Boeing grounds CEO to repair 737 Max, here's what Dennis Muilenberg is eligible for

Last Updated: Tue, Dec 24, 2019 12:08 hrs
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Dennis Muilenberg, the CEO of Boeing, the manufacturer of 737 Max airliner held responsible for the death of 346 passengers is no more the Chief Executive Officer at the airliner.

On Monday the Boeing board was reported as having taken a decision to abandon Dennis Muilenberg. The board was reported as having taken a firm stand on a conference call on Sunday. A person familiar with the development was quoted in an AP story as saying.

"A change in leadership was necessary to restore confidence in the company moving forward as it works to repair relationships with regulators, customers, and all other stakeholders," the company said.

Post Muilenberg's departure, the current chairman, David Calhoun, is expected to take over as CEO from Jan. 13 onwards. Greg Smith, Boeing's chief financial officer is expected to serve as Boeing's interim CEO during the transition period after the company's leadership reshuffle. It also said board member Lawrence Kellner will become non-executive Chairman of the Board effective immediately.

Meanwhile, Boeing appointed Niel Golightly as the company's Senior Vice President of Communications, expected to assume office on January 1, 2020. Golightly succeeds Anne Toulouse, who previously announced her plans to retire in early 2020. "Golightly, 61, will report to interim CEO Greg Smith initially, and then to President and CEO David Calhoun from January 13 onward," Boeing said.

After the decision was announced on Monday, stocks of Boeing gained in intra-day session to close at $337.55 per share. According to a securities filing, Muilenburg is eligible for $39 million in cash severance, stock and bonuses based on Boeing's stock price of $322.50 at the end of last year.

The development gains prominence after a week of bad performance at Boeing. Production of Max flights have been halted for sometime after intense speculation within aviation industry on delivery timelines. The second bad-news to hit Boeing this week was its new unmanned Starliner capsule flying to the International Space station. The capsule went off-course, turning the project awry.

The Max, developed by Boeing in 2011 as a competitor to Airbus has had two deadly attacks within a year of its launch. Indonesia Lion Air that crashed into the sea near Jakarta, and a Max from Ethiopian Airlines that nosedived after takeoff from Addis Adaba airport have claimed the lives of 346 passengers leading to widespread criticism. According to critics assistance from the Federal Aviation Administration helped Boeing push the plane into production.

The board faulted Muilenberg for his initial reaction to the accidents however the CEO seemed to fault the "foreign" pilots. A Congressional investigation into the two accidents suggests a the role of the new MCAS flight-control system. A faulty sensor within the flight caused the system to activate before the two disasters, pushing down the nose of both planes. It is reported that Boeing had not told pilots about MCAS until after the Lion Air crash. Even regulators at the FAA were kept in the dark.

The 737 MAX's return to flight has been postponed after the US Federal Aviation Administration (FAA) said earlier this month that it would not re-certify the aircraft for resumed service until 2020, which crushed Boeing's hope of getting the plane cleared for flight before the end of this year. The latest FAA action has lead the industry staring at damages exceeding $9 billion. This figure is Boeing's own assessment of damages to compensate airlines for adjusting Boeing production schedule. There are more damages in terms of job-losses considering an entire eco-system of component manufacturers that goes into building just one plane.

Muilenberg's replacement is Boeing's Chairman - 62 year old Calhoun who formerly drove General Electric's jet-engine business. He was also associated with TV ratings agency Nielsen as its CEO.

Boeing said the new leadership will lead the company with "a renewed commitment to full transparency, including effective and proactive communication with the FAA, other global regulators and its customers."

Do watch this expert commentary from The Associated Press:

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