Stanley Deal (Source: Boeing)
Days after Stanley Deal took the helm of Boeing
Co.’s jetliner business last month, he was winging across the globe to meet with the airline bosses most shaken by the deadly crashes that have plunged the manufacturer into crisis.
Deal spent the Oct. 29 anniversary of the first of two 737 Max crashes with Rusdi Kirana, founder of Indonesia’s Lion Air. And Deal apologized in person to Ethiopian Airlines Chief Executive Officer Tewolde GebreMariam in Addis Ababa, the site of the second disaster. The accidents killed 346 people, prompting a worldwide grounding of the Max and raising troubling questions about Boeing’s design and testing of new aircraft.
“It has been a humbling and inspiring first week at Commercial Airplanes,” Deal wrote to employees in a Nov. 1 memo seen by Bloomberg. “The past few days have also been filled with emotion and a heavy heart.”
Trying to make amends isn’t just good customer relations for Deal, a genial aerospace engineer who worked his way up the ranks at Boeing
and the rival it acquired in 1997, McDonnell Douglas Corp. His outreach will play a key role in shaping how Boeing
emerges from a long nightmare that has shaken confidence in its most important product and disrupted operations for dozens of airlines.
“Customer skills are going to be critical as Boeing works with the airlines to bring the aircraft back into service,” said aerospace consultant Kevin Michaels. Deal is the rare senior aerospace leader with “emotional intelligence,” he added.
Deal, previously known to suppliers for his efforts to handle some of their business in house at Boeing, will see his people skills put to the test. His next task is to soothe airlines and lessors dismayed at the abrupt exit of his predecessor, Kevin McAllister. He was well-regarded for his years leading sales and services at General Electric Co.’s aviation division before joining Boeing in 2017.
The new leader made his trade-expo debut as chief of Boeing’s $61 billion jetliner business on Saturday at the Dubai Airshow, fielding questions from reporters about the Max and the planned 777x wide-body, which has been hit by delays.
He struck a contrite tone, apologizing to families of crash victims and pledging to work through issues created for suppliers and customers -- including financial impacts -- by the Max’s unprecedented global flying ban, which is now entering its ninth month.
“We continue to work diligently around the changes necessary to the airplane,” Deal said. “We’re interacting daily with the FAA, but also regulators around the globe, and we continue to make progress.”
Deal has already jumped into the maelstrom around the jet. The regulatory environment is tense, with the U.S. Federal Aviation Administration under pressure for having certified the plane and members of Congress continuing to flay Boeing after tumultuous hearings last month.
The crisis has thrown the company’s product strategy into disarray while Airbus SE racks up sales in the crucial market for workhorse single-aisle jets. And if Boeing’s plight worsens -- a plausible scenario -- Deal could end up shouldering the blame like McAllister, who was ousted Oct. 22 after a tense boardroom session.
“The good news
is he’s very much the right person for the job,” said Richard Aboulafia, a consultant at Teal Group. “The problem is that if things go wrong, it could still potentially have a bad outcome, especially if folks at the top are determined to insulate themselves with another purge.”
Deal was a contender for the top post at the jetliner division in 2016 when Boeing CEO Dennis Muilenburg turned to McAllister, the first outsider to run the company’s biggest business. The fit was awkward at times for the GE veteran, who had never run an operation the size of Boeing Commercial Airplanes.
“It’s just a hard place to come into as an outsider,” said consultant Michaels, author of “Aerodynamic: Inside the High-Stakes Global Jetliner Ecosystem.”
McAllister had never sought the spotlight, and he shunned it after the crashes, breaking with precedent. Muilenburg bore the brunt of questions and criticisms, while senior engineers fielded technical queries.
Deal, in his previous job as head of Boeing Global Services, helped meld a sprawling collection of product offerings into a division with $17 billion in sales. That meant wresting high-margin sales from suppliers, which roiled longstanding relationships and helped prompt a megamerger between United Technologies Corp. and Raytheon Co.
Before that, he was a close adviser to Ray Conner, McAllister’s predecessor at Boeing Commercial Airplanes. Deal’s roles overseeing suppliers and then customer services didn’t give him a prominent role as the 737 Max was developed.
Now he’s trying to repair customer relationships shaken by the Max as Boeing faces billions of dollars in reimbursement claims from airlines and lessors. With Max-related costs at $9 billion and rising at Boeing, the planemaker can’t be overly generous to customers. But employing bare-knuckle negotiating tactics risks driving more of them to Airbus.
A key account in Dubai is Emirates, the world’s largest long-haul carrier. The airline has an unconfirmed commitment to buy 40 Boeing 787 Dreamliners, and the airline has ordered 150 of the coming 777x wide-body, which has been hit with engine-related delays. Emirates President Tim Clark has been vocal in his criticisms of failures by planemakers and engine suppliers.
Deal said Saturday that Boeing is still in talks with Emirates over the 787 order, valued at about $14 billion, and on the 777x, which is now targeted to start deliveries in early 2021.
“We’re working through those discussions,” Deal said of the re-engined wide-body. He wouldn’t comment on the potential for tightened regulatory scrutiny to drag out the larger plane’s certification in the wake of the Max crisis.
“Long term the 777X’s value remains intact,” Deal said.
Elsewhere, the chorus of complaints about Boeing is growing louder. Ed Sims, CEO of Canada’s WestJet Airlines Ltd., recently criticized Boeing’s overly optimistic estimates of when the revamped Max would be cleared to fly and its slowness in acknowledging its own lapses.
“I would grade it no higher than a B,” Sims said of Boeing’s outreach, speaking to BNN Bloomberg. “I expect A-plus service from every supplier to WestJet, just as we expect our customers to evaluate us in the same way.
Southwest Airlines Co. CEO Gary Kelly, typically loath to badmouth partners, has questioned the way Boeing treated McAllister. The pilots union for Southwest is suing Boeing for lost pay. The carrier, the largest Max customer and operator of an all-737 fleet, has said it will explore adding Airbus models -- a move also endorsed by pilots.
“Boeing will never, and should not ever, be given the benefit of the doubt again,” Jon Weaks, head of Southwest’s aviators union, wrote in a Nov. 13 letter to members.
Kirana, Lion Air’s founder, was enraged after Boeing issued a lengthy statement last year highlighting the budget carrier’s miscues flagged in a preliminary report on the 2018 crash. Lion, the third-largest Max customer, publicly threatened to scrap hundreds of orders. Kirana privately hurled expletives at Muilenburg, Bloomberg News
reported earlier this year.
Ahead of a luncheon meeting with Deal and a teary gathering with crash victims’ relatives last month, the Lion Air boss brushed off a question about whether Boeing was taking steps to compensate the carrier. It’s too early for commercial discussions, said Kirana.
Deal described the encounter in his later memo to Boeing staff: “I also appreciated our conversations about the road ahead.”
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