MIAMI — In today’s 3Q earnings release, Boeing has announced that it will reduce its 787 production rate by two planes and yet another delay on its 777-X program.
The North American planemaker also announced that Stan Deal is the new President and CEO of its Commercial Airplanes division, effectively replacing Kevin McAllister, who had been in the role since November 2016.
Moving into his new role, Deal leaves his current position as President and CEO of Boeing Global Services, with Ted Colbert appointed as his replacement.
In turn, Colbert is replaced by Vishwa Uddanwadiker, interim Chief Information Officer and SVP of Information Technology & Data Analytics at Boeing.
“Boeing is a great company with a commitment to safety I have seen firsthand working side-by-side with many thousands of tremendously talented and dedicated employees,” said the departing McAllister. “It has been an honor to serve with such a professional team for the past three years.”
A senior Boeing executive said the reason for McAllister’s replacement was not entirely related to the MAX crisis, but a combination of a lot of negative developments that happened on his watch as the chief executive of Boeing’s commercial airplane division.
McCallister is the first Boeing executive to go as a result of the ongoing 737 MAX crisis and the failed attempt to bring back the plane to the skies within a reasonable timeframe, as well as failing to launch Boeing’s NMA and get the 777X’s flight testing program to the skies on time.
Boeing President and CEO, Dennis Muilenburg, said that the “entire Boeing team is focused on operational excellence, aligned with our values of safety, quality, and integrity, and we’re committed to delivering on our commitments and regaining trust with our regulators, customers, and other stakeholders.”
“We’re grateful to Kevin for his dedicated and tireless service to Boeing, its customers, and its communities during a challenging time, and for his commitment to support this transition,” said Muilenburg.
Dennis Muilenburg also added that Stan Deal “brings extensive operational experience at Commercial Airplanes and trusted relationships with our airline customers and industry partners.”
However, industry analysts see this as a move that might not bring the results Boeing is trying to achieve. Jon Ostrower, Editor in Chief at The Air Current, believes that “when a top exec like McAllister is fired there will be a viper pit environment where everyone is increasingly mistrustful of their colleagues to save their own jobs. This will only make the leadership crisis worse at a time when there’s a massive strategic problem to fix.”
Boeing 737 MAX Update
In today’s earnings release, there where many expected figures with clear signs of Boeing showing the hurt of having an aircraft as popular as the 737 MAX out of service for as long as it has been.
Boeing outlines cost forecasts for the 737 MAX to be back in service by the fourth quarter, yet did not go into detail on how this would be achieved on what progress has been made to support this.
The manufacturer has said that they have developed software and training updates for the MAX and will continue to work with not just the FAA but the aviation authorities around the globe to complete the remaining steps required in order for the aircraft to become recertified.
One of the major factors against Boeing however, was the recent announcement that EASA and the CAA want to conduct their own safety certification requirements on the MAX and would not simply take the word of the FAA on the progress and changes made to the plane.
Dennis Muilenburg said that Boeing’s top priority “remains the safe return to service of the 737 MAX, and we’re making steady progress.”
“We’ve also taken action to further sharpen our company’s focus on product and services safety, and we continue to deliver on customer commitments and capture new opportunities with our values of safety, quality, and integrity always at the forefront,” Muilenburg added.
Boeing has also noted said that it plans to gradually increase the 737 MAX production rate from 42 per month to 57 per month by late 2020, hoping that the plane will return to service shortly.
Dreamliner Production Slowdown, 777-X Delay
The biggest surprise outlined in today’s 3Q earnings release was Boeing’s planned reduction of the production of its 787 production line from the current 14 down to 12 planes per month starting in 2020.
Boeing claims that this adjustment needs to be made to address the current global trade environment.
The release also shows that only 62 aircraft were delivered during this quarter, which compared to the 190 planes that were handed off to customers last year, shows a dramatic 67% decrease.
In addition to the Dreamliner’s slowdown, Boeing also noted that its new 777X is “progressing through the pre-flight testing and remains on track for its first flight in early 2020.”
The manufacturer added that despite the recent setbacks and delays that the aircraft has had from the engines and decompression test issues earlier this year, it remains on track for first flight in early 2020.
However, Boeing noted that it is now targeting early 2021 for first delivery of the 777X.
Overall, these are not positive times for the North American plane manufacturer. The new appointments in leadership, together with the further delay of the Boeing 777X program, and the uncertainty surrounding the 737 MAX, might continue to cause some concern for all parties involved.