Boeing chair says CEO has confidence of board amid fallout over Max 737 crashes

Boeing chair Dave Calhoun said on Tuesday the company's board believes Dennis Muilenburg "has done everything right," just days after the company's chief executive came under attack from U.S. lawmakers and repeatedly refused to step down at a hearing on two fatal crashes involving Boeing 737 Max airliners.

Boeing doesn't plan to cut 737 Max production levels or rebrand it, chair says in interview

Boeing chief executive Dennis Muilenburg was grilled in Washington last week by U.S. lawmakers. The company's chair says Muilenburg is giving up his bonuses this year and will not receive one until after the Max airliner flies again. (Sarah Silbiger/Reuters)

Boeing chair Dave Calhoun said on Tuesday the company's board believes chief executive Dennis Muilenburg "has done everything right," just days after Muilenburg came under attack from U.S. lawmakers and repeatedly refused to step down at a hearing on two fatal crashes involving Boeing 737 Max airliners.

"He has our confidence," Calhoun said in a CNBC interview, adding that Muilenburg called him on Saturday and offered to give up much of his compensation for 2019. The board had stripped Muilenburg of his chair title last month.

"From the vantage point of our board, Dennis has done everything right."

Boeing did not plan to cut the production rate of the 737 Max or to rebrand it, Calhoun said.

Last week, several U.S. lawmakers urged Muilenburg to resign, pressed him on whether he would refuse compensation, and criticized him and Boeing for not being entirely candid.

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Muilenburg repeatedly said last week his focus was on seeing the Max through to returning to service and told Congress: "It's not about the money for me."

Calhoun said Muilenburg is giving up his bonuses this year and will not receive one until after the Max flies again.

In the wake of the criticism by lawmakers, Muilenburg called Calhoun on Saturday to suggest he not be awarded any bonuses for 2019 or any equity grants "until the Max in its entirety is back in the air and flying safely," which Calhoun said could be by the end of 2020 or in early 2021.

Remember, Dennis didn't create this problem.- Dave Calhoun, Boeing Co chairman

"It was a significant move on his part," Calhoun said, adding Muilenburg "always does the right thing."

In 2018, Muilenburg received $23.4 million US in total compensation.

Boeing spokesperson Gordon Johndroe confirmed the board has endorsed Muilenburg's proposal to significantly reduce his compensation.

The board is not seeking to claw back any of his prior compensation, Calhoun said.

Muilenburg faced intense grilling by U.S. lawmakers over what the company knew about its MCAS stall-prevention system linked to the two deadly crashes, and about delays in turning over internal 2016 messages that described erratic behaviour of the software in a simulator.

"Our job is to fix MCAS," Calhoun said.

Supply questions after Max returns

Calhoun said a decision on compensation for U.S airlines, like Southwest Airlines Co and American Airlines Group Inc, that cancelled thousands of flights because of grounded 737 Max planes was "way long out from now."

The two crashes, off the coast of Indonesia and in Ethiopia, prompted the grounding of Boeing's bestselling plane in March. A total of 346 people were killed, including 18 Canadian citizens.

"Something went drastically wrong, a total of 346 people died, and we have a duty to fix it," Democratic congressman Peter DeFazio said last week.

Boeing is updating flight control software at the centre of both crashes. This must be approved by regulators before the plane can fly commercially again.

The planemaker has said it aims to return the 737 Max to service by the end of 2019 after making software changes.

The board is getting daily updates on the effort to return the airplane to service, said Calhoun, who has suggested Muilenburg could remain as CEO after the 737 Max begins flying again, saying: "Remember, Dennis didn't create this problem."

Two devastating crashes, five months apart, left 346 people dead. Both Ethiopian Flight 302 and Lion Air Flight 610 went down shortly after take off. The victims' families are still looking for answers. Boeing CEO Dennis Muilenburg testified in front of two committees in Washington this week about the 737 Max. Today on Front Burner, CBC correspondent Susan Ormiston tells us what he said, and how the families responded. 23:23

Federal prosecutors aided by the FBI, the Transportation Department's inspector general and several blue-ribbon panels are investigating the 737 Max's certification.

The Max could return to service in Europe during the first quarter of 2020, the European Union Aviation Safety Agency (EASA) said on Monday.

While the European regulator expects to give its approval in January, preparations by national authorities and airlines may delay the resumption of commercial flights by up to another two months, EASA executive director Patrick Ky indicated.

"If there are training requirements [and] coordination to be done with the EU member states to make sure everyone does the same thing at the same time, this will take a bit of time," Ky said. "That's why I'm saying the first quarter of 2020."

Until now, most concern has focused on whether regulators would permit an orderly return to service by avoiding gaps in approvals by different countries.

But one analyst has warned of the risks in opening floodgates too quickly and overwhelming fragile growth in travel demand.

Rob Morris, global head of consultancy at U.K.-based Ascend by Cirium, said the combination of any rapid rebound in deliveries of the Max, economic worries and an accumulation of market pressures dating back before the crashes could make it hard to absorb the jets.

"Next year is the challenge. When the dam breaks and the Max starts to flow, there are going to be a lot of aircraft," Morris told financiers at a Hong Kong briefing.

"There could potentially be as many as 1,000 surplus aircraft next year."

The forecast is based on both a rebound in Max deliveries and a potential glut of second-hand airplanes flooding back onto the market after standing in for the Max during the grounding.

The crisis has rekindled demand for older and less efficient jets, with airlines using more than 800 planes that are more than 15 years old, compared to conditions four years ago, Morris told the Airline Economics Growth Frontiers conference on Tuesday.

Still, Morris and other delegates at back-to-back aviation finance gatherings in Hong Kong agreed it would take Boeing 18 months or longer to deliver all the stranded aircraft.

With a file from Associated Press