Boeing raises retirement age for CEO Calhoun by 5 years, CFO to retire
- Boeing raised the company's mandatory retirement age from 65 to 70 for its current CEO
- Dave Calhoun, a former GE executive and longtime Boeing board member turned 64 on Sunday.
- The CEO took the helm as Boeing was dealing with the fallout of two 737 Max crashes and the start of the coronavirus pandemic.
Boeing on Tuesday said it is raising the mandatory retirement age of 64-year-old CEO Dave Calhoun from 65 to 70 as the company continues face challenges from the coronavirus pandemic, production issues and the aftermath of two crashes of its bestselling plane.
Boeing's CFO, Greg Smith, will retire in July, the manufacturer said, a move that surprised some analysts, who had considered him a potential successor to Calhoun. The company said it is conducting a search for his replacement.
Smith who has been in the CFO role since 2011 and has about three decades of experience at Boeing leaves a void at the manufacturer. Smith has been at Boeing most recently since 2008, and over the past two years helped the company raise debt to weather the Max and coronavirus pandemic crises, including a record $25 billion debt sale last year.
"The retirement is a loss for BA, in our view, with big shoes to fill for the potential successor," wrote Jefferies aerospace analyst Sheila Kahyaoglu in a note.
Cowen analyst Cai von Rumohr wrote: "Because Mr. Smith is highly regarded, investors will be sensitive to the timing and choice of a new CFO."
Boeing shares fell more than 4.1% to end Tuesday at $234.06. Shareholders voted to re-elect the company's 10 board members, according to preliminary results.
Calhoun, who joined Boeing's board in 2009, became CEO in January 2020 following a three-month stint as chairman. At the time, the company was reeling from the financial and reputational fallout from two crashes of its 737 Max planes within five months of one another. The board ousted the previous CEO over his handling of the crisis.
He told an annual shareholder meeting on Tuesday that the company will begin to stabilize financially as air travel recovers from the pandemic slump.
The pandemic began shortly after Calhoun took the top job, hurting demand for air travel and new planes. Boeing's losses ballooned to $11.9 billion last year from $636 million in 2019. Boeing reports quarterly results before the market opens on April 28.
But since regulators began clearing the Max for commercial service again in November, sales have started to recover. Boeing has scored new Max orders from big customers like United Airlines and Southwest Airlines this year.
Chairman Larry Kellner said the board's decision was based on "the substantial progress Boeing has made under Dave's leadership, as well as the continuity necessary to thrive in our long-cycle industry."
Calhoun said at an annual shareholder meeting on Tuesday that the company's priority is reducing its total debt, which stood at close to $65 billion as of the end of last year.
He also said Boeing aims to pay dividends again, a practice it suspended at the height of the pandemic last year, but he said that couldn't happen until the aviation industry recovers.