Category: Company News

DETROIT — Stellantis Chief Executive Carlos Tavares has unexpectedly resigned amid a “growing divergence of views” between senior management and the board, the company said Sunday.

The world’s fourth-largest automaker said the board accepted Tavares’ resignation on Sunday. His departure is effective immediately.

The Jeep maker Stellantis said the process of appointing a new CEO is “progressing well” and expects to complete the search in the first half of next year. Until then, the company said it will form a new interim executive committee led by Chairman John Elkann.

“Stellantis’ success since its inception has been rooted in a perfect alignment between shareholders, the board and the CEO,” Stellantis senior independent director Henri de Castries said in a press release. “However, divergent views have emerged in recent weeks, leading the board and the CEO to make today’s decision.”

A Stellantis spokesman declined to disclose any additional information about the resignation.

Tavares’ resignation comes less than two months after the company announced he would retire when his contract expires in early 2026. At the time, Stellantis said it planned to name a successor by the fourth quarter of next year.

Tavares has led Stellantis since Fiat Chrysler Automobiles NV merged with PSA Peugeot Citroën in 2021, having served as chairman of PSA Peugeot Citroën’s board since 2014.

The veteran auto industry veteran, a protégé of former Nissan executive Carlos Ghosn, has been widely credited in recent years for spearheading mergers and turning Stellantis into one of the world’s most profitable automakers.

But this year, the company’s financial results have severely missed expectations, citing mismanagement of the U.S. market (its main source of cash), a lack of investment in new or updated products, historically high prices and extreme cost-cutting measures.

The company, which also owns the Dodge, Fiat, Chrysler and Peugeot brands, cut its annual guidance in September, just a month after reporting a 27% drop in third-quarter net income.

Stellantis has also struggled with sales this year. Most recently, the company reported that global auto sales fell about 20% year-over-year in the third quarter. U.S. auto sales continued a year of free fall, despite Tavares’ attempts to correct what he called “arrogance.”

The company’s U.S.-traded shares will fall about 43% in 2024.

Tavares has made cost-cutting a key priority at Stellantis, including reporting that the combined company cut 8.4 billion euros ($9 billion) in costs.

The cost-saving measures include reshaping the company’s supply chain and operations, reducing the number of employees in the United States and adding jobs in low-cost countries such as Brazil and Mexico.

Several current and former Stellantis executives previously told CNBC that the layoffs were too harsh and caused problems in the United States. The executives requested anonymity due to concerns about possible repercussions.

Tavares refuted the claim that the company’s massive cost-cutting initiatives have caused problems.

“When you fail to deliver for any reason … you might be tempted to find a scapegoat. Budget cuts are an easy way to do that. That’s wrong,” Tavares said in July.

Stellantis has cut its workforce by 15.5%, or about 47,500 people, between December 2019 and the end of 2023, according to public filings. The company has cut thousands of jobs at its plants in the U.S. and Italy this year, sparking the ire of unions in both countries.

The United Auto Workers has been calling for Tavares’ ouster for months as its members face layoffs and production cuts. Stellantis’ U.S. dealer network has also turned against Tavares because of excess inventory and the company’s lack of financial support to sell cars.
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Delta Air Lines CEO Ed Bastien said Wednesday that a massive IT outage earlier this month that stranded thousands of customers will cost the airline $500 million.

The figure includes not only lost revenue but also “tens of millions of dollars in compensation and hotel costs per day” over five days, Bastien said. The figure is roughly in line with analyst estimates. Delta did not disclose how many refund and reimbursement requests it processed, but a spokesman said it was in the “thousands.”

Microsoft canceled more than 5,000 flights as of July 25, more than it did in all of 2019. The outage was caused by a failed CrowdStrike software update that took thousands of Microsoft systems offline worldwide. Bastien said the company had to manually reset 40,000 servers.

After the outage, Delta’s platform for matching crews with aircraft was unable to keep up with the changes, leading to further outages.

The issue is similar to Southwest Airlines’ 2022 year-end holiday season, when severe weather caused flight disruptions and passengers suffered losses. Delta’s incident shows how problems with just one of the many technology platforms airlines rely on can cause massive disruptions.

Other airlines recovered more quickly from the CrowdStrike problem, while Delta’s cascading outages and customer reactions prompted an investigation by the U.S. Department of Transportation. The crisis is rare for a carrier that prides itself on being a premium airline that ranks among the best in the U.S. for profitability and punctuality.

Bastien, who flew from Paris last week, told CNBC’s “Squawk Box” on Wednesday that the airline will seek compensation for the flight disruptions, adding, “We don’t have a choice.”

“If you’re going to get access to the technology, priority access to the Delta ecosystem, you have to test these things. You can’t be in the middle of a 24/7 mission-critical operation telling us we have a vulnerability,” Bastien said.

Bastien added that CrowdStrike has so far not offered to help Delta financially, only to provide free consulting advice to help them deal with the aftermath of the outage. A CrowdStrike spokesperson said in an emailed statement that the company was “not aware of the litigation and therefore has no further comment.” Microsoft did not immediately respond to a request for comment.

Delta has hired David Boies, a prominent attorney known for representing the U.S. government in a landmark antitrust case against Microsoft, to pursue claims against CrowdStrike and Microsoft, CNBC reported earlier this week.

“We have to protect our shareholders. We have to protect our customers, our employees, because the damage is not just the cost, it’s the brand and the reputation,” Bastien said.
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