Boeing’s sea of troubles
The aircraft maker has aimed for short-term nancial gain in a long-term industry, and the consequences are being felt. Can the company turn itself around? Simon Wilson reports
What’s happened?
One difficulty after another is besetting Boeing, the world’s second-biggest maker of commercial aircraft, which has been hit in recent months by a succession of safety scares and damaging claims from whistleblowers. This week in the US the Federal Aviation Authority (FAA) announced a fresh investigation into Boeing’s safety culture after it confessed it may have failed to conduct legally required inspections involving the wings of some 787 Dreamliners. It’s just the latest in a series of reputational blows for the firm this year.
What else has gone wrong?
On 5 January, a section of fuselage fell off the side of a 737 Max while flying over Oregon. The aircraft made a successful emergency landing with no serious injuries. It transpired that the bolts supposed to secure a section of the aeroplane had never been fitted. The incident prompted investigations by the FAA and a criminal probe by the Department of Justice. In March 2024, a Latam-operated Boeing 787 suddenly lost altitude during a flight from Sydney to Auckland, injuring 50 passengers; separately, the landing-gear on another Boeing plane malfunctioned at Houston airport. Then, in April, a Southwest Airlines Boeing 737-800 plane lost its engine cover during take-off. All these incidents have created a crisis of confidence in Boeing, and given credence to a series of disturbing claims from whistleblowers.
What are the claims?
In April, Sam Salehpour, an engineer at the aeroplane-maker, told a Congressional hearing that there is “no safety culture” at Boeing, alleging that employees who raise the alarm are “ignored, marginalised, threatened, sidelined and worse”. He claimed he had identified safety issues affecting “more than
1,000” jets in service. Salehpour’s testimony came weeks after the death of another high-profile whistleblower, John Barnett, a Boeing veteran of 30 years before his retirement in 2017. Barnett claimed workers who were under pressure had fitted substandard parts to aircraft on the production line, concerns ignored by management. In the days before his suicide, he had been giving evidence in a whistleblower lawsuit. Last week, another whistleblower, Joshua Dean, also died, of a respiratory illness. Conspiracy theories have flourished following the deaths, compounding the reputational damage to Boeing.
Wasn’t there trouble before?
Yes. In March 2019 all Boeing 737 Max aircraft were grounded worldwide following two fatal crashes involving the Max 8 model. Investigations found that both tragedies were partly due to failings in the aircraft’s software. Following changes to the design and software, regulators worldwide (including the UK’s Civil Aviation Authority) recertified the aircraft safe to re-enter service 20 months later in November 2020. Since then there have been no similar incidents or issues with the relevant software. However, on several occasions Boeing has been forced to ground, halt production, or delay deliveries of Max series planes due to various unrelated technical problems.
Why has it all gone so wrong?
Many analysts date Boeing’s troubles to its 1997 merger with McDonnell Douglas. In the following years, says Bill Saporito in The New York Times, the corporate culture shifted from one that prized engineering excellence and safety above all to one based on cost control and putting profits ahead of perfection. The company moved its HQ twice, chopped and changed chief executives, and began to outsource far more work – cutting costs, but also hampering oversight. More recently, an “obsession with quarterly results and shareprice momentum” saw $61bn handed out in dividends and share buy-backs between 2014-2020, says Aviation Strategy’s analysts – with far too little being spent on developing new products or safeguarding quality. “Boeing began to favour shortterm financial management in a long-term industry,” says The Economist. By contrast, its rising European competitor, Airbus – the two have a virtual duopoly in the passenger jet aircraft market – “focused less on investors and more on its aircraft”.
How do the two firms compare?
Boeing’s share price has halved over the past five years, whereas Airbus’s is up 38%. Five years ago, Boeing’s market capitalisation was around two and a half times that of Airbus, but now the firms are roughly equal – with Airbus moving up. Since 2019, Boeing’s combined annual losses have totalled $24.5bn, whereas Airbus has made $10bn of profits. Boeing still leads the market with its wide-body aircraft. But the popularity of Airbus’s single-aisle offerings put the European giant far ahead overall, with a 62% share of the pair’s combined market (according to Cirium’s analysts). “The market share has shifted heavily to Airbus with the launch of the A320neo. That is not going to change,” says Aengus Kelly, chief executive of AerCap, the world’s largest aircraft-leasing company. Boeing should focus on the next generation of aeroplanes and build a “serious competitor” to rival whatever Airbus might offer, he told the Financial Times.
“Airbus did better by focusing less on investors and more on its aircraft”
What else can Boeing do?
The company says it has taken action since the January blow-out, including additional inspections, more staff training and encouraging employees to speak out about quality and safety concerns. Dave Calhoun, Boeing’s CEO, announced in March that he would step down at the end of the year; it came after the company reported a $355m loss for the first quarter of 2024. But all is not lost, says Peter Georgescu in Forbes. Boeing has deep-rooted cultural problems, but it still has a big market share, in a market where barriers to entry are steep and its customers are desperate for it to succeed, compete and innovate. With a board and new leadership determined to refocus on long-term quality and safety, there’s every chance that it can fly high again.