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Boeing Picks New CEO To 'Restore Confidence, Repair Relationships'

NOEL KING, HOST:

There are still a lot of questions about what's going to happen at Boeing after the company announced yesterday that its CEO, Dennis Muilenburg, is out. Boeing said it was necessary to restore confidence and repair relationships. Muilenburg was blamed for fumbling Boeing's response after two fatal crashes of 737 MAX jetliners that killed almost 350 people. He was also seen as moving the company away from its engineering-first philosophy in search of higher sales and bigger profits. Earlier this morning, David spoke with Richard Aboulafia. He's an aerospace analyst and vice president of Teal Group. And David started by asking him whether the firing was the right move.

RICHARD ABOULAFIA: Well, I think it's a necessary, inevitable move. You know, the situation seemed to be spiraling downward in recent weeks in terms of the company's messaging and its internal communications as well. So, you know, you can never predict the exact timing with these sorts of things. But it does seem like it was coming to a - coming to this exact point.

DAVID GREENE, HOST:

So you said some recent stuff might have been involved here. I mean, the company, of course, announced last week they're suspending production of the 737 MAX. How connected - what kind of connection do you see here to this firing? I mean, is that what led to it finally happening?

ABOULAFIA: You know, you can never really put your finger on the exact final straw, but that was certainly one of them because it wasn't revealed with any kind of, well, management expectation in terms of when it could be resumed, in terms of what the enormous supply base should be doing and, most of all, what people should be doing with their workers because Boeing said no furloughs, no layoffs, but 80% of the jobs are in the subcontractors, and they weren't given a whole lot of guidance at first. And that's key because keeping skilled workers in place is absolutely essential for when the plane resumes production, resumes flying and ramps up again.

GREENE: Before we get into Boeing and kind of where it's going to go from here, can you just help us understand the importance of this company in the economy? I mean, some analysts have been predicting that the suspension of production of the 737 MAX could cut U.S. GDP by a half a percentage point. I mean, that sounds significant.

ABOULAFIA: Yeah. You know, this is an enormous economic powerhouse, and this product in particular, the 737, which has been in production in one form or another since the 1960s, it's the country's biggest single manufactured export product. So it really is a needle mover in the economy, especially if you consider the enormous supply chain behind it, a lot of which is U.S. focused.

GREENE: Well, let's talk about going forward now. So we have David Calhoun, who is taking over in mid-January. What do you know about him, and what do you think?

ABOULAFIA: Yeah. You know, he's been on the Boeing board for about 10 years. And he has in the past expressed interest in this job. As matter of fact, when the previous CEO was striving to get it, I believe, Dave Calhoun put his hat in the ring as well. You know, he's got a background that's - it touches upon aerospace here and there - GE aircraft engines but a lot of it at GE in general, infrastructure and other units during the Jack Welch era, a lot of background in private equity, money management, that kind of thing, not really what you call core to aerospace engineering and restoring the company to, you know, what it originally was in terms of having managers who came from that aircraft background, either in terms of program management or engineering or anything like that...

GREENE: Is that a problem?

ABOULAFIA: Having said - well, you know, that gets to the big question of how long he's staying for. As a short-term stabilizer, he's a really good choice. He's deeply respected by a lot of people. He's got a great external presence. He'll be a good diplomat, which is perhaps what they need right now after the recent missteps. But in terms of somebody who changes the way the company operates and, well, gets relations between the commercial aircraft unit in Seattle and corporate headquarters in Chicago back on track, he's probably not the right choice for that.

GREENE: One of the fundamental problems that many people see as being exposed here is that regulators - a lot of the responsibility for certifying aircraft came out of the hands of regulators and were actually put in the hands of a company like Boeing. Is it up to Boeing and David Calhoun to fix that or address that problem, or does that also rest on lawmakers and others?

ABOULAFIA: Yeah. You know, so much does come down to Washington, the FAA, Congress, and I think it needs to be part of a broader conversation. We've had this mantra of deregulate, deregulate, deregulate. And, of course, in the Reagan era, that did a lot of good. But there are some cases - certainly this one comes to mind - where things might have gone a bit too far. But in order to successfully put government back in control in situations like this, resources need to be provided. And, of course, that happens at the congressional level.

GREENE: Richard Aboulafia, aerospace analyst and vice president of the consulting firm Teal Group, thanks so much for your time this morning, really appreciate it.

ABOULAFIA: My pleasure. Thanks for having me on. Transcript provided by NPR, Copyright NPR.