Boeing Chairman David Calhoun joins CNBC’s “Squawk Box” to discuss the 737 Max crisis, including the fate of Boeing CEO Dennis Muilenburg, the outlook for the return of the plane to service and the company’s emphasis on safety.
Below are excerpts from that interview as well as a link to the full video interview courtesy of CNBC.
CALHOUN ON CEO COMPENSATION
Dennis called me Saturday morning 10am with the purpose of suggesting he not take any compensation for 2019 in the form of bonuses which of course is most of your compensation. It came in two fronts no short and no long term bonus and three no consideration for equity grants until the Max in its entirety is back in the air and flying safely as you know Max in its entirety takes us through all of the next calendar year.
CALHOUN ON BOARD SUPPORT OF CEO
From the vantage point of our board, Dennis has done everything right from the beginning, from the beginning remember Dennis didn’t create this problem, but from the beginning, He knew that MCAS should and could be done better. And he has led a program to rewrite MCAS to alleviate all of those conditions that ultimately beset two unfortunate crews and the families and victims.
CALHOUN ON RETURN TO SERVICE
Return to service starts the day its certified. It’s not over when it’s certified there’s no victory in that right? We have to get the airplanes that our customers have put on the ground. We have to get them back in the air, we have to assist them every step of the way. And we have to get the airplanes that we built and are ready for delivery to customers, back in the air as well. That’s a long program it’s at least a year and it’s a tough important task. And we believe he’s up to it.
CALHOUN ON CEO CLAWBACK PROVISIONS
We’re not looking for a claw back on Dennis, there’s nothing at any stage anywhere that suggests there’s culpability involved in any of that. With respect to those provisions, there’s no doubt we’ll take a look at that. There’s no question everything related to safety and its impact on compensation and many other facets of the operations of our company will be turned over looked at hard and many revisions will be made so I don’t want to predict the outcome, but you can be sure we’ll look at it.
CALHOUN ON CHAIRMAN APPOINTMENT
My appointment of Chairman was very much about division of duty, and that experience I brought for my aviation days. And what I think is the significance overhauls that have to go on inside our inside our company to increase visibility on the subject of safety straight up to the board and right down to the bottom of the organization and create more independence and the functions that represent safety
CALHOUN ON BOARD
Well, no one’s ever going to claim that they were fast enough. So, and I’m not going to be the last person to say that, but I will say this has been one very active board. So, between Indonesia, and Ethiopia, roughly four months. Very tough time, just trying to get everything we can, out of the NTSB investigation or the Indonesian equivalent of that, learn the facts, understand what has to get done. Fairly early on, that assumption, that deadly assumption around what a pilot would do in that circumstance when that boundary condition was tested that begin started to come to light. There’s no question about that. Ethiopia happens, everything changes and our board is in full full gear, and me included, we went down to the engineering organizations with a new safety committee that at that time was, we didn’t know if it was permanent or temporary but we’re on with it.
CALHOUN ON NOT HIDING
It was sort of clear to us, no one was hiding anything. It was a set of engineering decisions that ended up being wrong. And our job now is to make sure that whatever processes we have whatever process, our regulator has that those processes never allow for this to happen again. That that assumption just because history suggested it was a great assumption, just because history, and the record suggested that turned out it wasn’t right. And we have to test that every day.
CALHOUN ON CULTURAL PROBLEM
I do not believe that instance, that isolated instance is indicative of a cultural problem, I have not seen that in the many touches that I that I have had
CALHOUN ON CULTURE OF CONSEALMENT
that question of culture and anybody’s willingness to trade safety against anything else…have never seen it, never touched it, don’t believe it. Now, don’t confuse that our culture on this subject can get better. We can do more with visibility, everybody knows that, we can strengthen all the independent arms that are meant to put judgment against every decision in favor of safety, we can strengthen those, we can increase sort of authority across the company. And those are the steps that we’re gonna take.
CALHOUN ON FAA REFORM
The system let everybody down I totally understand that. Delegation of authority over a fairly lengthy period of time, has delivered incredibly strong results that safety record demonstrates that any involvement of the most technical of the team at Boeing, their involvement in that process is a good one.If a rebalancing has to happen by way of reform, so be it. So be it. I get that. I think both the FAA and ourselves will look hard at these, look hard at all of these practices. We will attempt to improve them on our own. And we will encourage reform at every at every turn. All in the name of safety
CALHOUN ON PILOT TRAINING
There were a lot of contributing causes, my job, our job is to fix MCAS, and make sure whatever inputs, ultimately come about in that cockpit at that moment do not create pandemonium. There is no question the fundamental assumption we designed around was flawed, with respect to how a pilot would react. And that’s our job is to fix that assumption and work with that man/machine interface with all of our customers and all of the regulatory authorities around the world. If you ask me, that is the, that is the center of the issue that has to be addressed as we go forward and develop every next new airplane.
CALHOUN ON GARY KELLY
We have let him down there was no question we have let him down. He was entirely dependent on the Boeing Company in the 737 fleet. He has confidence in that fleet, he does. He knows it has served him well. And he knows it has served him safely. But this gap where he needs capacity, and it’s not there is a real problem for him. Anybody at that moment in time has to make the decision that we’re going to consider other alternatives, I get that. So we’re going to have to step up to the plate. If and when that day happens and put our best foot forward, and we’re going to have to have a max back in the air that’s flying safely, maybe safer than any airplane that’s ever flown,
CALHOUN ON PRODUCTION
I had an objective to take the pressure off the company in every way I could think of. And one of them was to create some stability on the 737 max line. At that time we were running at a fairly low rate, 42, relative to the, what we were predicting, but my advice, and by the way, it wasn’t a debate accepted readily by the team was yes we’re going to stay at 42, and why stay at 42 Why not dropped to 30? Well, because there’s stability involved in our workforce and skills and knowledge that we want to stay, stay the course, we want we want to hurt those folks we don’t want to bump through the union lines. None of that works for us, or works for the airplane or works for the name of safety
CALHOUN ON THE 737 MAX BRAND
This control system will be fixed, and it will be safe and it will have been tested like no other control system in least in my history in the aviation industry. And this airplane will fly and it will be safe, and I’ll fly it and my family will fly it, and there’s the only way to win a brand back is not to advertise it or to talk about it but to win it with every next flight
CALHOUN ON BOARD INVOLVEMENT
This is a very involved board, it’s doing its very best to cope with a very difficult situation. We are not trying to rewrite history, we are simply trying to take every next half step forward the right way.
CALHOUN ON CEO BEING TESTED
he is going to experience in his first period, one of the most difficult situations, any CEO, that I’ve ever known has lived through. So if he can get us from here to the endpoint and the endpoint being a max that’s flying in service and accepted by the flying public and and begins to restore our brand, I might argue, he’s just about the most qualified executive in the world to be running a company like Boeing.