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737 Max

Boeing Makes a Blood Sacrifice After Profits Drop by 50%

Boeing Makes a Blood Sacrifice After Profits Drop by 50%
Jeff Edwards

This week, Boeing took a rare step of holding leadership to account for the disastrous handling of the mounting crisis surrounding the company’s 737 MAX program. On Tuesday, the embattled head of the commercial aircraft division, Kevin McAllister was ousted just hours before the aviation giant announced a gloomy earnings forecast on Wednesday.

Prior to a dismal third-quarter report released on Wednesday, Boeing opted for a blood sacrifice as Boeing CEO of Commercial Airplanes Kevin McAllister was asked to fall on his sword. The move to oust McAllister was widely seen as sending a signal to investors that top executives will be held accountable for the lingering 737 MAX drain on profits. Earlier this month, the Boeing board sent a similar message, making the unexpected decision to strip CEO, President, and Director Dennis Muilenburg of the title of Chairman.

“Boeing is a great company with a commitment to safety I have seen firsthand working side-by-side with many thousands of tremendously talented and dedicated employees,” McAllister said in a statement announcing the end of his short tenure with the company. “It has been an honor to serve with such a professional team for the past three years.”

According to the Seattle Times, McAllister faced growing scrutiny for both his role in heading up the response to the grounding of the 737 MAX and his failure to assuage the concerns of customers. Airlines, which have lost millions because of the issues with the 737 MAX program, have become increasingly dissatisfied with Boeing’s reaction to the ongoing crisis. More than one frustrated airline customer has even suggested in recent weeks that the prospect of dropping Boeing entirely in favor of an eventual all-Airbus fleet is not off the table.

Stan Deal, the former CEO of Boeing Global Services, was named as McAllister’s replacement. The company’s newly appointed Chairman David Calhoun seemed to indicate that no other heads on the executive floor need to roll – at least for now.

“The Boeing board fully supports these leadership moves,” Calhoun said in a statement announcing the leadership shakeup. “Boeing will emerge stronger than ever from its current challenges and the changes we’re making throughout Boeing will benefit the flying public well into the future.”

Unfortunately, the news accompanying the release of Boeing’s third-quarter earnings report on Wednesday was not quite as rosy. The company’s profits dropped by more than 50% compared to the same period last year. Perhaps more troubling is the fact that the forecasted expense for producing new 737 MAX aircraft has increased by more than $900 million, putting the future profitability of what was once considered among Boeing’s most potentially lucrative commercial aircraft models into question.

“Our top priority remains the safe return to service of the 737 MAX, and we’re making steady progress,” Muilenburg said in a statement introducing the disappointing earnings report. “We’ve also taken action to further sharpen our company’s focus on product and services safety, and we continue to deliver on customer commitments and capture new opportunities with our values of safety, quality and integrity always at the forefront.”

 

[Featured Image: Boeing]

View Comments (5)

5 Comments

  1. MaxVO

    MaxVO

    October 23, 2019 at 2:03 pm

    Colorful language, but hardly any blood. What inept leadership, can’t even put on a decent spectacle.

  2. EPA143

    October 23, 2019 at 2:29 pm

    Mr. Slater isn’t looking for attention. I can assure you that. THEY contacted him for the interview, remember? Perhaps those that are so quick to judge him should remember their judgemental quip of a comment here the next time they are unfairly attacked by a keyboard vandal. Never ever judge anyone unless you walk a mile in their shoes. His story is a profound one. Period.

  3. Paella747

    October 23, 2019 at 2:59 pm

    Poor guy.
    As a child he got left in the attic on Christmas Eve, and now this?

  4. Jimfish

    October 28, 2019 at 12:55 am

    Is anyone crazy enough to get on this plane when it comes back into service? The article in the NYT today is pretty damning indictment of Boeing as a company attempting, and succeeding, in capturing the regulatory system that was put in place to keep us safe and alive. In my view ALL of their heads should role.

  5. Boggie Dog

    October 31, 2019 at 11:29 am

    So killing over 300 people with Boeing airplanes didn’t cause an upheaval in Boeing management but let profits drop by 50% and katy bar the door.

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