Boeing had a rough start to 2024. On January 5th, a fuselage panel blew off one of its 737 Max 9 planes mid-flight, putting passengers and crew of the Alaska Airlines flight at serious risk. The incident comes at a time when Boeing was finally rebuilding its reputation after two crashes with 737 Max 8 airplanes in 2018 and 2019, killing 346 people. While luckily not fatal, this most recent incident put question marks around Boeing’s leadership, including its board.
Investigations after the fatal crashes of the Boeing 737 Max 8 in 2018 and 2019 showed that the company and its leadership had cut corners, putting profits and deadlines over safety. In a 2021 shareholder lawsuit, the Boeing board was fined $237.5 million, accused of failing in its fiduciary duty to monitor safety and initially not speaking the truth. The total cost of the Max 8 disaster is estimated at $20 billion.
Turning the ship around
After the 737 Max 8 scandal, Boeing’s CEO Dennis Muilenburg was replaced by Dave Calhoun – the lead independent board director at the time. While there were some changes on Boeing’s board, the current Chief Executive Officer and Board chair have both been around Boeing’s top table for over a decade. Besides adjustments in leadership, the company took several other measures to turn the ship around after the fatal events in 2018 and 2019, including structural changes, safety programs, and investments in technology. The company also added a Chief Aerospace Safety Officer to its leadership and formed the Aerospace Safety Committee, a new board-level panel. These changes may not have prevented the recent 737 Max 9 malfunction. However, a cultural shift was noticeable in Boeing’s response to the incident: Leadership immediately provided transparency and showed determination to find the root cause, which wasn’t the case in 2019.
Finding the balance
The recent events make critics question whether or not the changes on the Boeing Board in 2019 were enough, while also acknowledging that changing a company’s culture from the top down doesn’t happen overnight. This is especially true considering the pandemic hit the aerospace industry and manufacturing particularly hard. In 2019, it was clear there was a technical and safety problem as well as a leadership problem that allowed it to happen. Today, the situation is different with fingers not only pointing at Boeing but also at the Federal Aviation Administration (FAA). The proper organizational systems seem to be in place but there are flaws. It is a very complex problem with many moving parts, companies, organizations, and people involved. Boeing’s leadership is struggling to find the balance between innovation, delivery deadlines, safety and regulations, staying competitive with its main competitor, Airbus, and keeping its shareholders happy. While the FAA is only halfway through its audit after the Alaska Airlines incident, the recently appointed FAA Administrator, Mike Whitacker, already stated this week on Capitol Hill that the FAA will heighten the level of oversight on Boeing and hold the company accountable for safety violations while also considering making changes to the FAA’s current safety inspection system.
A wake-up call
Past decisions can’t always be undone with the flip of a switch, and new strategies take time to get implemented effectively. After the fatal crashes, there was a loud call for leadership changes. Today, the focus is mainly on changes to procedures and safety processes, rather than the people in charge. There are currently no leadership shifts announced at the top of Boeing. The events from January just may be the wake-up call the board and executive team needed to be reminded of their priorities. Despite the catastrophes of the past five years, Boeing holds a special place in the hearts of many Americans wanting to see the company succeed.
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