The resignation of embattled Boeing (BA) CEO Dennis Muilenburg is a “first step” toward the company restoring focus on safety and innovation after two deadly crashes, the father of a 24-year-old Ethiopian Airlines crash victim said on Monday.
“The next step is for several Board members who are underperforming or underqualified to resign in favor of a newly-configured excellence at the top level of the company and on the Board,” Michael Stumo, father of Samya Rose Stumo, said in a statement emailed to Yahoo Finance.
WASHINGTON, DC - JUNE 19: Michael Stumo and his wife Nadia Milleron, parents of Samya Rose Stumo, who was killed when Ethiopian Airlines Flight ET302 crashed, listen to testimony during a House Transportation and Infrastructure Committee hearing on Capitol Hill June 19, 2019 in Washington, DC. The committee heard testimony from officials in the airline industry regarding the status of the grounded Boeing 737 MAX. (Photo by Mark Wilson/Getty Images)
Asked which board members need to resign, Stumo’s attorney, Bob Clifford, who is also representing 66 other families of Ethiopian Airlines Flight 302 crash victims, told Yahoo Finance he was not prepared to disclose the names of specific directors.
On Monday morning, Boeing announced that Muilenburg, who has overseen the company’s attempt to get its 737 Max model recertified for commercial service after two fatal crashes, would immediately relinquish his role as CEO, president, and board director. Board chairman, David Calhoun, a member of the board since 2009, who currently serves as chairman, will begin as CEO and president effective Jan. 13. Calhoun took over the chairman’s position in October, after Muilenburg was stripped of the position.
‘Boeing knew ... what caused the first crash’
Shortly after takeoff from Jakarta, Indonesia, on Oct. 29, 2018, Lion Air Flight 610 crashed into the Java Sea. Less than five months later, Ethiopian Airlines Flight 302 crashed shortly after takeoff from Addis Ababa, Ethiopia, on March 10. In total, the two crashes killed all 346 passengers and crew on board.
Credit: David Foster/Yahoo Finance
Clifford said Boeing’s board had been complicit in decisions made immediately after the October 2018 Lion Air crash. Had Boeing disclosed to authorities what it knew about the cause of the first crash, he said, the second crash may have been avoided.
“The board taking this action just exemplifies to me the fact that the board always has the right and the ability to take action, and they failed,” Clifford said. “We know now from everything that has come out of Washington and elsewhere, and including our own discovery, that Boeing knew within hours, days, at a minimum, what caused the first crash.”
Max planes were not grounded by the FAA until March 13, several days after the Ethiopian Airlines crash, and after global regulators took more decisive action to ground the aircraft. The decision has been blamed on Boeing’s failure to communicate to the FAA and to pilots what it knew about the design and functionality of an automated stall prevention system, MCAS (Maneuvering Characteristics Augmentation System), that was omitted from pilot aircraft manuals and overrode the pilots’ efforts to keep the planes’ noses from pointing down.
In October of 2019, Muilenburg testified before the House Transportation Committee, telling Congress that prior to the second crash, he knew about a 2016 text message exchange between the company’s then chief technical 737 Max pilot and another Boeing employee that raised concerns about the safety of the MCAS flight system. In the exchange, pilot Mark Forkner wrote, “So I basically lied to the regulators (unknowingly).”
WASHINGTON, DC - OCTOBER 30: Dennis Muilenburg, then president and CEO of the Boeing Company, testifies before the House Transportation and Infrastructure Committee October 30, 2019 on Capitol Hill in Washington, DC. The committee held a hearing on “The Boeing 737 MAX: Examining the Design, Development, and Marketing of the Aircraft.” (Photo by Alex Wong/Getty Images)
That exchange became a key focus of Muilenburg’s testimony.
"I was involved in the document collection process, but I relied on my team to get the documents to the appropriate authorities," Muilenburg said during the October hearing. "I didn't get the details of the conversation until recently."
Asked for his opinion as to whether Calhoun is an adequate replacement for Muilenburg as CEO, Clifford described Boeing’s board response to the crashes as passive and, said, “That remains to be seen.”
“This firing should lead to a full review of the composition of the board, and where you don't have simply politicians, or celebrities, running the company at the board level,” Clifford said.
In response to Clifford’s claim that Boeing was aware of the cause of the Lion Air crash, within days, Boeing declined to comment directly. In a statement to Yahoo Finance a company spokesperson said, “We are truly sorry and we continue to offer our deepest sympathies to the families and friends who lost loved ones in the accidents of Lion Air Flight 610 and Ethiopian Airlines Flight 302. The safety of passengers and crews flying on our aircraft is our absolute priority. We know we have a deep responsibility to everyone who flies on our airplanes to ensure that the 737 MAX is one of the safest aircraft ever to fly.”
Trading of Boeing stock was halted ahead of the announcement of Muilenburg’s resignation on Monday. Once it resumed, the stock was up 3.4% just after 9:30 a.m., and up approximately 3% at Monday’s close.
"That was not surprising. It was the right thing for Boeing to do,” said FAA human performance scientist Alan Diehl, of the CEO’s departure. “Obviously public confidence in the modified MAX is critical.”
A longtime critic of Muilenburg, Rep. Jesus Garcia (D-IL), told Yahoo Finance’s On The Move on Monday, “I called for Mr. Muilenburg's resignation when he testified before the Transportation and Infrastructure Committee in October. It was clear then as it is now that there is a culture of negligence, incompetence or corruption, and it started at the top.”
Asked if Boeing’s board of directors should also be held accountable, Garcia told Yahoo Finance’s Adam Shapiro, “To a degree, the announcement is a decision made by the board, but let us be clear that the CEO and the chair play key roles in leadership. And in the testimony we heard, he played an integral role.”
In addition to Calhoun, Boeing’s current board members include Former U.S. Permanent Representative to the United Nations; Nikki R. Haley; President of Emerald Creek Group and Former Chairman and CEO of Continental Airlines, Lawrence W. Kellner; Chairman and CEO, Amgen, Robert A. Bradway; Seventh Vice Chairman of the U.S. Joint Chiefs of Staff and Former NATO Supreme Allied Commander Transformation, Admiral Edmund P. Giambastiani Jr.; Former Chairman and CEO, Medtronic, Arthur D. Collins Jr.; Chairman, President and CEO of Duke Energy Corporation, Lynn J. Good; Former U.S. Ambassador to Japan, Caroline B. Kennedy; Former Chairman and CEO of Allstate, Edward M. Liddy; 31st Chief of Naval Operations Admiral John M. Richardson; Executive Advisor to The Blackstone Group, Mike S. Zafirovski; Former Chairman and CEO of Aetna; Ronald A. Williams, University of Maryland School of Public Policy and Former U.S. Trade Representative, Susan C. Schwab.
Alexis Keenan is a reporter for Yahoo Finance. Follow her on Twitter @alexiskweed.
