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David Calhoun promises ‘simplification’ at Boeing

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Via Financial Times

David Calhoun added a search for “opportunities for simplification” at Boeing to his packed to-do list, in an email to employees that set out his priorities on his first day as chief executive.

The longtime Boeing board member has been charged with leading the American aircraft manufacturer out of the greatest crisis in its history, with a design flaw in the 737 Max implicated in two fatal plane crashes that led to the jet’s worldwide grounding.

Stakeholders were “rightly disappointed in us” and it was the company’s job to fix those relationships, he told Boeing’s roughly 150,000 employees.

Mr Calhoun said Boeing needed to rebuild trust with airlines, regulators and the flying public, which it would do “through a recommitment to transparency and by meeting and exceeding their expectations. We will listen, seek feedback and respond — appropriately, urgently and respectfully.”

The promise of respectful dialogue under his leadership seemed like a nod to emails disclosed publicly last week where some Boeing employees mocked the Federal Aviation Administration and downplayed the need for costly simulator training requirements.

He also said the company would need to make operational changes, although he did not specify what he meant.

“We will all need to find any opportunities for simplification to ensure we are dedicated to what matters most,” he said, adding that Boeing must also take steps “to maintain our supply chain and workforce expertise” so its factory in Renton, Washington, will be ready to resume production of the Max.

Boeing plans to halt production this month so it will no longer add to the number of undelivered Max jets sitting in storage, but analysts fear the disruption to the supply chain could make it difficult to quickly restart manufacturing.

Mr Calhoun took the reins on Monday from Greg Smith, Boeing chief financial officer, who has steered the company temporarily since Dennis Muilenburg was ousted as chief executive last month.

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The company’s first priority was to return the Max to service, following the lead of regulators, he said. The FAA chastised the company in December for publicly setting timelines to restore the jet to service, when the decision will be made by regulators. The frayed relationship contributed to Mr Muilenburg’s firing.

“This is a crucial time for Boeing,” Mr Calhoun told employees. “We have work to do to uphold our values and to build on our strengths. I see greatness in this company, but I also see opportunities to be better. Much better.”

Mr Calhoun has left his board seat at private equity firm Blackstone but continues to sit on the board of machinery-maker Caterpillar, where he serves with Mr Muilenburg.

As a Boeing board member for the past 11 years, Mr Calhoun was present at the company as its current problems festered.

Ahead of its next annual general meeting, Boeing shareholders were likely to express some concerns with Mr Calhoun as chief executive given his long tenure at the company, said Ken Bertsch, head of the Council of Institutional Investors, which represents big pension funds.

“He shares responsibility for the current problems,” Mr Bertsch said. “I am expecting there will be some criticism,” he said, adding that he was the “reasonable choice” to be named Boeing’s chief executive at the moment.

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