Kevin McAllister has been replaced as the President and CEO of Boeing Commercial Aircraft, making him the highest-ranking departure resulting from the 737 MAX crisis. He will be replaced by Stan Deal, the current head of Boeing’s Global Services business unit.
McAllister, a former executive with GE Aircraft engines, joined the company three years ago, just as the MAX development work was concluding, and inherited a crisis after the two deadly crashes of the 737 MAX. He has been noticeably absent from public view during the MAX crisis and had been working behind the scenes with customers during the MAX crisis, for which he has faced criticism from airlines.
With the 787 program facing quality issues, the KC-46 tanker plagued with problems, the 777X delayed in addition to problems emerging on older 737s, Boeing’s commercial aircraft unit is fraught with difficulties beyond simply the MAX crisis that is gaining almost all of the attention.
McAllister had been the focal point for the company’s efforts to fix the MCAS and flight control system issues that contributed to the two fatal crashes, and earlier this month the New York Times reported that he was under scrutiny, despite both the new Chairman and McAllister being former GE executives. While the initial MAX problems were not during McAllister’s tenure, the fix and lack of transparency in communications with both airline customers, pilots, and the traveling public has brought criticism to Boeing, which continued to look bad after some text messages between pilots were exposed last weekend that cast the company in a poor light.
While those texts had little to do with the MCAS problem and were likely indications of a simulator testing issue, the perception and lack of transparency from Boeing looked bad, and a scapegoat was needed for the Board. The CEO of Boeing Commercial Aircraft, rather than the CEO of the company, has become the sacrificial lamb. In our view, the departure should have been one step higher in the organization, and replacing Muilenburg remains a possibility unless Stan Deal can rapidly change the culture and create instant miracles in Boeing’s troubled operations.
This crisis is still on-going, and the final shake-out is just beginning. Making such a change two days before a quarterly earnings call typically indicates bad news.