Boeing CEO, Dave Calhoun, is set to testify before a Senate panel on Tuesday regarding the company’s safety and manufacturing crises. This comes after a door panel blew out of a nearly new 737 Max 9 jet in January, raising concerns about employee training, aircraft quality, and the company’s tarnished safety reputation. Calhoun, who plans to step down before the end of the year, will face questions from the Senate Permanent Subcommittee on Investigations.
In his written testimony ahead of the hearing, Calhoun acknowledges the criticisms of Boeing’s culture and states that while their culture is far from perfect, they are taking action and making progress to address the issues. The hearing is crucial for Boeing as they face potential U.S. prosecution after violating a 2021 settlement related to the 737 Max crashes in 2018 and 2019 that claimed 346 lives. The Justice Department has until July 7 to decide whether to prosecute.
The hearing is expected to be emotionally charged, with several victims’ family members in attendance. These family members have already met with Justice Department officials to urge prosecution. Senator Richard Blumenthal, the subcommittee’s chairman, expressed the American people’s need for an explanation from Boeing, as the company failed to fulfill its promise of overhauling its safety practices and culture.
Amidst these challenges, the Federal Aviation Administration (FAA) has taken a strong stance against Boeing. FAA Administrator Mike Whitaker has stated that inspectors will remain on the ground at Boeing’s facilities until the agency is satisfied with safety improvements. The FAA has already halted Boeing’s ability to increase production of the Max, resulting in a negative impact on Boeing’s cash flow. The company warned investors last month that it would burn cash instead of generating it this year.
As a result, Boeing’s shares have plummeted over 30% year-to-date. This decline contrasts sharply with the nearly 15% gain in the S&P 500. The company’s lower production and deliveries have also affected its big customers like Southwest Airlines and United Airlines, forcing them to adjust their growth and hiring plans.
To address quality flaws, Boeing is implementing changes to reduce defects and encourage workers to report problems in its factories. This comes after whistleblowers raised concerns about quality issues and retaliation. Furthermore, Boeing is facing supply chain issues as one of its major suppliers, Spirit AeroSystems, revealed that titanium entered the supply chain with falsified documents. Despite the falsification, over 1,000 tests confirmed that the material is of airplane-grade quality.
In an effort to stabilize their operations, Boeing is in the process of finalizing a deal to purchase fuselage supplier Spirit AeroSystems. Calhoun stated that this deal is likely to be completed in the first half of the year.
Overall, Boeing’s appearance before the Senate panel holds significant importance for the company’s future. It provides an opportunity for them to address the concerns surrounding their safety and manufacturing crises, rebuild trust, and demonstrate their commitment to rectifying the issues.
