Boeing's new CEO faces an uphill battle to restore faith in the company and get the troubled 737 Max back in the air
Calhoun, 62, is a veteran industrial leader who is no stranger to crisis, so it's clear why he appealed to Boeing.
Until 2006, Calhoun was a senior executive at General Electric, where he spent 26 years. Starting just before the September 11 attacks, which roiled the airline and airplane industry, he headed up the unit that builds aircraft engines, a unit which posted $47 billion in annual sales by the end of his tenure.
In 2006, Calhoun moved to Nielsen, the media ratings firm, where he was credited with helping to rebuild the company after a private equity takeover by KKR, Blackstone, and Carlyle Group.
In 2013, Calhoun joined Blackstone Group as the head of its portfolio operations group, advising owned companies and consulting on new buys. Then, in 2017, he was named chairman of Caterpillar, the construction equipment company that was under government scrutiny over tax and export practices, according to the New York Times.
Calhoun was named to Boeing's board of directors in 2009, and became chairman in October after the rest of the board decided to strip Dennis Muilenburg of that title and split the chair and CEO roles.
Over his career, Calhoun became known as a decision-maker with an ability to execute on bold plans and strategies. He was mentored by famous GE CEO Jack Welch, and was courted by a wide range of companies by the end of his time at GE — the New York Times reported in 2006 that even Boeing had approached him over its chief executive role.
As Calhoun arrives at Boeing for his first day on the job, he there are several objectives he'll need to start working towards immediately, with other long-term goals that can't be neglected.
Under Calhoun, Boeing's top priority will be getting the 737 Max back in the air. The company's flagship narrow-body jet has been grounded since March, 2019, following the second of two fatal crashes within a five-month period.
Last week, the company temporarily halted production of the Max, causing disruptions to a vast global supply chain. One supplier, Spirit AeroSystems, said last week that it would be forced to lay off 2,800 workers due to the halt.
The grounding has cost Boeing a substantial amount. The company took a $5 billion charge last year as it planned to compensate airline customers which have been forced to recalculate expansion and route growth.
A belated decision to recommend pilots undergo simulator training before flying the Max could cost Boeing an additional $5 billion.
To get the plane flying again, Calhoun's Boeing must complete regulators' requests while shepherding the plane through the FAA's certification process. The plane-maker may also need to work separately with other nations' regulators, some of which have indicated they will not reciprocate the FAA's certification decision.
As Boeing gets the Max airworthy again, Calhoun will need to work to repair the company's frayed relationships with the FAA and Congress, which have been put out by the Max crisis itself, as well as Boeing's haphazard handling of it under Muilenburg.
Calhoun will also need to fix Boeing's relationships with angry airline customers, to convince the flying public that its planes are safe, and to rebuild trust with shareholders, after almost a year in which the company offered timing estimates and updates on the plane's return that turned out to be arbitrary.
While the Max may be the highest profile and most pressing issue, it is not the only project on which Calhoun will have to focus.
Boeing's 777X program, the next generation of wide-body jetliners, has faced numerous delays and setbacks, leading the company to push the plane's timeline back and risking further delivery delays to customers. To avoid potentially missing out on further orders or losing money to late-delivery penalties, the company must bring the plane across the finish line.
Similarly, Boeing's much rumored and discussed new midsize aircraft, or NMA, seems to be in a state of limbo as the plane-maker focuses on the Max.
As airlines across the US and globe look for a longer range narrow-body to replace the aging 757, and to bring flexibility to fleets with planes that can handle short hops with high load factors, or shorter long-haul routes like the US east coast to western Europe, Boeing will need to offer a replacement, or risk losing this sector of business.
It has already seen customers defect from the 757 to Airbus' solution, the A321XLR from rival plane-maker Airbus.
United announced in December that it had ordered 50 of the Airbus jet to replace its aging 757 fleet.
While the highest profile issues and objectives are in Boeing's commercial division, Calhoun will also have objectives to meet in the defense arm.
Following years of trouble with the KC-46 tanker, leading to the plane's effective grounding by the Air Force in 2019, and a failed test flight of its Starliner space capsule in December, there are a number of projects and divisions that need to be addressed.
Despite a decade on Boeing's board and three months as chairman, Calhoun faces a new set of challenges as chief executive that are perhaps more dire and existential than what he's managed at other companies.
Calhoun takes over as Boeing confronts an ongoing public relations nightmare stemming from the 737 Max crisis.
The recent release of messages between Boeing employees mocking regulators and describing the 737 Max as troubled and flawed was just the latest hit.
Calhoun therefore faces an uphill battle as he tries to get the plane approved to fly again, and regain a degree of consumer confidence.
He'll also have to confront and address a culture at Boeing that has been widely described as "broken," as demonstrated by the emails.
An accounting and finance-first approach at Boeing, which some have argued would be better served by an engineer-led culture, has stymied innovation and creativity and created the atmosphere that allowed the Max to be built with flaws.
A renewed emphasis on engineering, ingenuity, and safety, with leadership corroborating those values and reporting structure that facilitates idea sharing and safety, will be vital to establish.
Boeing's costs are likely to continue to mount as long as the plane remains grounded, with a costly certification process, compensation due to airlines, and further liabilities over the crashes continuing to be assessed. Managing these will be crucial for Calhoun along with the board to help stabilize Boeing's finances.
As the US' largest exporter, this is an issue of national importance.
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