Air Executives Are Tired of Boeing's Mistakes
“This is the kind of the straw that broke the camel's back.”
By Eric Gardner, More Perfect Union
Boeing is grappling with intensifying scrutiny from regulators and airline executives following a spate of quality crises, most recently a door detaching mid-flight during a January 5 Alaska Airlines flight.
The FAA immediately grounded 177 Boeing MAX 9 aircraft, forcing Alaska to cut its routes by 20 percent and costing the company $150 million in lost income. An extensive government-led safety audit followed. “I am angry,” Alaska Airlines CEO Ben Minicucci said in an interview with NBC News. “It happened to our guests and happened to our people. My demand on Boeing is: What are they going to do to improve their quality programs in-house?”
United Airlines CEO Scott Kirby was more systemic in his analysis, pointing to decades-old corporate consolidation as the culprit. “My own assessment is this goes all the way back to the McDonnell Douglas merger. It started a change in culture,” Kirby told CNBC this week.
In 1997, Boeing acquired McDonnell Douglas. At the time, Boeing was a cutting-edge manufacturer known for safe and steady investor payouts with pristine engineering and quality standards. McDonnell Douglas was considered an also-ran—a second-tier competitor that focused mostly on generating cash to pay investors.
McDonnell Douglas's investor-focused approach, however, dominated the new post-merger Boeing, overshadowing the company’s engineering ethos. The cultural changes at Boeing have been well documented, but Peter Robinson, a reporter at Bloomberg and author of Flying Blind: The 737 Max Tragedy and the Fall of Boeing, summed them up in a recent podcast appearance: “It was very much raising the stock price, buybacks. Not as much investing for the future.”
During the five-year development of the MAX, which was supposed to be Boeing’s future, management spent nearly $40 billion buying back their stock while reportedly rejecting engineers’ safety suggestions over budgetary concerns.
The quality and safety issues first surfaced in 2018 and 2019, when a faulty sensor caused Boeing’s flight control system to malfunction, ultimately resulting in two deadly crashes that killed 346 people. Initially, Boeing management blamed the pilots, but subsequent Congressional investigations criticized Boeing management’s penchant for cutting costs and misleading regulators. Boeing eventually took full responsibility for the crashes, as part of a legal settlement with victims’ families to avoid punitive damages.
In the aftermath, Congress passed new quality certification standards across the industry, delaying the production of new planes. Last October, Delta Airlines CEO Ed Bastian highlighted Boeing's failure to meet new FAA certifications and deliver new airplanes as a threat to the industry. He told analysts the delays have wiped out years of “growth for our industry.”
Michael O’Leary, the CEO of European budget airline Ryanair, was less polite, referring to Boeing executives as “headless chickens” who needed a “reboot, or a boot up the ass.”
Airlines, however, are captive, because the airplane manufacturing industry is a duopoly dominated by Boeing and Airbus. In late 2022, Southwest Airlines, whose entire fleet is Boeing planes, deployed a team of mechanics and quality experts to inspect the company’s quality control process. “I have absolute confidence that they will work their way through this and address the issues,” Southwest Airlines CEO Robert Jordan said on an earnings call this week.
But on a separate earnings call this week, United, the largest purchaser of Boeing’s MAX planes, was less confident. Management signaled it was open to reorienting to Airbus, as the surefire delay would impact the company’s bottom line.
“This is the kind of straw that broke the camel's back,” CEO Kirby said. “We're working through an alternate plan.”