April 18, 2024 • 19 mins
Tires and doors falling off mid-flight. A top US official stranded because of a 737 jet maintenance issue. Boeing is facing the ire of US lawmakers, scrutiny from its key regulator, and pressure from Wall Street ahead of an earnings report — all as it struggles to rebuild trust with passengers after a string of crises.
On this week’s Big Take DC, Saleha Mohsin digs into Boeing’s rise and fall with reporter Julie Johnsson, global aviation editor Benedikt Kammel, and long-time pilot and accident investigator Captain John Cox.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio studios, podcasts, radio news.
Speaker 2 (00:09):
Yesterday, two different Senate committees convened to bring the country's
biggest plane maker down to earth.
Speaker 1 (00:16):
Boeing, is it a moment of reckoning. It's a moment
many years in the making.
Speaker 2 (00:19):
That Senator Richard Blumenthal, who chairs one of those subcommittees Boeing,
he reminded the public had promised to make big changes
after a series of tragic accidents over five years.
Speaker 1 (00:31):
Ago that led Boeing to promise that it would overhaul
its safety practices and culture. That promise proved empty.
Speaker 2 (00:42):
Whistleblowers and critics from inside Boeing are now saying that
the company has ignored employees who have highlighted shortcuts in
the manufacturing process. It's quite the fall from grace for
a company that was long known as a trusted planemaker.
Speaker 3 (00:54):
People always felt this is the safest plane you know.
There's that saying if it's not Boeing on what Gooeing
now is sort of turned into well, if it's Boeing,
then I'm not going.
Speaker 2 (01:03):
Benedict Cammel oversees Bloomberg's global aviation.
Speaker 3 (01:06):
Coverage, and for the past three months it's turned into
the everything Boeing beat because.
Speaker 2 (01:11):
Boeing has serious problems on its hands, from doors and
tires falling off aircraft mid flight to the US Secretary
of State getting stranded overseas it.
Speaker 1 (01:20):
Was scheduled to fly back from Zurich. There's a mechanical
issue with his plane.
Speaker 3 (01:25):
These incidents happen all the time, in the way that
a car can break down, a plane can break down.
The problem for Boeing is that it adds to that
narrative that Boeing is producing planes that can no longer
be trusted.
Speaker 2 (01:38):
And trouble at Boeing ripples through the entire airline industry.
As Senator Ron Johnson pointed out at yesterday's hearing.
Speaker 4 (01:44):
In the end, I want the public to be confident
in getting out of an airplane and experiencing your travel.
But I have to admit this testimony is more than troubling.
Speaker 2 (02:02):
Today on the show, how did Boeing get here? And
what can the company and the US government do to
turn things around and make flying feel safe.
Speaker 3 (02:11):
If there's one company that's too big to fail, it's Boeing.
They make the presidential jet that they are an integral
part of the US economy that the biggest exporter in
the country. There's nobody suggesting that Boeing is going to
go out of business, but.
Speaker 2 (02:24):
The road ahead is sure to be turbulent. From Bloomberg's
Washington Bureau, this is the Big Take DC podcast. I'm
Salaiah Mosen to understand just how remarkable this moment is.
With Boeing's problems being dragged in front of Congress, you
have to remember this is the company that, for more
(02:47):
than a century had a reputation that's centered on safety
and reliability.
Speaker 1 (02:51):
The phrase that keeps coming to mind is the Great Unraveling.
Speaker 2 (02:55):
Bloomberg's lead Boeing reporter, Julie Johnson, has been watching that unraveling.
It's a story that starts back around twenty ten.
Speaker 1 (03:04):
Just for context, Boeing was cranking out enormous amounts of cash.
It was just really, really riding high.
Speaker 2 (03:13):
It was the go to carrier for the US government,
from the Postal Service to Air Force one, and it's
seven thirty seven jets, which were first introduced in the sixties,
were the aircraft of choice for commercial airlines.
Speaker 5 (03:25):
Being a professional pilot, the absolutely most important part of
it is the safe operation of the aircraft.
Speaker 2 (03:34):
Captain John Cox spent thirty years as a commercial in
corporate pilot. For many of those years he flew Boeing jets,
including the seven thirty seven.
Speaker 5 (03:42):
And I really enjoyed the airplane. It's what pilots call him,
honest airplane. It does things the same way every time,
very reliable, it's a workhorse. It was a good challenging
weather airplane, meeting high cross winds, low visibility. So my
time with the seven thirty seven was one of the
hot points of my career.
Speaker 2 (04:04):
In twenty ten, Boeing's main competitor, Airbus, upgraded a line
of its planes with new engines that left the seven
thirty seven looking dusty and outdated.
Speaker 1 (04:13):
Air Bus got a big jump on the market, and
Boeing decided they had to do something, and that's where
the seven thirty seven Max was brought to live pretty quickly.
Speaker 2 (04:24):
The seven thirty seven Max, Boeing's next iteration of the
beloved series, came out in twenty eleven, but it would
end up spelling disaster.
Speaker 1 (04:34):
This is just like every fable you know you've ever
heard over history. This company brought to its knees through
a series of terrible tragedies.
Speaker 2 (04:45):
In October twenty eighteen, a Boeing seven thirty seven Max
plane took off in Indonesia just thirteen minutes into the flight.
The issue was.
Speaker 4 (04:53):
A system that forces the nose of the plane down.
It's supposed to be a safety feature, but it resulted in, obviously,
that tragic crash, airline pilot saying we weren't.
Speaker 2 (05:01):
No one on board survived. Boeing assured the public and
its regulator, the Federal Aviation Administration, that the plane model
wasn't at fault, But then just five months later, another
seven thirty seven Max crashed, this one taking off from Ethiopia.
Speaker 3 (05:19):
The Ethiopia crash that killed one hundred and fifty seven
people in the first official words, and the fallout from
that was swift and brutal for the company. Obviously far
more brutal for the people involved in these crashes, but
on the corporate side, it was sort of a reckoning
for Boeing and its products, which previously had a stellar record.
Speaker 1 (05:39):
The company's biggest source of revenue was grounded globally after
the second crash, and that's when people started really questioning
Boeing's processes and whether the company's priorities had drifted over time, the.
Speaker 3 (05:59):
Thinking and that this is a company that actually has
not put safety first. It's a company that's put profit first.
It's been caught up in the competition with Aurbus, and
all of these things led to a toxic cocktail that
ultimately led to them producing planes that weren't properly built, certified,
and had the errors that contributed to the crashes.
Speaker 2 (06:21):
All seven thirty seven Max planes were pulled from runways,
and Dennis Muhlenberg, Boeing CEO at the time, was brought
in front of Congress.
Speaker 1 (06:29):
He was really flogged by both parties publicly over a
couple of days of hearings, and within a couple of
months was forced out by the board.
Speaker 2 (06:39):
Then a new CEO, Dave Calhoun, came in with a
fresh mandate.
Speaker 3 (06:44):
To clean the company up, to put safety first. That
was a thinking that indeed they had cut some corners,
that they had been too quick with the way that
they produced some of these planes, and that the company
felt to sort of rethink how we do things, slow
things down.
Speaker 1 (07:03):
So Calhoun steps into the job in January twenty twenty,
and then COVID.
Speaker 2 (07:09):
Happens suddenly nobody's really flying on any planes, not just Boeings.
Speaker 3 (07:16):
And in some ways that was a chance for Boeing
because this took a lot of the pressure off the
business and the company, and it gave them the time
to rethink, to reset, to revisit their aircraft.
Speaker 1 (07:28):
From that operations, Boeing was still not making a profit,
but was gradually starting to head in the right direction
as they try to get their factories and their supply
chain figured out post COVID and you know, win back
trust of their customers and regulators, and the narrative seemed
(07:53):
to be changing.
Speaker 3 (07:55):
There was this expectation that now would be the year
while Boeing would truly come back. Everyone thought, twenty twenty four,
they've left all the baggage behind, They've left the previous
crises behind. You know, orders were pumping, they were really
winning amazing business all around the world. And then January
fifth happened.
Speaker 2 (08:15):
January fifth, twenty twenty four, uh.
Speaker 1 (08:18):
Seven thirty seven. Next, you know, takes off out of
Portland and a few minutes into a flight, there's just
this enormous bang and a panel flies out of the plane.
Speaker 3 (08:33):
This is a fortified door that is normally locked so
for that to sort of burst open gives you a
sense of what could have gone horribly wrong.
Speaker 2 (08:41):
Turns out there was a mishap at the factory. So
Booming employees had been fixing an error with a door panel, and.
Speaker 3 (08:48):
Then the panel was put back in. What didn't happen.
The four bolts that should have kept it in place
were just not put back in. Somebody clumsily left those
bolts lying around some more on the factory floor that
probably in a trash can at this point.
Speaker 2 (09:04):
Here's what Boeing said in a recent statement to Bloomberg News.
Since twenty twenty, Boeing has taken important steps to foster
a safety culture that empowers and encourages all employees to
raise their voice. We know we have more work to do,
and we are taking action across our company. We continue
to put safety and quality above all else and share
(09:24):
information transparently with our regulator, customers, and other stakeholders. As
for that January door incident, Boeing's CFO addressed it head
on at the Bank of America Global Industrials Conference last month.
Speaker 6 (09:39):
We first start by saying that we continue to be
fully committed to transparency and accountability with our regulators. The
FA is deeply involved and undertaking a tougher audit than.
Speaker 3 (10:00):
We've ever been through before.
Speaker 6 (10:02):
And as they do their important work, we're undertaking comprehensive
actions so that we can move forward to strengthen quality
and build confidence.
Speaker 1 (10:14):
Fortunately nobody was killed. I mean, it's just like unbelievably
miraculous that nobody was sitting next to the section that failed.
But that moment flashed around the globe and in videos
that just went viral within a matter of minutes, and
(10:34):
I was watching it happen. But the confidence that Boeing
had been trying to rebuild just collapsed within minutes.
Speaker 2 (10:46):
Captain Cox, the pilot that we heard from earlier, has
investigated crashes with the National Transportation Safety Board. He says
that when he first heard about Boeing's tragic crashes in
twenty eighteen and twenty nineteen, his sense of how they
could have happened was blurry.
Speaker 5 (11:00):
I've been an accident investigator for thirty five years, and
when you look at those accidents, there are some of
the more complex ones I've ever seen.
Speaker 2 (11:08):
But as he's followed the news about Boeing seven thirty
seven jets over the past few months and years, He
says a different image has come into focus. He runs
an aviation safety consultancy and says it's all left him
more than surprised.
Speaker 5 (11:22):
I think shocked would be a better word. It was
very disappointing to me as we began to understand the
contributing factors for the Max accidents of how the culture
at Boeing had changed from when I was working very
closely with them in the eighties and nineties. The focus
really shifted from building the highest quality airplane that they
(11:45):
could to shareholder value.
Speaker 1 (11:48):
The twenty nineteen tragedies, we knew, okay, there were a
series of things that went wrong, but at the root
was this flawed design. But when you we don't have
confidence in a company's ability to install literal nuts and
bolts in its aircraft, I think that's far more damaging.
Speaker 2 (12:13):
Coming up. Where does Boeing go from here and will
the US government's intervention help move the needle. After Boeing's
plane door incident in January, the FAA came down on
the company hard.
Speaker 3 (12:30):
I think for the FAA, this is a moment of
reckoning where they've understood we need to be much tougher
on this company. We need to keep a much closer
on on what they do. We need to slow them down.
Speaker 2 (12:42):
The regulator can men an expert panel to investigate safety
practices at Boeing, and the results it published in February
were pretty damning.
Speaker 3 (12:51):
They said there was a disconnect between sort of the
message from the top about safety culture and what actually
arrived down on the shop floor. There was a sense
that profitability was taking precedent over process.
Speaker 2 (13:06):
I'm trying to think how we got here. Isn't it
up to the US government or the Federal Aviation Authority
to make sure that this doesn't happen in the first place.
Speaker 3 (13:15):
Part of the accusation leveled against the FAA after these
two crashes was that they had too cozy a relationship
with Boeing, that they let Boeing almost self regulate, and
they put too much faith into a trust in Boeing,
and we all know how that ended.
Speaker 2 (13:31):
It's worth noting that Boeing has over one hundred lobbyists
on his payroll. It's been over fourteen million dollars on
lobbying in twenty twenty three. Now the government is sending
examiners into Boeing's factories. It's forcing them to slow things down,
mandating that the company limit the number of planes it
produces each month. It gave the company until late May
(13:53):
to address the issues the FAA audit identified. At one
of yesterday's hearings, Senator Tammy Duckworth put it this way.
Speaker 3 (14:00):
We need to judge Boing by what it does, not
by what it says it's doing.
Speaker 2 (14:04):
Because Boeing's problems are the government's problems. Boeing isn't a
company that can just be replaced. It's America's flagship aircraft maker,
providing planes for everyday people to fly on, and also
supporting US defense and military operations. Plus, there are only
two major players in the airplane production industry. The government
(14:25):
can't just ditch Boeing and replace its fleet with Airbus.
Neither can commercial airlines.
Speaker 1 (14:31):
If you go to Airbus, you're joining the back of
the queue, at queue that stretches into the twenty thirties.
Airbus is basically sold out through twenty twenty nine, and
the airlines need airplanes right now.
Speaker 2 (14:44):
Benedict told me he's spoken with Airbus executives about all
of this, and they don't view Boeing's problems as a
win for them.
Speaker 3 (14:51):
I say, look, we take no pleasure in the other
side's misfortunes hair because we know whatever happens to one
side could as easily happen to the other side. And frankly,
this is bad for the global aviation industry. People have
second thoughts about flying. But it also means that if
Boeing slows down, it sends a shiver through the entire industry.
Speaker 2 (15:12):
Bennettict says it's a problem of supply and demand. Fewer
planes overall mean airlines have to limit their flights and
the routes that they serve, and that would mean demand
outpaces supply, so that the.
Speaker 3 (15:24):
Fewer seats, as it were, that means higher prices. So
all these things are ripple effects that go from the
factory floor at Boeing all the way back to the
pockets of the consumer.
Speaker 2 (15:35):
If you ask Captain John Cox, we should keep things
in perspective.
Speaker 5 (15:39):
If you look at in twenty twenty three worldwide, we
flew about thirty five million flights without a single accident
or a single fatality. It's one of the safest cheers
in aviation's history.
Speaker 2 (15:50):
That's encouraging to him, even though clearly doors should not
be falling off planes midflight.
Speaker 5 (15:56):
I think, day by day will begin to rebuild the
concid in the quality of the airplanes coming off the
Boeing assembly line. I'm comfortable with them today I fly
on a Max without a second thought.
Speaker 2 (16:09):
But right now Boeing is still managing a bumpy landing.
On Wednesday, the company will report it's earnings from the
first quarter of twenty twenty four, and things are not
looking good.
Speaker 1 (16:20):
They've burned through just an enormous amount of cash. I mean,
they've had to pay hundreds of millions of dollars to
the airlines whose planes were grounded, slowing your factories, taking
days off to encourage employees to speak up about you
know what they've seen. All of that adds up, so
(16:40):
it's going to be a big cash outflow.
Speaker 2 (16:43):
Investors are expecting the company to report burning through four
to four and a half billion dollars in cash for
the first quarter.
Speaker 1 (16:50):
So at some point they need to start ramping up
their production again, but they can't do that until the
FAA is convinced that their processes have changed.
Speaker 2 (17:00):
If Boeing wants to rebuild trust, it's going to need
a new plane. Consumers do not trust the seven thirty
seven max anymore.
Speaker 1 (17:08):
Buying planes right now are like just one giant bad meme.
Speaker 2 (17:11):
But new planes cost money, money that Boeing does not have.
All this leaves Boeing in a spot not unlike the
one it found itself in in twenty nineteen crisis management mode.
A few days after that plane door flew off. This
past January, Dave Calhoun, the CEO who took over during
the last crisis, addressed the company's employees and told them
(17:34):
we're taking responsibility for this. Something needs to change.
Speaker 3 (17:38):
Dave Calhoun held an almost tearful speech to employees, saying, look,
I get this. We need to get this right.
Speaker 1 (17:47):
I got kids, I got grandkids, and so do you.
Speaker 5 (17:51):
This stuff matters.
Speaker 3 (17:53):
This is a watershed moment for the company. Safety is
our guiding principle, always has But if anyone didn't get
the message, this is our north star.
Speaker 2 (18:05):
The last thing I wanted to ask you about, Edict
is where does Boeing go from here?
Speaker 3 (18:09):
Well, Boeing, wherever they go, they're going to go with
a new CEO. So a couple of weeks ago they
announced a leadership change that was fairly comprehensive. The chairman
stepped down, the head of the aircraft manufacturing business step down,
and Dave Calhoun, who had taken the role in the
wake of these twin crashes, also said that he would leave.
And a lot of people are saying Boeing needs an
(18:32):
engineering mind again, you know, forget the person with a
financially minded sort of perspective. We've had those before and
that didn't get us anywhere.
Speaker 2 (18:44):
Thanks for listening to The Big Take DC podcast from
Bloomberg News. I'm Salaiamosen. This episode was produced by Julia Press.
It was mixed by Ben O'Brien. It was fact checked
by Adrianna Tapia. It was edited by Aaron Edwards and
Bennettedt Cammel. Naomi Shaven is our senior producer. Michael Shephard,
Wendy Benjaminson and Elizabeth Ponso provide editorial direction. Nicole Beemster
(19:06):
Bower is our executive producer, and Sage Bauman is Bloomberg's
head of Podcasts. Please subscribe and review The Big Take
DC wherever you listen to podcasts. It helps new listeners
find the show. Thanks for listening. We'll be back next week,
Bloomberg Audio studios, podcasts, radio news.
Speaker 2 (00:09):
Yesterday, two different Senate committees convened to bring the country's
biggest plane maker down to earth.
Speaker 1 (00:16):
Boeing, is it a moment of reckoning. It's a moment
many years in the making.
Speaker 2 (00:19):
That Senator Richard Blumenthal, who chairs one of those subcommittees Boeing,
he reminded the public had promised to make big changes
after a series of tragic accidents over five years.
Speaker 1 (00:31):
Ago that led Boeing to promise that it would overhaul
its safety practices and culture. That promise proved empty.
Speaker 2 (00:42):
Whistleblowers and critics from inside Boeing are now saying that
the company has ignored employees who have highlighted shortcuts in
the manufacturing process. It's quite the fall from grace for
a company that was long known as a trusted planemaker.
Speaker 3 (00:54):
People always felt this is the safest plane you know.
There's that saying if it's not Boeing on what Gooeing
now is sort of turned into well, if it's Boeing,
then I'm not going.
Speaker 2 (01:03):
Benedict Cammel oversees Bloomberg's global aviation.
Speaker 3 (01:06):
Coverage, and for the past three months it's turned into
the everything Boeing beat because.
Speaker 2 (01:11):
Boeing has serious problems on its hands, from doors and
tires falling off aircraft mid flight to the US Secretary
of State getting stranded overseas it.
Speaker 1 (01:20):
Was scheduled to fly back from Zurich. There's a mechanical
issue with his plane.
Speaker 3 (01:25):
These incidents happen all the time, in the way that
a car can break down, a plane can break down.
The problem for Boeing is that it adds to that
narrative that Boeing is producing planes that can no longer
be trusted.
Speaker 2 (01:38):
And trouble at Boeing ripples through the entire airline industry.
As Senator Ron Johnson pointed out at yesterday's hearing.
Speaker 4 (01:44):
In the end, I want the public to be confident
in getting out of an airplane and experiencing your travel.
But I have to admit this testimony is more than troubling.
Speaker 2 (02:02):
Today on the show, how did Boeing get here? And
what can the company and the US government do to
turn things around and make flying feel safe.
Speaker 3 (02:11):
If there's one company that's too big to fail, it's Boeing.
They make the presidential jet that they are an integral
part of the US economy that the biggest exporter in
the country. There's nobody suggesting that Boeing is going to
go out of business, but.
Speaker 2 (02:24):
The road ahead is sure to be turbulent. From Bloomberg's
Washington Bureau, this is the Big Take DC podcast. I'm
Salaiah Mosen to understand just how remarkable this moment is.
With Boeing's problems being dragged in front of Congress, you
have to remember this is the company that, for more
(02:47):
than a century had a reputation that's centered on safety
and reliability.
Speaker 1 (02:51):
The phrase that keeps coming to mind is the Great Unraveling.
Speaker 2 (02:55):
Bloomberg's lead Boeing reporter, Julie Johnson, has been watching that unraveling.
It's a story that starts back around twenty ten.
Speaker 1 (03:04):
Just for context, Boeing was cranking out enormous amounts of cash.
It was just really, really riding high.
Speaker 2 (03:13):
It was the go to carrier for the US government,
from the Postal Service to Air Force one, and it's
seven thirty seven jets, which were first introduced in the sixties,
were the aircraft of choice for commercial airlines.
Speaker 5 (03:25):
Being a professional pilot, the absolutely most important part of
it is the safe operation of the aircraft.
Speaker 2 (03:34):
Captain John Cox spent thirty years as a commercial in
corporate pilot. For many of those years he flew Boeing jets,
including the seven thirty seven.
Speaker 5 (03:42):
And I really enjoyed the airplane. It's what pilots call him,
honest airplane. It does things the same way every time,
very reliable, it's a workhorse. It was a good challenging
weather airplane, meeting high cross winds, low visibility. So my
time with the seven thirty seven was one of the
hot points of my career.
Speaker 2 (04:04):
In twenty ten, Boeing's main competitor, Airbus, upgraded a line
of its planes with new engines that left the seven
thirty seven looking dusty and outdated.
Speaker 1 (04:13):
Air Bus got a big jump on the market, and
Boeing decided they had to do something, and that's where
the seven thirty seven Max was brought to live pretty quickly.
Speaker 2 (04:24):
The seven thirty seven Max, Boeing's next iteration of the
beloved series, came out in twenty eleven, but it would
end up spelling disaster.
Speaker 1 (04:34):
This is just like every fable you know you've ever
heard over history. This company brought to its knees through
a series of terrible tragedies.
Speaker 2 (04:45):
In October twenty eighteen, a Boeing seven thirty seven Max
plane took off in Indonesia just thirteen minutes into the flight.
The issue was.
Speaker 4 (04:53):
A system that forces the nose of the plane down.
It's supposed to be a safety feature, but it resulted in, obviously,
that tragic crash, airline pilot saying we weren't.
Speaker 2 (05:01):
No one on board survived. Boeing assured the public and
its regulator, the Federal Aviation Administration, that the plane model
wasn't at fault, But then just five months later, another
seven thirty seven Max crashed, this one taking off from Ethiopia.
Speaker 3 (05:19):
The Ethiopia crash that killed one hundred and fifty seven
people in the first official words, and the fallout from
that was swift and brutal for the company. Obviously far
more brutal for the people involved in these crashes, but
on the corporate side, it was sort of a reckoning
for Boeing and its products, which previously had a stellar record.
Speaker 1 (05:39):
The company's biggest source of revenue was grounded globally after
the second crash, and that's when people started really questioning
Boeing's processes and whether the company's priorities had drifted over time, the.
Speaker 3 (05:59):
Thinking and that this is a company that actually has
not put safety first. It's a company that's put profit first.
It's been caught up in the competition with Aurbus, and
all of these things led to a toxic cocktail that
ultimately led to them producing planes that weren't properly built, certified,
and had the errors that contributed to the crashes.
Speaker 2 (06:21):
All seven thirty seven Max planes were pulled from runways,
and Dennis Muhlenberg, Boeing CEO at the time, was brought
in front of Congress.
Speaker 1 (06:29):
He was really flogged by both parties publicly over a
couple of days of hearings, and within a couple of
months was forced out by the board.
Speaker 2 (06:39):
Then a new CEO, Dave Calhoun, came in with a
fresh mandate.
Speaker 3 (06:44):
To clean the company up, to put safety first. That
was a thinking that indeed they had cut some corners,
that they had been too quick with the way that
they produced some of these planes, and that the company
felt to sort of rethink how we do things, slow
things down.
Speaker 1 (07:03):
So Calhoun steps into the job in January twenty twenty,
and then COVID.
Speaker 2 (07:09):
Happens suddenly nobody's really flying on any planes, not just Boeings.
Speaker 3 (07:16):
And in some ways that was a chance for Boeing
because this took a lot of the pressure off the
business and the company, and it gave them the time
to rethink, to reset, to revisit their aircraft.
Speaker 1 (07:28):
From that operations, Boeing was still not making a profit,
but was gradually starting to head in the right direction
as they try to get their factories and their supply
chain figured out post COVID and you know, win back
trust of their customers and regulators, and the narrative seemed
(07:53):
to be changing.
Speaker 3 (07:55):
There was this expectation that now would be the year
while Boeing would truly come back. Everyone thought, twenty twenty four,
they've left all the baggage behind, They've left the previous
crises behind. You know, orders were pumping, they were really
winning amazing business all around the world. And then January
fifth happened.
Speaker 2 (08:15):
January fifth, twenty twenty four, uh.
Speaker 1 (08:18):
Seven thirty seven. Next, you know, takes off out of
Portland and a few minutes into a flight, there's just
this enormous bang and a panel flies out of the plane.
Speaker 3 (08:33):
This is a fortified door that is normally locked so
for that to sort of burst open gives you a
sense of what could have gone horribly wrong.
Speaker 2 (08:41):
Turns out there was a mishap at the factory. So
Booming employees had been fixing an error with a door panel, and.
Speaker 3 (08:48):
Then the panel was put back in. What didn't happen.
The four bolts that should have kept it in place
were just not put back in. Somebody clumsily left those
bolts lying around some more on the factory floor that
probably in a trash can at this point.
Speaker 2 (09:04):
Here's what Boeing said in a recent statement to Bloomberg News.
Since twenty twenty, Boeing has taken important steps to foster
a safety culture that empowers and encourages all employees to
raise their voice. We know we have more work to do,
and we are taking action across our company. We continue
to put safety and quality above all else and share
(09:24):
information transparently with our regulator, customers, and other stakeholders. As
for that January door incident, Boeing's CFO addressed it head
on at the Bank of America Global Industrials Conference last month.
Speaker 6 (09:39):
We first start by saying that we continue to be
fully committed to transparency and accountability with our regulators. The
FA is deeply involved and undertaking a tougher audit than.
Speaker 3 (10:00):
We've ever been through before.
Speaker 6 (10:02):
And as they do their important work, we're undertaking comprehensive
actions so that we can move forward to strengthen quality
and build confidence.
Speaker 1 (10:14):
Fortunately nobody was killed. I mean, it's just like unbelievably
miraculous that nobody was sitting next to the section that failed.
But that moment flashed around the globe and in videos
that just went viral within a matter of minutes, and
(10:34):
I was watching it happen. But the confidence that Boeing
had been trying to rebuild just collapsed within minutes.
Speaker 2 (10:46):
Captain Cox, the pilot that we heard from earlier, has
investigated crashes with the National Transportation Safety Board. He says
that when he first heard about Boeing's tragic crashes in
twenty eighteen and twenty nineteen, his sense of how they
could have happened was blurry.
Speaker 5 (11:00):
I've been an accident investigator for thirty five years, and
when you look at those accidents, there are some of
the more complex ones I've ever seen.
Speaker 2 (11:08):
But as he's followed the news about Boeing seven thirty
seven jets over the past few months and years, He
says a different image has come into focus. He runs
an aviation safety consultancy and says it's all left him
more than surprised.
Speaker 5 (11:22):
I think shocked would be a better word. It was
very disappointing to me as we began to understand the
contributing factors for the Max accidents of how the culture
at Boeing had changed from when I was working very
closely with them in the eighties and nineties. The focus
really shifted from building the highest quality airplane that they
(11:45):
could to shareholder value.
Speaker 1 (11:48):
The twenty nineteen tragedies, we knew, okay, there were a
series of things that went wrong, but at the root
was this flawed design. But when you we don't have
confidence in a company's ability to install literal nuts and
bolts in its aircraft, I think that's far more damaging.
Speaker 2 (12:13):
Coming up. Where does Boeing go from here and will
the US government's intervention help move the needle. After Boeing's
plane door incident in January, the FAA came down on
the company hard.
Speaker 3 (12:30):
I think for the FAA, this is a moment of
reckoning where they've understood we need to be much tougher
on this company. We need to keep a much closer
on on what they do. We need to slow them down.
Speaker 2 (12:42):
The regulator can men an expert panel to investigate safety
practices at Boeing, and the results it published in February
were pretty damning.
Speaker 3 (12:51):
They said there was a disconnect between sort of the
message from the top about safety culture and what actually
arrived down on the shop floor. There was a sense
that profitability was taking precedent over process.
Speaker 2 (13:06):
I'm trying to think how we got here. Isn't it
up to the US government or the Federal Aviation Authority
to make sure that this doesn't happen in the first place.
Speaker 3 (13:15):
Part of the accusation leveled against the FAA after these
two crashes was that they had too cozy a relationship
with Boeing, that they let Boeing almost self regulate, and
they put too much faith into a trust in Boeing,
and we all know how that ended.
Speaker 2 (13:31):
It's worth noting that Boeing has over one hundred lobbyists
on his payroll. It's been over fourteen million dollars on
lobbying in twenty twenty three. Now the government is sending
examiners into Boeing's factories. It's forcing them to slow things down,
mandating that the company limit the number of planes it
produces each month. It gave the company until late May
(13:53):
to address the issues the FAA audit identified. At one
of yesterday's hearings, Senator Tammy Duckworth put it this way.
Speaker 3 (14:00):
We need to judge Boing by what it does, not
by what it says it's doing.
Speaker 2 (14:04):
Because Boeing's problems are the government's problems. Boeing isn't a
company that can just be replaced. It's America's flagship aircraft maker,
providing planes for everyday people to fly on, and also
supporting US defense and military operations. Plus, there are only
two major players in the airplane production industry. The government
(14:25):
can't just ditch Boeing and replace its fleet with Airbus.
Neither can commercial airlines.
Speaker 1 (14:31):
If you go to Airbus, you're joining the back of
the queue, at queue that stretches into the twenty thirties.
Airbus is basically sold out through twenty twenty nine, and
the airlines need airplanes right now.
Speaker 2 (14:44):
Benedict told me he's spoken with Airbus executives about all
of this, and they don't view Boeing's problems as a
win for them.
Speaker 3 (14:51):
I say, look, we take no pleasure in the other
side's misfortunes hair because we know whatever happens to one
side could as easily happen to the other side. And frankly,
this is bad for the global aviation industry. People have
second thoughts about flying. But it also means that if
Boeing slows down, it sends a shiver through the entire industry.
Speaker 2 (15:12):
Bennettict says it's a problem of supply and demand. Fewer
planes overall mean airlines have to limit their flights and
the routes that they serve, and that would mean demand
outpaces supply, so that the.
Speaker 3 (15:24):
Fewer seats, as it were, that means higher prices. So
all these things are ripple effects that go from the
factory floor at Boeing all the way back to the
pockets of the consumer.
Speaker 2 (15:35):
If you ask Captain John Cox, we should keep things
in perspective.
Speaker 5 (15:39):
If you look at in twenty twenty three worldwide, we
flew about thirty five million flights without a single accident
or a single fatality. It's one of the safest cheers
in aviation's history.
Speaker 2 (15:50):
That's encouraging to him, even though clearly doors should not
be falling off planes midflight.
Speaker 5 (15:56):
I think, day by day will begin to rebuild the
concid in the quality of the airplanes coming off the
Boeing assembly line. I'm comfortable with them today I fly
on a Max without a second thought.
Speaker 2 (16:09):
But right now Boeing is still managing a bumpy landing.
On Wednesday, the company will report it's earnings from the
first quarter of twenty twenty four, and things are not
looking good.
Speaker 1 (16:20):
They've burned through just an enormous amount of cash. I mean,
they've had to pay hundreds of millions of dollars to
the airlines whose planes were grounded, slowing your factories, taking
days off to encourage employees to speak up about you
know what they've seen. All of that adds up, so
(16:40):
it's going to be a big cash outflow.
Speaker 2 (16:43):
Investors are expecting the company to report burning through four
to four and a half billion dollars in cash for
the first quarter.
Speaker 1 (16:50):
So at some point they need to start ramping up
their production again, but they can't do that until the
FAA is convinced that their processes have changed.
Speaker 2 (17:00):
If Boeing wants to rebuild trust, it's going to need
a new plane. Consumers do not trust the seven thirty
seven max anymore.
Speaker 1 (17:08):
Buying planes right now are like just one giant bad meme.
Speaker 2 (17:11):
But new planes cost money, money that Boeing does not have.
All this leaves Boeing in a spot not unlike the
one it found itself in in twenty nineteen crisis management mode.
A few days after that plane door flew off. This
past January, Dave Calhoun, the CEO who took over during
the last crisis, addressed the company's employees and told them
(17:34):
we're taking responsibility for this. Something needs to change.
Speaker 3 (17:38):
Dave Calhoun held an almost tearful speech to employees, saying, look,
I get this. We need to get this right.
Speaker 1 (17:47):
I got kids, I got grandkids, and so do you.
Speaker 5 (17:51):
This stuff matters.
Speaker 3 (17:53):
This is a watershed moment for the company. Safety is
our guiding principle, always has But if anyone didn't get
the message, this is our north star.
Speaker 2 (18:05):
The last thing I wanted to ask you about, Edict
is where does Boeing go from here?
Speaker 3 (18:09):
Well, Boeing, wherever they go, they're going to go with
a new CEO. So a couple of weeks ago they
announced a leadership change that was fairly comprehensive. The chairman
stepped down, the head of the aircraft manufacturing business step down,
and Dave Calhoun, who had taken the role in the
wake of these twin crashes, also said that he would leave.
And a lot of people are saying Boeing needs an
(18:32):
engineering mind again, you know, forget the person with a
financially minded sort of perspective. We've had those before and
that didn't get us anywhere.
Speaker 2 (18:44):
Thanks for listening to The Big Take DC podcast from
Bloomberg News. I'm Salaiamosen. This episode was produced by Julia Press.
It was mixed by Ben O'Brien. It was fact checked
by Adrianna Tapia. It was edited by Aaron Edwards and
Bennettedt Cammel. Naomi Shaven is our senior producer. Michael Shephard,
Wendy Benjaminson and Elizabeth Ponso provide editorial direction. Nicole Beemster
(19:06):
Bower is our executive producer, and Sage Bauman is Bloomberg's
head of Podcasts. Please subscribe and review The Big Take
DC wherever you listen to podcasts. It helps new listeners
find the show. Thanks for listening. We'll be back next week,
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