Boeings Challenging Recovery a Year After Incident

A year after a significant safety incident involving a Boeing 737 Max 9 aircraft operated by Alaska Airlines, Boeing faces a challenging path to recovery. The incident, where a fuselage panel covering an unused emergency exit door detached mid-flight, raised serious concerns over safety and quality within the company. This event not only resulted in a safe emergency landing in Portland, Oregon, but also highlighted significant oversights at Boeing’s Renton, Washington, factory, including missing key bolts—a detail uncovered in a preliminary report by the National Transportation Safety Board.

As a result of the incident and its fallout, Boeing’s stock price has suffered, dropping more than 30% over the past 12 months, while the S&P 500 has seen a nearly 27% increase. In response, Boeing has undertaken substantial internal changes, including executive leadership shifts with the appointment of a new chief executive, Kelly Ortberg, a former CEO of Rockwell Collins with extensive aerospace experience. These changes extend to intensified training programs for factory workers and the implementation of random quality audits to enhance product integrity.

In the past year, Boeing has also worked to integrate feedback from employees, aiming to improve manufacturing processes and reduce defects, particularly in 737 fuselages made by Spirit AeroSystems—a company Boeing is in the process of reacquiring. Additionally, the company has made efforts to minimize so-called traveled work, which involves completing aircraft assembly tasks out of their normal sequence, to streamline production and reduce the likelihood of flaws.

Despite these efforts, the Federal Aviation Administration (FAA) has maintained increased oversight of Boeing, limiting the production rate of its best-selling 737 Max jets. Outgoing FAA chief Mike Whitaker emphasized that this heightened supervision would continue, indicating that Boeing’s recovery and cultural shift towards prioritizing safety and quality over profit are long-term projects that require sustained effort and commitment.

Financially, Boeing has not recorded an annual profit since 2018, a year marked by the first of two fatal crashes involving its 737 Max aircraft, which collectively resulted in the deaths of 346 people. These incidents led to a global grounding of the aircraft model for nearly two years, exacerbating Boeing’s challenges, which include other quality issues that have delayed deliveries across several aircraft models, including the 787 Dreamliner and the new Air Force One 747s.

Since 2019, Boeing has accrued over $30 billion in losses. The new CEO is tasked with steering the company towards stabilizing production and ensuring defect-free outputs as a foundation for future increases in production rates. This focus on quality and efficiency is critical as Boeing continues to face strong competition from Airbus, which currently leads in aircraft delivery volumes.

Ortberg’s early tenure has been marked by efforts to directly engage with production processes and personnel, including relocating to the Seattle area to be closer to Boeing’s main production facilities. These actions have been tentatively well-received by industry stakeholders, such as Bob Jordan, CEO of Southwest Airlines, who noted that while it’s still early days, there is a sense that Ortberg is committed to fundamental changes at Boeing, rather than superficial fixes.

Looking ahead, Boeing is poised for a period of recalibration, focusing on enhancing its core operations and possibly slimming down its workforce as part of a broader strategic reassessment to navigate out of its current crises effectively.

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Sources: AirGuide Business airguide.info, bing.com, cnbc.com