SHAKEUP AT BOEING. The ouster was Boeing’s most direct effort to hold someone in senior leadership accountable for the bungled handling of the Max crisis – By Todd Horwitz, Bubba Trading.

 

Boeing Ousts Top Executive 

Boeing replaced the head of its commercial airplane unit Tuesday as the manufacturer scrambles to convince regulators to allow its 737 Max plane back in service after two fatal crashes that killed 346 people. Kevin McAllister is the senior-most executive to leave in the wake of the catastrophes. The commercial airplane division has been immersed in a crisis for nearly a year following the first of two 737 Max crashes. A second 737 Max went down less than five months later, prompting a worldwide grounding of Boeing’s bestselling aircraft. All 346 people aboard the two flights were killed. McAllister, who had led the unit since 2016, is being replaced by Stan Deal, a three-decade Boeing employee who most recently led its global services business, Boeing said.

The ouster was Boeing’s most direct effort to hold someone in senior leadership accountable for the bungled handling of the Max crisis, which continues to spiral out of control. The company’s board stopped short of removing Boeing’s chief executive, Dennis A. Muilenburg, though it stripped him of his title of chairman just over a week ago.

The decision to remove Mr. McAllister was made while the Boeing board met in San Antonio on Monday. With directors and senior executives gathered for tense meetings at the plant where the company builds Air Force One, Boeing’s stock took a beating. Two analysts issued downgrades and shares plummeted to their lowest level in more than three months.

The management change adds an element of volatility to the biggest crisis in the company’s 103-year-history. The Max jets have been grounded since March, costing Boeing at least $8 billion and roiling the global aviation industry. The company is also facing intense pressure from lawmakers in Washington. On Friday, messages became public that suggested a pilot involved in the development of the Max had voiced concerns about the automated system in 2016, months before the Federal Aviation Administration certified the plane. That system, known as MCAS, was found to have played a role in the accidents.

Those messages are expected to be of central importance when Mr. Muilenburg testifies before Congress next week. Lawmakers have spent the last several days hammering the company and its board for failing to hold anyone accountable for mistakes that may have contributed to the two crashes. “If nothing else, it gives Dennis Muilenburg something to point to when he is on the Hill,” Richard Aboulafia, vice president for analysis at the Teal Group, a consulting firm, said of Mr. McAllister’s departure. “People are calling for action. Rightly or wrongly, he can point to this as a form of action.”

Todd “Bubba” Horwitz

Financial Markets and Political Commentary
 

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Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.