Boeing chief executive Dave Calhoun has defended his record at the biggest US aerospace company, insisting he has focused more on engineering and that the indebted group could launch a new plane without having to raise funds from shareholders.
Calhoun said the company has made significant progress since he took office two and a half years ago, when Boeing was reeling from the grounding of its 737 Max following two crashes.
“We all have to put two and a half years into perspective, and what we’ve done as a leadership team to get ahead of each of our big issues and no, they’re not complete,” Calhoun said in an interview.
But a series of production delays and challenges have sent shares of Boeing down 30% this year, compared to an 11% decline in those of rival Airbus.
Deliveries of its widebody 787 Dreamliner remain on hold amid quality control issues while US Federal Aviation Administration (FAA) approval of its 737 Max 10 jet raises questions. Stabilizing the production of the 737 Max jet is another major challenge.
Still, speaking to the Financial Times in London on the eve of the biennial Farnborough Air Show, Calhoun, 65, struck an optimistic tone about Boeing’s prospects.
Reflecting on his tenure since taking office in January 2020, Calhoun said, “I’m feeling pretty good right now.”
“The most difficult of our crises is to be managed effectively. It’s not done and it’s the Max. But we are still putting aircraft back into service for our customers. »
Airline demand for new planes, he added, has rebounded sharply following a pandemic that has plunged the aviation industry into its biggest crisis in decades. “We’re in full on-demand recovery mode,” he said.
Calhoun was “comfortable” that regulatory approvals to allow 787 deliveries to resume would occur, but declined to offer a specific timeline. For the 737 Max, the company focused on being able to reliably produce 31 planes per month.
Delays in the delivery of the 737 Max have drawn direct criticism of Boeing’s leadership from some of its biggest customers, including Michael O’Leary, chief executive of low-cost carrier Ryanair.
Calhoun said he takes O’Leary’s comments “very seriously, because if we deliver a new plane even one day late, it affects his business.” He stressed, however, that his team is focused on a consistent production pace, adding, “My team struggles with this every day. I love them and I know we will get there.
Nevertheless, supply chain constraints continue to disrupt the industry. Stan Deal, who is head of commercial aircraft at Boeing, pointed to engine delays and shortages of semiconductors and other parts as a key issue.
Calhoun also sought to address concerns about the group’s engineering culture, saying he had shaken up the group’s management structures and brought people closer to operational centers.
One of his first acts when he took office was to ask Greg Hyslop, Boeing’s chief engineer, to leave his Chicago office and move to Seattle, the main aircraft manufacturing base. company business.
“I emphasize distributed management, action-oriented leadership,” Calhoun said.
Hyslop told the FT: “I don’t believe we’ve ever had a cultural problem around engineering at The Boeing Company. I believe that there were necessary changes, [to] strengthen engineering and give more independence to engineering”.
One of the strategic conundrums facing Boeing is how to bridge the gap with Airbus, which has strengthened its lead in the lucrative market for single-aisle jets that serve short- and medium-haul destinations. The European aerospace group, which has nearly a 60% market share, recently secured a $37 billion order from Chinese airlines.
“I’m at 40% [of the market]”, Calhoun said. “And if the market saw me delivering stable at 40%, they would be ecstatic. I think I’ll be better than 40% if I can get back on par in China.
Analysts have said Boeing needs to launch a new plane to take on Airbus’ best-selling A321neo, with some suggesting it will need to raise equity to do so given its $45 billion net debt. Calhoun played down that any launch was imminent, saying advances in engine technology weren’t worth it yet.
“The question of when you introduce a new commercial aircraft. . . has to do with technological maturity as far as propulsion packages are concerned. . . and if they’re going to create a big enough difference that the market will then go out and place orders and I don’t think we’re at that threshold.
When the time comes, Boeing could launch a new plane without raising new capital, according to Calhoun, because the company’s engineers are already building the digital infrastructure to enable the next plane, which will reduce development time.
“It is important that those [technologies] proven and available, the most important being the digital model, the digital twin of this development. And that is in full effect,” he said.
By the time Boeing needs to spend money, Calhoun added, “the cash numbers will be significantly different and, in my view, more than that.”
“I think it will be the ability to run a digital twin on a new commercial aircraft that will allow us to reduce development time, enhance product and plant safety, and improve bottom line results,” he said. -he declares.