Boeing (BA) is unlikely to reinstate its dividend any time soon as cash flow remains negative, while the CEO received a vote of confidence before a shareholders’ meeting that could oust the key members. Boeing’s stock has fallen.
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CEO David Calhoun said on Tuesday that the company does not intend to bring back the Boeing share dividend in the short term, adding that cash flow will have to become positive again in the near to medium-term future.
Earlier Tuesday, the board extended the standard retirement age of 70 for 65 years for its CEO.
Calhoun, 64, has been president and CEO since January 13, 2020, taking over the reins after the crash of 737 Max and managing the aviation giant during the pandemic.
“Under Dave’s strong leadership, Boeing has effectively climbed one of the most challenging and complex periods in its long history,” said chairman Larry Kellner.
Calhoun’s mandatory retirement age now extends to April 1, 2028, but there is no fixed term for his service.
Boeing has also announced that CFO Greg Smith will retire with effect from July 9. He was appointed chief financial officer in 2011 and was briefed as interim chief executive before Calhoun took over.
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Boeing Stock Board Meeting
Shares fell 4.6% on the stock market today to 233.03. Boeing shares posted a retro sell signal after breaking a 244.18 entry last month and then relinquishing all its profits and falling back to the buying point. Top provider Spirit AeroSystems (SPR) decreased by 4.2%, and the engine supplier General Electric (GE) lost 3.7%.
The management movements come when Boeing holds its annual meeting on Tuesday, where a potential battle in the board could erupt.
Authorized advisory firm Glass Lewis recommends that shareholders vote against Chairman Kellner and Edmund Giambastiani, citing prior advice from the board’s audit committee, which oversees the major risks. Another authorized firm, Institutional Shareholder Services, supported Boeing’s lead.
The vote is seen as a referendum on whether the board has insisted on enough changes in the business culture since the two 737 Max accidents.
Problems with the automatic flight control software of the Maneuvering Characteristics Augmentation System contributed to the Ethiopian air crash in March 2019 as well as the Lion Air crash in October 2018. Along with the two crashes, 346 people were killed.
But investigations into the causes of the accidents have also pointed to a culture of putting profits above safety.
Boeing 737 Max Order
Meanwhile, Dubai Aerospace Enterprise has announced an order for 15,737 Max jets. The deal, valued at $ 1.8 billion, is the first direct order by the leasing company for Boeing 737 Max aircraft. It bought about 737 Max’s from airlines, which then released it to the carrier.
“We are confident in the success of these aircraft as domestic and local air travel are showing strong signs of recovery,” CEO Firoz Tarapore said in a statement.
The order comes after Boeing admitted last week that a possible electrical problem on the 737 Max affects more aircraft than previously thought, after airlines took dozens of aircraft out of service.
Airlines have increased aircraft orders over the past few months when the 737 Max returns to service.
In December, Ireland’s Ryanair announced an order for 75 Boeing 737 Max aircraft, the largest order since the aircraft was launched in 2019. Alaskan Airlines (ALK) followed with an agreement to buy another 237,737 Max-rays, the largest U.S. order for the aircraft since its inception.
At the end of March, Southwest Airlines (LUV) said it would add 100 orders for the Boeing 737 Max 7 to an existing order. On March 12, Boeing also confirmed an agreement with investment firm 777 Partners, which will buy 24,737 Max aircraft with options for another 60 aircraft. United Airlines (UAL) announced in February that it would buy 25,737 Max aircraft.
Follow Gillian Rich Twitter for aviation news and more.
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