By Andrew Tangel
With Boeing Co. facing a cash drain, Chief Executive David
Calhoun went public last month to ask for government money to help
the aerospace giant weather the coronavirus pandemic.
Mr. Calhoun wound up undercutting the urgency of Boeing's
request in television interviews, however, asserting the
manufacturer could secure private financing if the government
insisted on taking an equity stake in exchange for taxpayer
help.
"We'd just look at all the other options, and we have got
plenty," he said.
The CEO's mixed message complicated Boeing's case for stimulus
money on Capitol Hill, some lawmakers said. "It's sort of a tale of
two companies -- on the one hand belittling the need for aid, but
on the other hand privately pushing very aggressively for that
aid," said Sen. Richard Blumenthal (D., Conn.).
In his three months on the job, Mr. Calhoun has at times made
troubles worse. He first irked senior Federal Aviation
Administration officials after pledging a fresh start with Boeing's
most important regulator, then he antagonized his own leadership
team by claiming Boeing's problems were worse than he imagined and
criticizing his predecessor publicly.
Boeing had enough problems already. The massive economic shock
delivered by the new coronavirus has overtaken its earlier crisis
stemming from two crashes of its 737 MAX jets.
The outlook facing Mr. Calhoun "is bleak as hell, even if the
damn MAX wasn't a problem," said Gordon Bethune, a former Boeing
executive who went on to lead Continental Airlines as CEO. "No one
needs the airplanes and if they did they couldn't afford to pay for
them."
The pandemic's global fallout for airlines that buy Boeing's
airplanes is expected to dwarf the primarily U.S.-centric travails
the industry faced after the Sept. 11, 2001, terrorist attacks. It
has led to at least a near-term drop in demand for Boeing's
airplanes and prompted Mr. Calhoun to lay the groundwork for
shrinking the manufacturer's workforce of some 160,000 employees.
He announced last week Boeing would offer buyouts. According to
people familiar with the matter, Boeing is considering a plan to
reduce its overall workforce by about 10%.
The sharp drop in aircraft deliveries and sales of spare parts
and services has left Boeing reliant on its military unit for cash
and strained its balance sheet. Credit-rating firms expect Boeing's
debt to double to as much as $45 billion by the end of the year
after it drew down a $13.8 billion loan. To save cash, the dividend
has been suspended alongside a cost-cutting program.
Mr. Calhoun, whom Boeing declined to make available for an
interview, is expected to address investors in coming weeks when
Boeing reports first-quarter earnings and holds a virtual
shareholder meeting on April 27. As the company weighs whether to
tap government stimulus aid, the CEO has been working remotely like
much of corporate America and managing the crisis from his New
Hampshire home, a company executive said. Mr. Calhoun has been on
calls with top executives at airlines and suppliers as they try to
estimate how long a recovery might take.
"He's going to be very honest about what he's seeing," the
executive said.
Mr. Calhoun succeeded Dennis Muilenburg, who was ousted in
December amid criticism of his handling of the MAX, which was
grounded after two crashes linked to a faulty flight-control system
killed 346 people. Mr. Muilenburg's overly optimistic projections
for when the plane would fly again angered the FAA.
Soon after Mr. Calhoun started as CEO in January, Boeing issued
what it thought was a more realistic estimate -- midyear 2020 --
but it surprised and irked senior agency leaders, U.S. government
officials familiar with their discussions said. Whether the plane
maker would need to first bring certain wiring into compliance with
federal regulations hadn't been resolved. The FAA ultimately
rejected company arguments that the wiring didn't need to be
relocated.
Boeing's relationship with the FAA has nevertheless improved
this year, according to one of the government officials and another
person familiar with the matter.
Early into his tenure, Mr. Calhoun focused in large part on
revamping Boeing's engineering culture after the MAX saga. He spent
a day with senior engineers and has visited factories and struck up
conversations with employees, some of whom didn't immediately
recognize him, asking how Boeing could improve, according to
current and former executives.
Mr. Calhoun's vow to make Boeing more transparent has been
welcomed by company leaders, as has his tendency to make decisions
quickly, the current and former executives said.
Mr. Calhoun's attempted candor, however, has also backfired. Mr.
Calhoun angered colleagues when, in an interview with the New York
Times, he said Boeing's problems were worse than he previously
imagined, and suggested his predecessor was focused on boosting the
company's stock price.
His comments called into question his own credibility
internally, given that he served on the company's board for a
decade and spent much of last year as its lead director and later
its chairman. A person close to Boeing's senior management said:
"He's known everything."
Mr. Calhoun later told senior leaders in an internal note he was
embarrassed and regretful. People close to Mr. Calhoun said the CEO
was having a bad day when he made those remarks. They noted his
mentor Jack Welch, the former CEO of General Electric Co., where
Mr. Calhoun spent much of his career, had just died.
The current Boeing executive said Mr. Calhoun's remarks
reflected his preference for avoiding safe corporate language, and
at any rate were "water under the bridge" as the company faces the
pandemic crisis.
--Andy Pasztor contributed to this article.
Write to Andrew Tangel at Andrew.Tangel@wsj.com
(END) Dow Jones Newswires
April 10, 2020 11:15 ET (15:15 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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