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US lawmakers urge the CEO to resign

Boeing Executive Director Dennis Mullenburg testifies before the Senate Aviation Safety, Trade and Transportation Committee meeting and the justified 737 MAX after 34 Deadly Catastrophes 737 MAX killed 346 people on Capitol Hill in Washington, 2019, 29

Sarah Silbiger | Reuters

Last week at two Capitol Hill hearings, lawmakers pressured Boeing CEO Dennis Mullenburg on why he did not waive his pay after two fatal crashes of his 737 Max plane killed 346 people.

whose compensation exceeded $ 23 million in 201

8, the year of the first crash, said it depends on the company's board. Other lawmakers called for a more drastic measure.

“Mr. Muilenburg, if you have an ounce of honesty, you will know that the right thing to do is to retire, "Rep. Debbie Mukarsel-Powell, D-Flag., Told the Chamber's Transportation and Infrastructure Committee on Wednesday.

"You are the captain of this ship. A culture of negligence, incompetence or corruption starts from the top and starts from you, "said the rap. Jesus Garcia, a Democrat from Illinois, questioning Müllenburg as to whether employees were pressured to cut corners to get the plane on the market, the allegations dismiss. "I think it's time to resign, right?"

Buck stops

A day earlier Texas sex worker Ted Cruz was worried that Müllenburg had recently learned the details of an instant messaging of a former Boeing pilot telling a colleague that he had a simulator 737 Max. "You're the CEO," Cruz said. The Buck Stops at You.

The change of Mullenburg will fall on the board of Boeing, which disqualified him from his presidency on October 11, but expressed "full confidence" in him as CEO. He was replaced by board member and Blackstone Group CEO David Calhoun, who also sits on the Caterpillar board. The company later in the month removed the head of Boeing's important commercial aircraft division, which makes Max.

Some analysts and experts say that replacing Muilenburg in the midst of this crisis could lead to more uncertainty and pull the more important task of making the 737 Max fly again. Boeing has faced numerous investigations into the development and certification of aircraft by regulators, including a Justice Department probe.

"The Right Man Right Now"

The Max Plane, Boeing's best-selling aircraft, represents about 40% of its profits, founded by regulators around the world since March after the second of two crashes, a flight ban that has flown through Boeing's supply chain to its airlines' customers.

"I think he is the right person at the moment, considering the process and the changes that must be made to make the necessary improvements to be unfounded," said Jeff Windau, Boeing analyst at Edward Jones . "After that moment, it depends on the view of the board."

Despite two fiery hearings, Boeing shares closed the week at 1.6%, slightly higher than the broader market. Shares have lagged the broad market so far, but are still up 7% by the end of Friday.

"My take is all the time, the best arbiter is the stock price," says Ron Epstein, Boeing analyst at Bank of America Meryl Lynch, who added that some investors asked him if Muilenburg would be replaced. "If you had to see stocks that made sense for a while, then the villas came out."

Another interruption

He said that his replacement was now "another break" and that "no" did not facilitate "his progress.

"The committee members were prepared with sharp but sensible questions to the BA, and some expressed clear anger at what they perceived to be a culture mess behind decisions that undermine MCAS and MAX," Credit Suisse wrote in a note after the hearings. . "That said, we found the exchange was largely as expected: hard questions asked by members with sympathetic but tactical answers from Boeing."

The latest deviations from CEOs under pressure from investors have spanned Big Food, retail and technology.

It is not unheard of for a CEO to resign or board to replace his leadership if "he is involved in a crisis of this magnitude, even if it is found that the CEO is not at fault or responsible," says Jill E. Fish, who teaches business law at the University of Pennsylvania Law School. "Clean slate, new image."

But the challenge of replacing Boeing with Muilenburg amid the crisis of the 737 Max is finding someone who can do the job and who wants it, potentially outside the company. "It's not an attractive time to join a company," Fish said.

During a sales practices scandal three years ago, Wells Fargo CEO John Stumpf stepped down and was replaced by the bank's chief technology officer, Tim Sloan. Sloan then retired last March after struggling to repair the bank at the request of regulators in the wake of the scandal. The bank's board then said it was seeking an outside replacement, appointing former Visa CEO Charlie Scharf to lead the bank's fight last month.

"We made mistakes"

Müllenburg was quiet during the hearings, the victims' family members were sitting behind him – sometimes holding pictures of their loved ones killed in the crash. Mullenburg admitted: "We made mistakes" and apologized to the victims' deputies and families several times. He criticized Boeing cutting corners to launch a plane to take over the competing Airbus and having too much control over the Federal Aviation Administration's certification process. Lawmakers say they are reviewing a decades-long program that assigns certification to manufacturers.

At the heart of the dispute is a flight control system involved in both crashes – a Lion Air flight that landed shortly after taking off in Indonesia in October 2018 and another almost new Boeing 737 Max operated by Ethiopian Airlines in March. Boeing turned on the Max airplane system to make them look like older models. The 737 Max is a derivative of the Boeing jet, which has been sold since 1967. A clean sheet of airplane would take longer to reach the market.

The system automatically pushes the nose of the aircraft down to avoid stagnation, but the pilots fight a system that is powered by inaccurate data from a defective sensor. Boeing brought the planes to the market with a system that receives information from only one sensor.

It takes heat in hearings during document disclosures that show that an engineer is concerned about using only one sensor. Boeing said other reports also show that there is an open culture where employees feel comfortable raising questions. Another message from the 737 manager, which worried employees, cut angles under pressure to achieve high production targets for the aircraft. Boeing advertised airline customers that they would not have to provide pilots with expensive, time-consuming simulator training. He offered Southwest Airlines, his largest Max client in the US, a $ 1 million discount on a plane if simulator training was needed, the House committee said as part of its investigation.

Different decisions

Lawmakers have sharply questioned Boeing executives as to why the planes were not grounded after the first crash in October.

"I think about that decision again and again," Mullenburg said at a Senate hearing Wednesday. "If then we knew everything we knew now, we would have made a different decision."

But Müllenburg, who has been with Boeing since he was an intern at the college and became CEO in 2015, has withstood calls to withdraw, saying he wants to see the crisis instead, citing his farm upbringing in Iowa.

A group of victims' relatives said during the hearing that "return to the farm, the mother of one of the victims of the crash said. Müllenburg after the interrogation. "The moment has come when you are no longer the man to handle the situation," the Mullenburg woman said.

"You're no longer a boy on the Iowa farm," reporter Peter DeFazio, chairman of the House committee, said Thursday. "You are the CEO of the largest aircraft manufacturer in the world. You make a lot of money and so far the consequences for you have been, oh, you are no longer chairman of the board. "

DeFazio blames Boeing's approach to designing and selling the 737 Max to investor pressure.

" It all starts with Wall Street, "he told reporters before the hearings.

Restoring confidence

Boeing is designed a series of siege repairs to make the flight management system less aggressive and with data from two sensors instead of one.The regulators have not yet signed up for the changes, but Boeing expects them to be before the end of the year.

The BofA Epstein analyzer expects aircraft to be cleared Airlines do not expect aircraft to return until January or February, but repeatedly postpone scheduled return dates to avoid having to rewrite high-cost passengers at the last minute and

Mühlenburg said it wants to regain public confidence, according to the Teal Group, more than a quarter of the world's commercial aircraft fleet is the Boeing 737, and the latest iteration of that aircraft is key to the future of Boeing.

Some studies indicate that passengers will hesitate to fly in planes and the unions representing flight attendants in the US and United, who both have Max in their fleets, said more questions about aircraft safety need to be answered.

"After these two days of hearings, it became clear that there were serious damages in the oversight of the 737 Max," Lori Basani, president of the Professional Flight Assistants Association, which represents 28,000 cabin crew members of America, wrote in a letter to the Chief CEO of Boeing on October 30th. " We have basic questions about whether the FAA has the resources it needs to move forward. "

Sarah Nelson, president of the Flight Employees Association, which represents the flight attendants of United and those of 19 other airlines, said p Assemblers are confused about the aircraft and often ask if older 737 models are safe.

" None working on the 737 Max until and unless we have full confidence from regulators around the world, our flight deck colleagues, engineers, etc. our airlines that the 737 Max is safe, "Nelson says in a statement." This week took a step back. in the process, not forward.

Due to lack of the urgency and controversy surrounding the airplane, the Boeing board again has to go out or express confidence in Mullenburg, or let it go, said William Klepper, who teaches

"You can't let it get in the wind," he said. 19659046]
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