Boeing Co (NYSE: BA) Chairman David Calhoun won't be able to fly under the radar once he takes over as CEO at the beleaguered American jet maker Monday.
Calhoun will take over the controls from Dennis Muilenburg, who was forced to step down last month in the tumultuous aftermath of two crashes of Boeing's new 737 Max aircraft that killed a total of 346 people and led to revelations about a climate of a questionable commitment to safety in the design and development of the aircraft.
The plane has been grounded around the world since last March.
What The New Boeing CEO Has To Deal With
Calhoun will be asked to guide Boeing out of the storm and help restore confidence in what was one of the most iconic large industrial companies in the United States.
Boeing's stock on Friday was trading at about 75% the value of its 52-week high and bounced around considerably in a turbulent 2019.
If the grounding weren't bad enough, Calhoun takes over as Boeing is again under scrutiny following the release of internal emails and documents showing a lack of confidence in the plane's safety. Boeing itself released the documents to Congress as it investigates how the 737 Max was certified by the Federal Aviation Administration as safe before the two crashes.
"This airplane is designed by clowns, who in turn are supervised by monkeys," one Boeing employee said in one of the emails released by the airline. In others, employees said they wouldn't want their own families to fly on the 737 Max.
Calhoun also will take over a company facing billions in compensation costs from the two crashes, including money that will be paid out to families of the crash victims and compensation to airlines that have had to cancel thousands of flights.
When Will 737 MAX Return To Service?
Calhoun also comes in as the timeline for the plane's return to service and production remains up in the air.
Longbow Research analyst Chris Olin said in a Friday note to investors that Boeing is considering a couple scenarios for how quickly it will ramp up production after a projected mid-February restart, which Olin said may not be realistic anyway. Either scenario is conservative in comparison to previous production goals, he said.
Olin has an Underperform rating on Boeing stock because of the uncertainty.
"There are too many lingering questions surrounding the MAX approval process, management strategy, airline customer intentions, and wide-body aircraft demand support," the analyst said.
And in an additional concern to airline customers, a new Boeing recommendation for simulator training for 737 pilots will delay a full resumption of service, Bank of America Securities analyst Andrew Didora said in a note covering a 737 Max pilot panel at BofA's Commercial Aerospace Forum on Thursday.
The simulator recommendation will create another delay, the analyst said.
"We think there will be a minimum of 60 days after the airworthiness directive is given before there is the first revenue flight," he said.
Calhoun has turned around companies before, with a reputation for rescue work in previous jobs at General Electric Company (NYSE: GE), TV rating company Nielsen Holdings PLC (NYSE: NLSN) and Caterpillar Inc. (NYSE: CAT).
Boeing shares were trading down 1.55% at $331.09 at the time of publication Friday.
Photo by SounderBruce via Wikimedia.