SEATTLE/WASHINGTON (Reuters) – Boeing Co on Tuesday ousted the top executive of its commercial airplanes division, Kevin McAllister, marking the first high-level departure since two fatal crashes of its 737 MAX jets.
Boeing Commercial Airplanes President Kevin McAllister poses with a model of 737 MAX 10, during the 52nd Paris Air Show at Le Bourget Airport near Paris, France June 20, 2017. REUTERS/Pascal Rossignol/File Photo
The company named veteran Boeing executive Stan Deal to succeed McAllister effective immediately as president and chief executive of Boeing Commercial Airplanes (BCA). Deal had led Boeing’s recently formed Global Services division.
The world’s largest planemaker faces a growing crisis over the eight-month safety ban on its best-selling single-aisle jet prompted by crashes in Indonesia and Ethiopia that killed 346 people.
Tuesday’s announcement, a day before Boeing was due to report quarterly results, shocked some Boeing employees, with one insider calling McAllister a “scapegoat” and noting he came to the helm of BCA late in the 737 MAX development.
It ends a relatively unusual experiment at Boeing of handing an outsider a prominent position, and places the crucial commercial airplanes division in the hands of a long-serving Boeing insider who has relationships with important customers such as Singapore Airlines.
McAllister, a regular figure at industry conclaves, had championed an analytical, data-based approach forged in his previous position selling services for General Electric.
He was credited in part with boosting Boeing sales as part of a roving double act with sales chief Ihssane Mounir with whom he regularly toured the world clinching deals at the expense of European rival Airbus.
That sales momentum slumped to a record nine-month low after the MAX was grounded in March.
McAllister also struggled to claw back a series of industrial delays or production quality problems including delays to a military tanker and the new 777X, analysts said.
McAllister could not be reached for comment.
MAJOR CHALLENGES AHEAD
One person familiar with the matter said McAllister’s departure had been described to staff as a “separation,” a clear indication that he had been fired.
Another person said Boeing had asked McAllister to leave, giving no explanation other than saying it was the right move at the right time for the company’s leadership. He added that the decision was not purely related to the MAX.
Deal joined Boeing in 1986 and in 2017 was tapped to lead the company’s new Boeing Global Services unit, which sells analytics, parts and training services for airline customers.
Deal’s major challenge is to get the MAX back into service while simultaneously handling deliveries of new aircraft and boosting production of the money-making single-aisle jets. That is seen as one of the most formidable logistical challenges in the industry’s history. He must also get the larger, twin-aisled 777X back on track.
Beyond that, Deal will have to make decisions about a potential new mid-market jetliner code named NMA, which has been eclipsed by the MAX crisis and whose prospects now look unclear.
The management change was announced after Boeing’s board met in San Antonio.
Earlier on Tuesday, Federal Aviation Administration Administrator Steve Dickson said Boeing was making progress toward winning approval to resume flights, but would need “several weeks” before a key certification test flight can take place.
Next week, Boeing Chief Executive Dennis Muilenburg, who was stripped of his title as chairman by the board this month, will testify before Congress for two days.
“We’re committed to delivering on our commitments and regaining trust with our regulators, customers and other stakeholders,” Muilenburg said.
A deliberate decision was made soon after the MAX crashes to make Muilenburg the public face of the company during the crisis, sources said, although he has faced criticism for what some in the industry have characterized as a wooden and lawyer-driven response to concerns raised from the crashes.
Senior industry officials said McAllister’s departure leaves Muilenburg – recently stripped of his chairman title – squarely in the firing line in the event of further unexpected revelations or if the company fails to recover from the crisis.
“It removes one of the sandbags around him,” said Nick Cunningham, aerospace analyst at UK-based Agency Partners.
New Chairman David Calhoun said the board backed the decisions. “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,” he said in a statement.
Reporting by David Shepardson in Washington and Eric M. Johnson in Seattle and Tim Hepher in Paris; editing by Bill Berkrot and Jason Neely