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What to Make of Boeing's Change in Leadership?

Daniel Laboe

Boeing BA is changing its CEO in the face of 2019’s 737 MAX calamities. Dennis Muilenburg is out and being replaced by David L. Calhoun

Traders & investors took this news optimistically, pushing the share price up more than 3% in morning trading.

Calhoun has a very reputable executive with a background. He graduated Virginia Tech with an accounting degree and immediately signed with General Electric, where he worked for 26s years. Calhoun rose in the ranks to become Vice Chairman and CEO of GE Infrastructure. He moved from there to become the executive chairman and CEO of Nielson between 2006 and 2013. From their he became senior managing director and head of operation for Blackstone’s private equity portfolio. Later he got a position on the boards of both Caterpillar and Boeing, to his current position as CEO of Boeing.

The move to change the company’s image naturally follows the firm’s MAX issues. Muilenburg defended the MAX’s safety following its two fatal crashes, which claimed 346 lives. His initial defense of the MAX after the second crash was the beginning of the end for him. The company stripped Muilenberg of his executive chair position in October and now his CEO position This move comes one week after Boeing announced it would be suspending production of its best-selling plane, the 737 MAX

The plane has been grounded for most of 2019 and is costing the company billions. There are more than 5,000 orders of the 737 MAX, but its perpetual grounding makes the orders value progressively drop. The Federal Aviation Administration says they will re-evaluate the MAX’s safety in February.

Boeing is beginning to lose market share to its biggest competitor Airbus EADSY, which has seen 55% returns so far in 2019, way outpacing BA. The longer the MAX is grounded, the more it is going to cost the company and its customers. BA will continue to see price cuts the longer the MAX grounding is dragged out.

Shareholders are hoping that Calhoun will effectively navigate Boeing out of this mess.

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