The Boeing CEO Exits — The Rest Of The Story

David Reavill
5 min readMar 25, 2024
Dave Calhoun, CEO of The Boeing Company.

Earlier today, Dave Calhoun, the CEO of Boeing, announced his resignation. The Financial Press is full of headlines today: the Boeing CEO is stepping down in light of the ongoing “safety crisis” at Boeing. Indeed, the adverse press surrounding Boeing Commercial Airlines might have been the final straw that forced Calhoun to leave. But there is much, much more to the Boeing story.

Calhoun is the type of manager we often see from our perch on Wall Street. Much of my research has been focused on company management. After all, the managers will determine the future course of any company and often determine whether their stock is a “buy” or a “sell.”

Calhoun falls into the general category of “bean counter.” In college, he was an accounting major. Corporations hire this sort of manager when their numbers don’t add up when the company is less profitable than the Board of Directors would like. Production companies often hire engineers when their production falters or attorneys when they fall into legal trouble.

In hindsight, it’s apparent why the Boeing board reached out to Calhoun. First, he was a known quantity, having been a Director for 11 years. More importantly, Boeing was in trouble. From 2018 until 2020, Boeing’s revenue fell by 43%. The company was bleeding, and Calhoun was just the sort of person, thought the Board, to right the ship.

In a word, that means Calhoun was brought in to cut expenses. He was a hatchet man, pure and simple. In his first year as CEO, over 40,000 pink slips were handed out to Boeing employees, most of whom worked in the Commercial Airplane Division.

Now, corporate hatchet men are never, ever the favorite. They aren’t invited to an after-work drink with the guys, and they don’t join the company bowling league. The average worker resents these executives deeply, both because they’ve often laid off a close friend and because the workers themselves feel threatened that they might be next to get a pink slip.

Consequently, hatched men are usually well paid, with ample benefits for when they leave, because that follows. After a point, most hatchet-man do leave. So, for that reason alone, it was no real surprise that Calhoun was asked to leave.

But we’re getting ahead of the story because, in addition to returning Boeing to profitability by cutting expenses, Calhoun also dramatically changed the direction of Boeing’s future — the most dramatic move in this century-old firm.

For 94 years, Boeing has called the state of Washington home. It is a major employer in the state and has built significant infrastructure there, including the world’s largest building (by volume) in Renton, Washington. Boeing is comfortable in Washington, which is not always a corporate-friendly place, and Washington is comfortable with Boeing.

That all changed in 2001 when Boeing decided to move to Chicago, Illinois. Why Chicago? Because that was the home of their largest customer, United Airlines. Being just down the road from United would give Boeing a critical advantage. Planning and service could be up close and personal. The two management teams could quickly meet and work out a proposal that Boeing might make.

The strategy worked brilliantly. United remained one of the top US Air Carriers (if not always number one), and Boeing continued to be their primary plane maker.

It was a corporate marriage made in heaven, or at least the “Friendly Skies,” until the “Hatched Man,” Dave Calhoun, came along. He decided to change all that. And it wasn’t that he wanted to abandon United; it was just that a more attractive “suitor” had come along.

Calhoun decided to move the Boeing Corporate Headquarters to Arlington, Virginia. It might seem like a strange choice until you look at the numbers and remember that Calhoun is a numbers guy.

Boeing has two major divisions: “Commercial Airplanes” and “Defense, Space, and Security.” The two other divisions, “Boeing Capital” and “Boeing Service,” are just offshoots of the central business sectors.

Even though Boeing Airplanes has the premier position in domestic airplane production, its business was becoming increasingly volatile. The Airplane Division caused nearly all of Boeing’s revenue drop in the two years up to 2020. When the COVID-19 pandemic struck, people stopped flying, and Airlines stopped buying planes.

However, for Boeing, expenses did not stop. They had those vast plants that needed to be maintained, and what’s more, they had over 45 thousand workers. It was a capital-intensive business, something Calhoun saw in an instant.

On the other hand, Boeing Defense and Space was a relatively light business model, having only one-third the number of employees that Airplane has. By 2021, Defense and Space had produced more profits for Boeing than the Airplane Division. What’s more, the Federal Government is the perfect customer. They consistently pay on time, and their budget for new Boeing products never declines.

Just like that, Calhoun decided to use the same strategy that had worked well these past 21 years: move next to your best customer. And so Calhoun made the decision: Washington, here we come!

For Boeing, Dave Calhoun played a good management role. He went from the perfect hatchet man cutting expenses to the strategic marketing man by locating next to their chief customer. For Boeing, the numbers all added up.

But for America, how do those numbers add up?

Unfortunately, here, the ledger isn’t so optimistic.

The workers who lost their jobs lived in turmoil. Many, perhaps most, have yet to return to their old jobs. It placed tremendous stress on the families involved, who lost both income and benefits. In many respects, the working class, blue-collar people have suffered the most from Boeing’s corporate transitions.

Boeing’s future portends a less comfortable experience for America’s Airline Travelers. At the same time, it’s undoubtedly true that the headline-making Boeing accidents are just that — accidents and no one’s fault.

However, it should also be appreciated that Boeing, our number one commercial airplane maker, has changed its focus. Defense and Space will become its number one priority, a change that will likely result in a longer R&D cycle for commercial aircraft.

But most importantly, Boeing’s new number one customer will likely call the shots. When Washington calls, all other phones will be dropped. Washington, the new “Mr. Big,” will demand attention. In the past, we only achieved this kind of Government-Industry association during Wartime. We’re now reaching the point where it’s an everyday occurrence — the fulfillment of President Eisenhower’s Military-Industrial Complex.

It’s a future in which Boeing’s military side continues to grow and grow, leaving the civilian side behind.

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David Reavill

David Reavill writer + finance +iconoclast + hiker + Pennsylvania #valueside daily podcast + medium + meditate valueside.com/links