Boeing was an icon of American innovation, until greed took over, burning its reputation into the ground.
Boeing was once the leader in aerospace engineering. Delivering reliable, ground breaking airplanes. Today, after the 737 Max fall-out. The company is a shadow of its former self. Boeing was always regarded as an American icon. A juggernaut in aerospace engineering. But as its priorities shifted from innovation to revenue generation and shareholder satisfaction, it embarked on a path of no-return. A path that would result in one of the largest fall from grace in recent history. A decline to rapid and aggressive executives had to make way and allow for a new beginning.
The Boeing 737 Max
The Boeing 737 Max would become Boeing’s largest debacle, sealing the fate of its executives and taking a bite of its once world class reputation as a reliable airplane manufacturer. In August 2011, Boeing announced its new family of aircraft, the 737 Max series. At the time, the general public was not aware of the disastrous outcome of Boeing’s relentless drive to push the 737 Max out of the production line to stay ahead of Airbus.
The 737 Max would be a continuation of its 737 family, sporting a new engine configuration, giving better fuel efficiency in order to better compete with upcoming rivals. The plane would deliver a 7 percent reduction in operating costs for airlines, thanks to its innovative engines. The panic at Boeing didn’t come out of thin air. Airbus was garnering strong momentum in the lead up to the 737 Max announcement. In 2002, Airbus aircraft deliveries set a comfortable 303, but just a few years later, in 2006, deliveries increased to 434. In 2009, unit deliveries improved to 498, a 64 percent increase in under a decade. In 2010, Airbus delivered 510 aircraft.
It was during this period that Airbus surpassed Boeing plane orders, according to a report by the BBC. Airbus’s airplanes were in particular demand with low-budget airlines and emerging markets, with players such as EasyJet increasing its orders for the single-aisle A320, which proved to hit the sweet spot for airlines who were looking for fuel efficient airplanes that could drastically reduce operating costs. The A320, which saw 60 orders during the 2010 Farnborough International Airshow, would deliver an estimated 15 percent higher fuel efficiency.
In the year Boeing announced its 737 Max, Airbus had delivered 534 airplanes. Executives at Boeing strongly believed in the aircraft, commenting on how the Max would deliver more revenue potential to airlines through its innovative design. In a July 2012 press release, Vice president and general manager, 737 program, Beverly Wyse, pointed out that the manufacturer was making steady progress toward its development goals. Engineers improved the maximum take-off weight, which would allow the aircraft to fly further, hence more revenue opportunities than its predecessor and its future competitors.
From the get-go it was obvious who Boeing was targeting. The company tried to instill confidence in current and future customers that a viable, mid-size airplane, would soon be on the way. In October of 2012, Boeing managed to secure a delivery for 60 737 Max airplanes with Brazil’s largest low-cost airline GOL. The purchase was valued at an upward of $6 billion and an important marker for the airplane manufacturer that demand for its newest plane was on the horizon.
Turmoil begins
As the orders for the 737 Max started to come in, as the plane took to the skies the downward spiral of Boeing began. It was shortly after the first delivery was made to budget airline Lion air in May 2017, when problems started to arise. As approximately 5,000 orders were placed by September 2018, a month later Lion Air Flight 610, crashed into the Java Sea minutes after takeoff from Jakarta. No passengers. As flight data was being analyzed, researchers found a relation to the Maneuvering Characteristics Augmentation System, or MCAS, flight control system that Boeing didn’t inform pilots about.
In April 2019, a month after the a second 787 Max 8 crashed in Ethiopia, pilot and software engineer Gregory Travis, wrote his down his assessment of the troubled airplane. By combining his decades of experience in both fields, he provides a unique outlook on the problems facing the latest Boeing airplane. Travis opened his piece by noting that having two back to back crashes with a new airplane, poses an existential risk to an airplane manufacturer.
The 737 has been around for decades. The 737 was a small airplane, with a fairly basic design, Travis noted. Southwest was a fan of the airplane as it was reliable, simple and flexible, requiring only a small crew to operate the plane. This made the plan quickly profitable for airlines who operated them. However, Travis explained, market dynamics had shifted, forcing Boeing to create larger variants and build more technically advanced variants, which resulted in higher complexity. These evolutions, not limited to the 737, were mostly designed to aggressively decrease the cost per seat-mile.
Priorities were set on increasing airplane profitability rather than safety, Travis continued. This trend was primarily visible with the engines, which became ever larger to produce more power per unit whilst decreasing fuel consumption. Fuel consumption is one of the most important levers an airplane manufacturer can focus on to deliver an interesting product to its customer. For good reason, as fuel costs are one of the largest airline expenses, making up 15 to 20 percent of all expenses, the U.S. Department of Transportation noted back in September 2019.
In order to meet this demand, Boeing made an engineering decision to be compensated for through the now infamous MCAS flight control program. In order to house a larger engine, and instead of redesigning the 737, engineers at Boeing decided to move the engine further to the front of the wing. The engine lost its signature circular shape, receiving an oval one instead for better ground clearance. This meant that the thrust behavior changed. As pilots would add thrust, the nose would pitch up.
This required a mental shift as to how pilots needed to handle the plane. Pilots through training can learn to adjust to this new situation. These early warning signs were already noted by the FAA. But, instead of going back to the drawing board, Travis continued, Boeing built the MCAS system.
Skipping the line
Years later documents revealed that Boeing was able to convince FAA regulators that recertification for pilots wasn’t required and the government agency should relax its stance on the certification requirements, the Seattle Times reported in October 2019. According to the documents reviewed by the news outlet, back in 2014, Boeing pursued the FAA that no special attention was needed to cockpit alerts to warn pilots about unforeseen behavior. By skipping this step, Boeing would save a lot of money for certifying the new 737 Max airplane with federally dictated requirements.
The FAA regulations are designed to clearly communicate details of warning messages to pilots to ensure the crew can react accordingly in a timely manner. Boeing, being able to convince regulators, resulted in pilots being able to accurately assess the issue at hand, according to a report published by National Transportation Safety Board (NTSB), who analyzed the crashes of Lion Air and Ethiopian Airlines. The FAA, according to The Seattle Times, argued that Boeing should apply for recertification based on four clauses in requirements rulebook.
Meanwhile, through its ability to omit these steps, Boeing wasn’t forced to upgrade its decades old airframe and systems designed during the first 737 program. Boeing’s appeal relied heavily on the long standing history of previous 737 generations, the news outlet noted, despite having three fatal crashes in the past 10 years. Hence, the airplane manufacturer was able to tinker with the airplane’s lay-out, primarily the engines, without having to go through the regulatory process.
Skipping the regulatory process would save Boeing an additional $10 billion and also save customers of the 737 the burden of having to retrain their pilots, making the new airplane great value for money. Fast forward to 2017, the reluctance to update the plane’s warning systems, in combination with failing sensors sending the MCAS system astray, were the primary reasons for the fatal accidents. The NTSD report showed that due to sensory overload due to compounding error messages, pilots were unable to stabilize the airplane.
Instead, Boeing offered a self-administered online course for pilots, which omitted the updated MCAS flight control system, and was deemed sufficient for crew members to transition from the previous generation 737 to the new Max 8 variant, according to spokesmen from Southwest Airlines and American Airlines, who spoke with CNN about the installment of the new plates across their fleets. The pilots received a brief course that lasted between 56 minutes to three hours, highlighting the differences between the two airplanes.
However, the courses provided failed to address the MCAS. Boeing didn’t disclose the new software integration, emphasizing to the pilots that the plane was, at its core, still the old 737. Representative of the Allied Pilots Association, Captain Dennis Tajer, exclaimed his discontent with Boeing’s approach, commenting that hands-on experience should be mandatory if the equipment changed. The decision to opt for MCAS fits a broader narrative across Boeing. A narrative dedicated to reducing costs and maximizing profits, even when laws of physics have to be counteracted through software.
The Muilenberg Era
Executives at Boeing have been aggressively cutting across their workforce since 2012. In that year, the number of employees at the airplane and defense manufacturer peaked at 174,000. The years that followed saw deep cuts into the company’s workforce. In 2013, Boeing counted 168,000 employees. A year later, the workforce was reduced to 165.500 employees.
The fate of Boeing would be sealed with the appointment of Dennis Muilenburg, who positioned the airplane manufacturer in a spiral where profits became before safety. In June 2015, the Boeing board of directors elected Dennis Muilenburg to become the company’s 10th chief executive, succeeding James McNerny, who had been at the wheel at Boeing for the past 10 years. Muilenburg had been working for Boeing for 30-years prior to his appointment, starting as an intern at the company back in 1985.
In February 2016, Chief Executive at Boeing Commercial Airplanes, Ray Conner, announced a drastic workforce reduction to cut costs in order to align the company with intensified competition from its main rival Airbus, who saw massive success with its midsize airplane, the A321Neo. To create a rivaling product, Boeing saw itself forced to develop a new airplane, which put financial pressure on its balance sheet, Seattle Times aerospace reporter Dominic Gates noted.
While Boeing refrained from providing further details regarding the timeline and size of the operation, spokesman Doug Alder told The Seattle Times, the first workforce reductions would happen across executives and managers. Boeing would also tap into voluntary layoffs, with involuntary layoffs being a last resort. In 2017, the number of employees fell to 140,800, the lowest number since 2002. In December 2023, Boeing announced it would cut further into its strategic division, cutting half the number of planners across several departments in order to adjust to changing industry dynamics.
Fearing the Boeing 737 Max
In February 2024, Politico spoke with former senior employee at Boeing Ed Pierson about the decline of the company, failing oversight, ultimately leading to the tragic accidents with the company’s 737 Max. Pierson warned Boeing’s executives about poor assembly procedures, unfortunately to no avail as leadership pushed the airplane through the assembly line. The result was a troubling program which well into 2024 was plagued by problems.
Pierson noted that the company is capable of building high quality airplanes, but the leadership put pressure on staff to ramp up production, prioritizing profits over reliability. Boeing responded to Politico by commenting that the company had taken the necessary precautions and making the necessary investment to improve manufacturing. Despite these claims, Pierson remained on the fence about the 737 Max airplane. A key factor as to why the 737 Max has remained in operations is the traveler’s inability to distinguish the 737 Max from other Boeing airplanes.
Pierson noted that Boeing itself deserves its praiseworthy reputation. Being able to build complex machines, with employees pouring their heart and soul into making them. However, over the course of 2017 and into 2018, he continued, Boeing ran into issues with the engine supply chain. This trickled down to other components, which meant employees were working on parts of the plane wherever possible and having to revisit steps earlier in the assembly at a later stage.
Testing became disrupted due to the disorganized assembly, with multiple shifts having to continue testing. Pierson pointed out that this isn’t how airplanes should be constructed. The situation became so dire in fact, that in 2018, due to severe engine shortages, concrete blocks were installed on airplanes to prevent them from falling over. This served as a major warning sign and should’ve forced executives to first streamline the supply chain before continuing manufacturing. Pierson continued by saying the Federal Aviation Administration (FAA) was absent during the entire product process, leaving Boeing to its own devices.
Profit over safety
In July 2024, columnist at the Des Moines Register, Rekha Basu. reflected on the tumultuous Muilenburg era and the deep implications it had on the company’s disorganized operations that led to its subsequent downfall heralded through by the Boeing 737 Max disasters. Basu opens by stating that Boeing was one famous for being a leader in safety and design, now having become an example of cost-negligence that led to the premature death of 346 people in two plane crashes.
The downward spiral shouldn’t come as a surprise, Basu argued, as Muilenburg treated his home-state Iowa, the same way as he did during his time at aerospace company. During a 2019 Senate Commerce Committee hearing about the 737 Max crashes, Muilenburg said he was led by the values instilled in him by the state of Iowa. A feeble attempt to restore his credibility and ethos. However, this comment backfired, Basu noted, after Connecticut Sen. Richard Blumenthal argued that nowhere in the values of Iowa is lying and concealing.
Muilenburg, Basu continued, grew up in an era where state leaders put corporate interests before its citizens’ safety, referring to the polluted waterways that had to make way for economic profit. We could witness the relentless priority on optimizing revenue during instances such as a December 2017 interview, where Muilenburg explained to CNBC host Jim Cramer, how vital cutting the corporate tax rate would be to unleash the company’s full potential. Muilenburg explained that the tax cuts into a $6 billion annual research and development program. Noting that Boeing would use the available funds to boost innovation.
Budget would be made available to create new production lines, generate more manufacturing jobs and last but not least, boost returns for shareholders by improving dividends and increasing stock buybacks. Muilenburg expressed his faith in President Trump for helping his business succeed, allowing for direct communication lines. Continuing to reemphasize the importance of tax reforms and having a seat at the table to streamline regulatory policies is a valuable position and will benefit the entire economy as a whole. This brief exchange alone revealed how Boeing had transformed itself from an engineering company to a dividend generating company.
A PR-disaster
Boeing, once the pride and joy of the aviation industry, has put profits before safety. The airplane manufacturer did everything in its power, from persuading regulators to skipping software updates, to push the 737 Max onto the market as fast as possible to keep up with its primary competitor Airbus. In doing so, it opened a Pandora’s box, revealing how corrupted the company had become.
The debacle with the 737 Max was riddled with communication errors. Instead of tackling the problem head-on, allowing for the story to run its course and further damaging the already crumbling reputation. In March 2024, after Muilenberg announced his exit, the Boeing brand was still shattered with website The Drum asking PR-experts what the company could do to regain the trust of its customers and travelers. As Calhoun was preparing for his new role as CEO of Boeing, a long road of reputation restoration lay ahead of him, with the incident with Alaska Airlines still fresh in everybody’s mind.
Founder and president of brand consultancy and market research firm Brand Keys, Dr Robert Passikoff, told The Drum, that replacing its leadership team was the worst kind of crisis management of the 20th century, acting as purely symbolic. Professor of strategic communications at the University of Louisville, Dr Karen Freberg, had similar views, noting that changing the company’s leadership was just the first step. Founder of PR firm O’Brien Communications and author of The Essential Crisis Communications Plan, Tim O’Brien, however was less skeptical, noting that the change was more than just optics.
Boeing needed a new executive who could address and re envision the cultural and operational issues that plagued the company. According to O’Brien, Boeing will have to review every organizational issue and implement solutions that will appease regulators, customers and travelers. These problems, he continued, would have to extend beyond just external communications. New systems have to be put in place to determine the root cause and develop the necessary processes to resolve them as quickly as possible, O’Brien noted.
Founder and head of strategy at Bread & Law, Andrew Graham, commented that the company made critical errors by addressing the concerns of shareholders first, creating an image that shareholder satisfaction mattered more to the company than anything surrounding the company. The stance doesn’t come as a surprise as during the early days of Muilenberg’s career, delivering higher value to shareholders was deemed a key focus of the company’s leadership. An error that would now haunt the company and erode any message during the 737 Max disaster.
Graham added that Boeing would have to step over its stock performance and refocus on rebuilding the company, returning to its core assets, quality and craftsmanship. Values that have helped Boeing turn into the aerospace behemoth of today. Only through this will it regain the confidence of its customers, who have the quality of their airplanes deteriorate as time progressed. The aviation industry is not the industry where one can cut corners, offering products that skimp out on safety in favor of lower prices.
