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Former Boeing CEO to receive $90 million after 737 MAX issues

Dennis Muilenburg has left Boeing with an impressive severance package despite failing to get the company’s best-selling plane back in the air.

Boeing CEO Dennis Muilenburg will walk away from the aerospace and manufacturing company with a $US62.2 million ($A90 million) package.

Mr Muilenburg was ousted from the company after the botched response to two crashes and the grounding of the company’s best-selling plane, the 737 MAX Jetliner.

The ex-CEO, who spent more than 30 years at the company, will not receive any additional severance or a 2019 bonus.

Former Boeing CEO to receive $90 million after 737 MAX issues

DennisMuilenburg became CEO of Boeing in 2015 after starting as an intern. Picture: Mandel Ngan / AFPSource:AFP

While Mr Muilenburg will forfeit stock awards worth $14.6 million, he does have unexercised stock options worth more than $A26.80 million that he has held since 2013.

Boeing board chairman David Calhoun will take over as CEO and has a reputation for being a turnaround specialist.
The former General Electric and Nielsen executive will receive a base salary of $US1.4 million ($A2 million) but potentially will earn more in bonuses, including a $US7 million ($A10.1 million) if he gets the MAX back in service.

David Calhoun said the company needed to ‘restore confidence’. Picture: Toru Yamanaka / AFPSource:AFP

MAX PROBLEMS

Mr Muilenburg’s problems began in October 2018 when Lion Air Flight 610 crashed shortly after takeoff from Jakarta, Indonesia, killing 189 people.

This was followed by the crash of Ethiopian Airlines Flight 302 that killed 157 people in March last year.

Following the second crash, the Federal Aviation Administration ordered all Boeing 737 MAX planes flown by US carriers to be grounded.

“We’re going to be ordering an emergency order to ground all 737 MAX 8 and the 737 MAX 9 and planes associated with that line,” US President Donald Trump announced at the White House.

This month, Boeing will halt production until it is clear what changes need to be made to the 737 MAX line.

Hundreds of 737 MAXs across America have been grounded. Picture: Mark Ralston / AFPSource:AFP

Mr Muilenburg technically resigned back in December, but a statement by Boeing made it clear that he was forced out.

“The board of directors decided that a change in leadership was necessary to restore confidence in the company moving forward as it works to repair relationships with regulators, customers and all other stakeholders,” Boeing said in its statement.

An industry insider said the decision was inevitable following the 737 production halt and was topped off by an embarrassing space launch failure.

The grounding of the 737 was the biggest crisis of Mr Muilenburg’s CEO tenure, and last July the company reported its worst second-quarter loss of $US2.9 billion.

FLOW-ON EFFECT

It is now feared that the 737 MAX crisis could curb US economic growth in 202 by half a point.

Treasury secretary Steven Mnuchin said there was no question the Boeing situation would slow down GDP numbers.

“Boeing is one of the largest exporters, and with the 737 MAX, I think that could impact GDP as much as 50 basis points this year,” Mr Mnuchin told Fox News.

The fleet’s grounding has already led to lay-offs in Boeing’s supply chain as it takes cash away from companies that make parts for the planes.

The fleet’s grounding has had major economic repercussions. Picture: Jason Redmond / AFPSource:AFP

One such company, Spirit Aerosystems, which makes fuselages for the MAX, let go of 2800 employees and warned more could be on the way.

Boeing has said it has no plays to lay off workers and released a plan to reassign 3000 of its 737 workers to other parts of the company.

The fallout has cost the airline more than $US1 billion ($A1.4 billion) and has cut more than $US50 billion from the company’s market value.

Mr Mnuchin said the United States had readjusted its economic growth numbers due to the Boeing crisis.

“For this year, we’ve been looking at 2.5 to 3 per cent, as I said. It may be closer to 2.5 because of the adjustment of the Boeing numbers, but this would have been 3 per cent otherwise,” he said.

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