Boeing boss struggles to keep shareholders on board

Boeing chief executive Dennis Muilenburg tried to bolster shareholder confidence in the company on Monday in his first general meeting since two fatal crashes of the 737 Max triggered the jet's grounding, lawsuits and investigations.

Battling the biggest crisis of his tenure, Mr Muilenburg said the company was making steady progress towards getting approval for new software as questions linger over the safety of its fastest-selling airplane.

One-third of Boeing shareholders voted for a boardroom shake-up over the crisis with the 737 Max aircraft, falling short of the majority needed to oust the head of the board’s audit committee and strip Dennis Muilenburg of his joint role as chairman and chief executive.

Earlier this month, the influential shareholder adviser Institutional Shareholder Services told its clients that Mr Muilenburg should be stripped of his dual role. It recommended the appointment of an independent chairman to help the aerospace group rebuild its reputation.

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Glass Lewis, a rival shareholder advisory service, recommended the removal of the board’s audit committee head Lawrence Kellner for failing to foresee safety risks with the 737 Max aircraft.

But shareholders voted by a margin of 66 per cent against separating the chairman and chief executive roles. Some shareholders voiced concern about how Boeing is dealing with the Max crisis.

Unreliable

At the company’s annual general meeting, one shareholder told Mr Muilenburg: “You don’t have to have 300 people die every time to find out that something is unreliable.” The Boeing chief replied that it is “simply not true” that the company rushed the Max to market.

The annual general meeting of the world's largest commercial aircraft maker took place in Chicago on Monday, as family and friends of one victim of the crash of Ethiopian Airlines flight 302 held a protest outside calling for the criminal prosecution of the company and its executives.

Friends and family of victim Samya Stumo, grandniece of consumer activist Ralph Nader, held placards saying "Prosecute Boeing and Executives for Manslaughter".

Mr Nader himself wrote a letter to the board of Boeing on the eve of the meeting, calling on them to observe a minute’s silence for the 346 people who died in two 737 Max crashes in Indonesia and Ethiopia in the last six months. “Shareholders and the travelling public deserve to know what you knew about the 737 Max design, from the beginning, and when you knew it,” he wrote.

The Ethiopian Airlines crash, which killed all 157 people on board when it plunged to the ground shortly after takeoff, came five months after a similar Lion Air craft nosedive that killed all 189 passengers and crew.

‘Great investment’

Daniel Johnson, a Boeing shareholder on and off since 1984, said it had been "a great investment, better than anything else". But Mr Johnson, who is an engineer, said Boeing "really stubbed their toe" by allowing MCAS to rely on only one sensor. "The question is, will they need to rebrand. We don't know how much the general public actually knows what a 737 Max is."

Boeing is under pressure to deliver a software fix to prevent erroneous data triggering an anti-stall system called MCAS and a new pilot training package that will convince global regulators, and the flying public, that the aircraft is safe.

Mr Muilenburg told the AGM that the company made 146 737 Max flights totalling roughly 246 hours of air time with the updated software, which is due to be submitted shortly to the Federal Aviation Administration for approval.

Boeing observed a moment of silence for the victims during the meeting.

“When it comes to safety there are not competing priorities,” Mr Muilenburg told shareholders.

Shares in the company, worth $214 billion, have lost nearly 10 per cent of their value since the March 10th crash. – Reuters/Financial Times service 2019