Editorial: Boeing’s arrogance haunts its future

Boeing has long had a reputation in the industry for arrogance, even with the press. Ask a difficult question, and a reporter could expect an obfuscated answer, served with an attitude that seems to ask, “Who are you to question us?” Write a negative story, and you will quickly hear complaints from their PR team and likely not show up on their next invitation list. But that has long been a hallmark of Boeing’s culture.

A report in the Seattle Times indicates that Boeing has not turned over important documents to National Transportation Safety Board investigators reviewing the door plug blowout on an Alaska Airlines 737 MAX 9 earlier this year. “Boeing has not provided us with the documents and information that we have requested numerous times over the past few months, specifically with respect to opening, closing, and removal of the door and the team that does that work at the Renton facility,” said NTSB chair Jennifer Homendy today in testimony before the Commerce Committee of the US Senate.

Because of Boeing’s actions, investigators do not know who at Boeing

removed and reinstalled the door plug that later blew out. The NTSB investigation has led to the conclusion that Boeing employees removed critical bolts that hold the plug in place but failed to reinstall them before the aircraft was delivered. Homendy said Boeing has not provided the names of the 25 employees who deal with door plugs and has told the NTSB that it cannot find documentation about the removal and reinstallation of the door plug on that aircraft. Convenient, given the $1 billion lawsuit filed by passengers earlier this week.

But it gets potentially much worse. Boeing admitted that they couldn’t find documentation for that repair.  Oops!  Since every action taken to repair an aircraft needs to be documented, including the mechanic who did it and the inspector who signed off on it, Boeing is not following FAA procedures.

Not following FAA rules and procedures, however, is a violation of their Deferred Prosecution Agreement with the Department of Justice, which agreed not to criminally charge Boeing after the MAX crashes if it towed the line and followed FAA rules and procedures. In the wake of the most recent kerfuffle, the DOJ has announced that it is opening an investigation. Get ready, Boeing, because it may have just hit the fan.

Since we already know from leaked emails in prior investigations of the MAX crashes that Boeing employees purposely hid MCAS from regulators, there is a pretty good chance that some former Boeing executives and the company could face massive liability for the crashes, including additional fines and sanctions, and potentially jail time for some involved in lying to the FAA.

The Hits Keep on Coming

Today, the FAA issued another proposed airworthiness directive for the Boeing 737 MAX regarding the chafing of wire bundles that could send erroneous messages to the spoilers. The impact could result in loss of control of the airplane.  Boeing has downplayed the potential of severe consequences in its reaction to the AD, citing the possibility of an occurrence as negligible.  We’ve seen similar ADs before that required re-wiring of airplanes, a problematic and potentially expensive maintenance process if the inspections show wear.

The smug attitude at Boeing reflects a broken culture. Boeing’s culture was a major factor in the 737 MAX crashes that killed 346 people after the company purposely hid facts from the FAA during the certification process. The attitude that “we know better than you” is apparently rearing its ugly head again in the investigation of the Alaska Airlines incident earlier this year.

Chairwoman Homendy also raised concerns with Spirit AeroSystems, as they provided the board with three individuals for interviews who did not actually work for the company but for subcontractors. Of course, Spirit’s current CEO, Pat Shanahan, was a long-time Boeing employee and is well-steeped in the Boeing culture.

This comes after a scathing FAA report on quality at both Boeing and its major subcontractor Spirit AeroSystems, which Boeing spun off in 2005 and is in talks to reacquire. That report indicates that employees fear retaliation if they report potential safety issues and may let problems slip by in order to keep their jobs.

The Boeing culture changed markedly after the McDonnell-Douglas acquisition in 1997, after which several of their executives assumed leadership roles and intentionally changed the culture from product-driven to financially driven, focused on share price and shareholder value. Unfortunately, the fundamental traits of that culture that led to the failure of Douglas in the commercial market after it was acquired by McDonnell are currently leading to the failure of Boeing, which has lost market share and industry leadership to its European-based competitor, Airbus. Boeing is now the clear number two in the industry, as the following chart illustrates. The chart shows the percentage of aircraft delivered each year by manufacturer. Boeing had a strong lead in 2000, which Airbus has now reversed.  This doesn’t help build long-term shareholder value.

The Impact of Arrogance

Boeing is arrogant. Ask its customers, suppliers who suffered under its Partnering for Success initiatives, regulators, the media, and others who routinely deal with the company. That arrogance was once based on well-earned industry leadership prior to 1997. Today, Boeing is a shadow of the company it was before the turn of the millennium and is clearly no longer the industry leader.

Now, add the NTSB, the FAA, and Congress to the list of people who have turned from supporters to enemies. Boeing needs support to succeed. By not cooperating with the NTSB, and apparently violating their deferred prosecution agreement along the way, Boeing has angered people that have the power to significantly impact their success. From Senate hearings with the same people who fund defense contracting to obtain permission to raise production rates by the FAA, Boeing cannot afford to make enemies of those with the power to impact its business significantly. Now, the DOJ is back involved, looking at criminal liability for fraud as it revisits whether the deferred prosecution agreement still holds.

Naturally, Boeing may not want to release information showing their culpability while legal actions are in process. The NTSB is not a courtroom but the process through which the aviation industry learns about incidents and accidents to ensure they never happen again. Historically, Boeing has been cooperative with the NTSB, routinely lending assistance in accident investigations. We have to ask what might they be hiding from public view rather than to be transparent and forthcoming. Are Boeing’s lawyers, concerned about a $1 billion lawsuit, hiding the truth that somebody forgot to put the bolts back in, and that nobody followed up or double checked their work? It appears to be worse, as not only did they forget to put the bolts in, but since they cannot find documentation, it is likely that Boeing failed to enter the repair into the quality system and as a result nobody double checked that the bolts were actually installed. A quality escape based on a flawed system and incompetence.

Of course, the latest non-cooperative event opens up Boeing to even further pressure from the Deferred Prosecution Agreement coming back to haunt them. The wording says it all: deferred, not never. Boeing needs to be ready for news coming from Washington DC that won’t be very pretty and could be costly. How do you deal with a company that is too big to fail? You make certain that its culture changes from the top down. Quality escapes will inevitably lead to executive escapes, particularly those who have been involved in the decision processes that led to the cultural problems that are rampant within the Boeing organization.

Living in the Past

Boeing was once an outstanding company – emphasize was. Boeing today cannot produce new airplanes on time or on budget. The last program that was on-time and on-budget was the 737NG series that entered service in 1997. The 787 was late and three times its estimated cost before it entered service. The 737 MAX 8 was rushed into production after Airbus surprised Boeing with the A320neo, and in that rush built a design with a single point of failure that resulted in a self-crashing airplane. The final two models of the MAX family are three years behind schedule, and the forthcoming 777-X is now five years behind schedule.

Boeing was busy buoying up its stock price through share buybacks, which of course benefits senior executives and board members who received part of their compensation in shares. The company spent $43 billion in share buybacks, only to find the shares lower after their multiple operational failures, yielding no lasting benefit. Poof, the money just disappeared as the litany of disasters that the shareholder value priority caused. The funding for two completely new aircraft programs went down the drain, leaving shareholders scratching their heads today.

The company also can’t seem to produce high-quality airplanes. The 787 was grounded because of battery fires on board the aircraft that could have had fatal consequences. The 737 MAX was grounded because of two fatal crashes and the deaths of 346 people. Later, production of the 787 was restricted due to quality concerns with fuselages and pressure bulkheads, with significant rework required during a long delivery hiatus.

Of course, the company states that their aircraft are now safe, but that also what they said about the 737 MAX 8 before the two fatal crashes. The FAA pulled back elements of Boeing’s production certificate authority as it can no longer trust Boeing’s quality system and has not allowed Boeing to increase production rates until they prove they can build aircraft without faults.

And yet, amidst all of this, Boeing remains arrogant and smug, and unwilling to cooperate with NTSB investigators. Is Boeing too big to fail? The answer is yes, and no. Yes, it would be a great blow to the US economy to lose Boeing. But it has been happening for two decades, in a slow downward spiral that will soon accelerate. No, it won’t happen all at once, but slowly as Boeing struggles to build high quality products. Airbus will edge ahead year by year, making it more and more difficult for Boeing to regain parity and be relegated to number two.

Boeing’s arrogance was earned in the 1960s, 1970s, 1980s, and early 1990s. During that period, the company was innovative, risk-taking, and built the best aircraft in the world. People aspired to fly on a Boeing. The name Boeing was to aircraft as Kleenex was to facial tissues, a brand that transcended the industry. But after the culture changed and the company began to fail, Boeing’s arrogance still exists, even though it is now underserved and out of place.

What Boeing now has is a credibility gap, with regulators, airlines, suppliers, and even customers, who are once again leery about getting on a 737 MAX. One of the popular booking sites, Kayak, now has a filter for the type of an airplane you can exclude from your search, which it has now moved up on its web page given its popularity. Customers are now purposely avoiding the 737 MAX. When you lose credibility, and it impacts your customers, it is tough to regain. It is now even featured in satirical R-rated shows such as Last Week Tonight, with scathing results as the public becomes more and more aware of the fundamental issues at play.

I still have not flown on either a 787 Dreamliner or a 737 MAX. And this is from somebody who is a pilot that loved aerobatics when I was younger and played at the edge of the flight envelope of airplanes I flew. I know about calculated risks. However, I also have no confidence in the latest generation of Boeing products, and I am a member of the growing “if it’s Boeing, I’m not going” movement.  You can still get virtually anywhere without having to fly a MAX or Dreamliner.  I’m happy to fly the 747, 757, 767, 777, and older 737s, but not the 787 or a 737 MAX.  

How Many Wake-Up Calls Does it Take?

One might have thought that the 787 groundings and budget delays, the 737 MAX crashes, and the continuing litany of “quality escapes” would provide Boeing with the opportunity to change its culture. It hasn’t, and probably won’t under the current leadership that has brought the company to a crisis in confidence. America needs a strong Boeing, but won’t get it until their cultural arrogance, which is no longer something that has been earned, returns to reality along with the Board and C-Suite leadership team, who are apparently continued to sleep through the alarm clock.