Boeing CEO Dennis Muilenburg resigned Monday over the deadly 737 Max debacle that has plunged the aircraft maker into crisis and damaged its reputation as one of the stalwarts of American industry.
The company’s board said a change in leadership was needed to restore confidence in Boeing as it works to repair relationships with regulators and others in the wake of two 737 Max crashes that killed 346 people in all.
The Max was grounded worldwide after the two disasters — one in October 2018 off the coast of Indonesia, the other in 2019 in Ethiopia. Boeing has come under fierce criticism on Capitol Hill and elsewhere over the design and rollout of the jetliner and has been unable to get approval from regulators to put the plane back in the air.
Last week, the crisis inside the company deepened when Boeing announced it will suspend production of the Max in January. And in another stinging setback for the aerospace giant, Boeing’s new Starliner space capsule went off course Friday during a bungled unmanned test flight to the International Space Station.
Boeing said Muilenburg will depart immediately and the board’s current chairman, David Calhoun, will take over as CEO on Jan. 13. The company declined to make Calhoun or other executives available for comment.
Investigators say that in both crashes, a faulty sensor caused the plane’s new automated MCAS flight-control system to push the nose of the plane down, and the pilots were unable to regain control.
Ababu Amha, who lost his wife, a flight attendant, in the second crash, involving an Ethiopian Airlines aircraft, welcomed Muilenburg’s departure.
“This is something that we have been asking and struggling for quite some time,” he said. “The CEO reluctantly and deliberately kept the aircraft in service after the Lion Air crash. The Ethiopian Airlines crash was a preventable accident.”
The resignation, however, is not enough, Amha said: “They should further be held accountable for their actions because what they did was a crime.”
Muilenburg was faulted for Boeing’s initial response to the first accident, in which he and the company seemed to suggest the pilots were at fault. Criticism of Muilenburg increased in recent months as news reports and congressional investigations disclosed internal documents that revealed concern within Boeing’s ranks about key design features on the Max, especially the new flight-control system.
In late October, lawmakers and relatives of passengers who died called on the CEO to quit.
Earlier this month, the head of the Federal Aviation Administration expressed concern that Boeing was pushing for an unrealistically quick return of the grounded Max. The shutdown in production is likely to ripple through the U.S. economy and Boeing’s vast network of 900 companies that make engines, bodies and other parts for the Max.
With Boeing in turmoil, sales at Airbus, its top rival, surged 28% during the first half of the year.
Board member Lawrence Kellner, a former United Airlines CEO, will become non-executive chairman of the board. In a statement, Kellner said Calhoun has “deep industry experience and a proven track record of strong leadership, and he recognizes the challenges we must confront. The board and I look forward to working with him and the rest of the Boeing team to ensure that today marks a new way forward for our company.”
The crashes and the decisions that were made leading up to those tragedies have shaken Boeing.
“The company appears to have known about safety issues for quite some time. This indicates that there might be more fundamental cultural issues at the company,” said Tim Hubbard, a professor of management at the University of Notre Dame’s Mendoza College of Business.
“Furthermore, the recent failure of a rocket test launch indicates that the company might not be as innovative as they once were. Increasing innovativeness and changing the culture of a company the size of Boeing is challenging. One way to jump-start changes at Boeing could be new leadership.”
Trading of Boeing stock was halted before the announcement, but it had jumped 3% after the opening bell.
Muilenburg’s departure was long overdue, said Robert Clifford, a Chicago lawyer representing several people who are suing Boeing after losing relatives in the Ethiopia crash.
“Mr. Muilenburg and other Boeing leaders deliberately put the desire for a heightened stock price and profits over safety by allowing the 737 Max 8 to stay in service” after the first crash, involving a Lion Air flight, Clifford said. Boeing directors, he said, deserve no praise for ousting Muilenburg now.