Dave Calhoun became Boeing’s chief executive two years ago. His goal was to restore confidence in the company that Boeing had misled regulators to speed up the certification of the faulty 737 Max Jet, with dire consequences. Today, that goal could be the departure of Calhoun himself or some of his senior management to achieve that goal.
In recent weeks, the heads of Ryanair, Emirates Airlines, leasing company Avalon and Air Lease Corporation have publicly called for a change in the company’s performance, culture, strategy or even leadership. Ryanair’s Michael O’Leary said this week that Calhoun was “out of time”.
The comments follow a shocking first-quarter results announcement last month, where Boeing unveiled several new changes and delays as most of its civilian aircraft and defense programs are not going to be planned.
Now it wants to relocate its headquarters from Chicago to Arlington, Virginia, the Pentagon’s home, away from Washington, D.C., and to a more convenient location for a few members of the East Coast executive.
For some commercial aviation customers, the decision to move farther from Seattle could only lead to one conclusion, where the company’s traditional space skills lie. Boeing management will seek refuge under a branch of government rather than face the daunting challenge of implementing its core program.
This is certainly not the purpose of management. But such signals are important. Boeing certainly doesn’t need a big presence in Washington. According to the Open Secrets website, last year it ranked as one of the top 20 corporate spenders in lobbying services.
The decision raises questions about how much has changed in the two years since Calhoun took office.
One of his first commitments was to invest in engineering capabilities that are crucial to program execution. It is a recognition that engineering skills are over-focused on cost-cutting, outsourcing and short-term profits year after year, leading to a sevenfold increase in Boeing shares between 2010 and 2019.
According to Engineering Union Magazine, Spotlight, last year, the company spent nearly three times its budget on salary increases beyond the usual annual increase, amounting to $ 22 million, while the company said that in 2021 about 3,500 new engineers were hired. But persistent problems indicate that more needs to be done.
Engineering – and one obvious way to demonstrate that commitment to commercial customers is to identify top management in Seattle. It could be argued that the distance of leadership from commercial operations was partly responsible for the problems that led to the Max disaster. Engineers no longer had the opportunity to personally express their concerns to the top management.
Boeing said it was “confident about the future, because we’ve done that hard and important work.” It says this includes increasing security and quality measures and strengthening engineering. “The impact of these fundamental changes will be measured over the years,” it says. “Some have created challenges for us in the short term. But they can take the right steps. ”
But Boeing’s long-term vision remains unclear. Richard Abulafia, a consultant at Aerodynamic Advisory, noted that Boeing has spent significantly less on commercial research and development over the past five years than its rival, Airbus.
The company needs to change that to make up for lost land. Boeing has promised that R&D will double this year. But even greater ambitions are needed. The only way to capture this, led by Airbus, is to abandon the short-term of previous management and invest in a new aircraft that offers more advantages than its competitors.
To do this, Boeing may have to raise a huge fund. With বাস 45 billion in debt compared to Airbus’ net cash, the US company is not in a position to invest the $ 10 billion needed for a new jet.
The company insists there are no rights issues on the card. However, some analysts estimate that Boeing may need $ 20 billion or more to handle its current challenges and compete with Airbus on a new aircraft. It will be among the largest equity fundraisers in history. Investors are unlikely to bill feet without a price exclusion. If many of the promised improvements in implementation are not implemented soon, there is a risk of paying Calhoun and / or its top management.