By Andrew Tangel and Doug Cameron
Boeing Co. shuffled the ranks of top management on Tuesday,
replacing the head of its jetliner business as it struggles to
shore up confidence among customers, investors and lawmakers in the
company's handling of the 737 MAX crisis.
The removal of Kevin McAllister as chief executive of the Boeing
Commercial Airplanes division is the first high-level departure
from the plane maker since the second crash of a MAX, in March,
triggered a global grounding of its best-selling jet and billions
of dollars in losses at the nation's largest exporter.
Stan Deal, head of Boeing's fast-growing services unit, will
succeed Mr. McAllister, who moved to the aerospace company from
General Electric Co. about three years ago.
The executive reshuffle comes on the eve of Boeing's quarterly
earnings. Investors expect the company to take additional charges
as the grounding of the MAX moves into its eighth month following
the two deadly crashes, with a return to service not expected until
early next year.
Mr. McAllister, who joined Boeing in November 2016, has been
credited by analysts with improving its production system. But he
has faced criticism from some airlines over his communication
surrounding the grounding of the MAX and efforts to return it to
service. At GE, he headed its aviation services unit, the support
arm of the conglomerate's aircraft-engine business.
His departure follows a two-day board meeting in San Antonio
that took place as the company's crisis deepened, and 10 days after
Chief Executive Dennis Muilenburg was stripped of his chairman
role. David Calhoun, a senior executive at the Blackstone Group
Inc., is now chairman.
Much of Boeing's design and certification of the MAX preceded
Mr. McAllister's tenure. But he oversaw the internal response to
the first 737 MAX crash in Indonesia, on Oct. 29, 2018, including
his division's still-unfinished work to fix a MAX flight-control
system also implicated in the second accident. At the same time, he
took a less public role than Mr. Muilenburg in dealing with the
crisis.
Mr. McAllister's tenure has been marked by problems that extend
beyond the MAX at the world's largest aerospace company by sales.
Various Boeing airplane programs have suffered setbacks, including
the delayed introduction of the latest wide-body 777X. The plane
maker struggled to rev up its supply chain to meet demand for its
best-selling single-aisle jet, the 737. The U.S. Air Force has
sharply criticized Boeing for manufacturing lapses as evidenced by
tools and other debris left inside refueling tankers, a major
safety issue for the military.
In an interview in June, Air Force procurement chief Will Roper
called out a Boeing commercial facility in the Seattle area as
particularly beset by problems.
"We've seen issues across Boeing but the Everett facility, I
would say, is the most advanced of those," Mr. Roper said. "But
we've seen issues across Boeing and that just tells me that there's
a lapse of culture."
A Boeing spokesman has said the plane maker ramped up efforts to
improve its manufacturing. "Although we've made improvements to
date, we can do better," the spokesman said.
Mr. McAllister at times defended his tenure internally by
arguing he was dealing with a mess he had inherited, people
familiar with the matter said. He also came under scrutiny
internally for not visiting Boeing customers in Indonesia and
Ethiopia after the crashes of the airlines' 737 MAX aircraft, these
people said.
The MAX crisis has put considerable strain on Boeing. Executives
have been mulling whether to further cut or halt production at its
Renton, Wash., 737 factory, as finished planes pile up.
Last week, scrutiny of Boeing executives and board members
intensified following disclosures of a former Boeing pilot's
instant messages that suggested he unknowingly misled regulators in
his work on the MAX. Federal authorities have been conducting a
criminal investigation into whether Boeing misled customers or
regulators about the MAX.
Before Mr. Muilenburg lost his dual role as chairman, the board
approved an overhaul of how Boeing handles engineering and safety,
effectively centralizing his control over matters under the purview
of the commercial-airplane unit in the Seattle area.
Mr. Muilenburg, who is based in Chicago. will remain in the
spotlight in the MAX crisis next week when he testifies before
Congress. He is slated to testify with John Hamilton, the chief
engineer in what was Mr. McAllister's division. Mr. McAllister
hadn't been scheduled to appear.
Mr. Deal, a 33-year company veteran, previously ran Boeing
Global Services, which Mr. Muilenburg aims to build into a $50
billion-a-year business. Mr. Deal will be succeeded by Ted Colbert,
Boeing's current chief information officer.
Attempts to reach Mr. McAllister weren't immediately successful.
In a statement, he said: "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."
Mr. Deal was picked to run Boeing's new services arm two years
ago when the company consolidated its units providing parts and
training for commercial and military aircraft in an effort to boost
market share.
The services market is larger and more profitable than the
jetliner business, and Boeing's push under Mr. Deal has upset some
suppliers.
Write to Andrew Tangel at Andrew.Tangel@wsj.com and Doug Cameron
at doug.cameron@wsj.com
(END) Dow Jones Newswires
October 22, 2019 18:33 ET (22:33 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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