Wires

UPDATE 3-Boeing ousts senior executive as 737 MAX crisis grows

Eric M. Johnson and David Shepardson

(Adds details on Deal, McAllister, PIX available)

SEATTLE/WASHINGTON, Oct 22 (Reuters) - Boeing Co on Tuesday ousted the top executive of its commercial airplanes division, Kevin McAllister, marking the first high-level departure since two fatal crashes of its 737 MAX jets.

The company said it named veteran Boeing executive Stan Deal to succeed McAllister effective immediately as president and chief executive of Boeing Commercial Airplanes (BCA). Deal had led Boeing's Global Services division.

The world's largest planemaker faces a growing crisis over the eight-month safety ban of its previously best-selling flagship single-aisle jet prompted by crashes in Indonesia and Ethiopia that killed 346 people.

Tuesday's announcement, a day before the company was due to report quarterly financial results, shocked some Boeing employees, with one insider calling McAllister a "scapegoat" and pointing out that he came to the helm of BCA later in the 737 MAX development.

It ends a relatively unusual experiment at Boeing of handing an outsider a prominent position, and places the crucial commercial airplanes division in the hands of a long-serving Boeing insider who has formed relationships with some important customers, such as Singapore Airlines.

McAllister, a regular figure at industry conclaves, had formed deep relationships with key airline customers forged during his previous position selling services for General Electric Co.

McAllister was also credited in part with boosting Boeing sales in tandem with sales chief Ihssane Mounir. The sales momentum slowed significantly when the MAX was grounded worldwide in March.

McAllister could not be reached for comment.

MAJOR CHALLENGES AHEAD

One person familiar with the matter said McAllister's departure had been described to staff as a "separation," a clear indication that he had been fired.

Another person said Boeing had asked McAllister to leave, giving no explanation other than saying it was the right move at the right time for the company's leadership. He added that the decision was not purely related to the MAX.

Deal joined Boeing in 1986 and in 2017 was tabbed to lead the company's new Boeing Global Services unit, which sells analytics, parts and training services for airline customers.

Deal's major challenge is to get the MAX back into service across the world while simultaneously handling deliveries of new aircraft and boosting production of the money-making single-aisles. That is seen as one of the most formidable logistical challenges in the industry's history.

Beyond that, Deal will have to make decisions about a potential new mid-market jetliner code named NMA, which has been eclipsed by the MAX crisis.

The management change was announced after Boeing's board met in San Antonio.

Earlier on Tuesday, Federal Aviation Administration Administrator Steve Dickson said Boeing was making progress toward winning approval to resume flights, but would need "several weeks" before a key certification test flight can take place.

Next week, Boeing Chief Executive Dennis Muilenburg, who was stripped of his title as chairman by the board this month, will testify before Congress for two days.

"We're committed to delivering on our commitments and regaining trust with our regulators, customers and other stakeholders," Muilenburg said.

A deliberate decision was made soon after the MAX crashes to make Muilenburg the public face of the company during the crisis, sources said, although he has faced criticism for what some in the industry have characterized as a wooden and lawyer-driven response to concerns raised from the crashes.

Senior industry officials said that McAllister's departure leaves Muilenburg squarely in the firing line in the event of any further unexpected revelations or if the company fails to recover from one of its worst-ever crises.

New Chairman David Calhoun said the board backed the decisions. "Boeing will emerge stronger than ever from its current challenges and the changes we're making throughout Boeing will benefit the flying public well into the future," he said in a statement. (Reporting by David Shepardson in Washington and Eric M. Johnson in Seattle and Tim Hepher in Paris; Editing by Peter Cooney and Bill Berkrot)