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Boeing's Management Shuffle: The Early Reaction

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Boeing's Management Shuffle: The Early Reaction

Shares of Boeing Co (NYSE: BA) gained more than 2% Monday morning after the airplane manufacturer announced CEO Dennis Muilenburg's immediate resignation.  

Boeing CFO Greg Smith will serve as interim CEO through Jan. 13, at which point Boeing Chairman David Calhoun will take over as CEO.

Boeing's Smith Speaks With FAA

Boeing will "operate with a renewed commitment" to transparency, including proactive communication with the U.S. Federal Aviation Administration and other global regulators, the company said in a press release.

CNBC's Phil LeBeau reported within hours of the Boeing transition announcement that Calhoun had already spoken with FAA Administrator Steve Dickson.

Calhoun said he welcomes rigorous oversight, LeBeau reported. 

In contrast, the relationship between the FAA and Muilenburg was "frosty in the beginning and pretty much non-existent towards the end," LeBeau said.

Smith sent a major signal to the market that he wants to work with the FAA to resolve all outstanding problems the right way and immediately.

The era of "fighting" between Boeing and the FAA will now be replaced with cooperation to ensure a smooth return of the 737 Max to the air, LeBeau said.

Cramer Says Someone Had To Be Held Accountable

Two fatal plane crashes occurred during Muilenburg's time as CEO and "someone has to pay the price," CNBC's Jim Cramer said on "Squawk on the Street."

Muilenburg's first day of testimony in front of the U.S. Congress was a "disaster" and "no one wanted to deal with him," the CNBC host said. 

Under Calhoun's leadership, the process of recertifying the grounded 737 Max will likely happen under an accelerated timeline, Cramer said. Muilenburg was simply not the go-to person to "get to the promised land," he said. 

Is Calhoun The Right Pick?

Calhoun's background relates more to "big industrial experience," so it is possible the "engineering precision isn't quite as tight as it should be" at Boeing, Jefferies analyst Sheila Kahyaoglu said on CNBC's "Squawk Alley" segment Monday. 

Calhoun's appointment likely signals an end to Boeing's communication to the public of a revised timeline of return to service for the 737 Max, the analyst said. 

Calhoun brings the right combination of industry experience and company experience, Kahyaoglu said: he has been a board member for around a decade and is "fairly close" to the 737 Max's history.

Boeing shares were trading 2.7% higher at $336.88 at the time of publication Monday. 

Related Links:

Bank Of America Cuts Boeing Price Target, Expects 737 Max To Fly Again No Sooner Than May

How The Dow Jones Industrial Average Changed Over The Past Decade

Posted-In: 737 MAX CNBC David Calhoun Dennis MuilenburgAnalyst Color News Management Media Best of Benzinga

 

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