After an embarrassing and potentially dangerous bungling atop of the iconic American aerospace company, culminating in the grounding of hundreds of aircraft following a door plug blowing off a 737 MAX 9 mid-flight, Boeing CEO Dave Calhoun is stepping down.
Also heading for the exits are Board Chair Larry Kellner and Boeing Commercial Airplanes CEO Stan Deal, an exodus that will make way for new blood at a company that fumbled one of the hardest-earned reputations for excellence in the country’s history.
The door plug incident follows a pattern of outsourcing and sloppiness driven by a desire to increase the stock price at all costs, a culture some at the company trace to a 1997 merger that set the company off a track that prioritized engineering prowess.
Calhoun, not incidentally, is not himself some aeronautic engineering genius, but trained as an accountant. He previously served as a senior managing partner at the gigantic private equity firm — and leveraged buyout pioneer — Blackstone Group, a perch from which he knew well companies’ balance sheets, not the airworthiness of their airliners.
Of course, we shouldn’t suggest that the CEO isn’t intricately familiar with some forms of aerospace engineering; he’s no doubt adept at understanding parachutes, namely the golden parachute he probably has waiting to bail out of the company he’s nosedived.
Like so many next-quarter-obsessed executives before them, the bounced Boeing executives and board chair won’t expect to pay any penalties for their mismanagement. While many professionals see their pay and their ability to switch jobs tethered to their performance, that paradigm breaks down when you reach the C-suite, where CEOs are free to run companies aground before simply jumping to the next one with a massive payout.
Where once the lion’s share of company CEOs had risen through the ranks, this is the era of career executives who jump from industry to industry, not understanding nor having to understand the actual business beyond numbers on a spreadsheet.
This all works in tandem with regulatory agencies that are overwhelmed, constrained by aggressive interfering courts, outgunned by corporate lobbyists and increasingly reliant on self-policing within industries ranging from aerospace to poultry. The rest of us are left with the consequences, in this case the reality of a significant chunk of the commercial jetliner fleet that has serious safety concerns.
Hopefully, the management change at Boeing will improve outcomes, but we can’t rely on them to come around on their own when the public’s safety is at stake. That nobody was killed or seriously injured in the door plug incident is a miracle — something that can’t be said for the infamous 737 MAX crashes of 2018 and 2019, which killed 346 people, after the company hastened the rollout of its new system.
The Federal Aviation Administration’s scrutiny of Boeing should continue, and more broadly, policymakers and legislators should take the company’s continuous debacles over the past few years as a sign that the promise of industry self-regulation is a farce.
So should the U.S. Supreme Court, which is currently setting its sights on the so-called Chevron deference, a legal doctrine allowing regulators to use agency expertise to interpret the law, and whose absence could prove disastrous. Regulators need flexibility and funding to do their jobs properly, for all our benefit.
