Manufacturer still faces tough recovery

Boeing is Embarking on Another Rebuilding Year

Boeing is embarking on another rebuilding year, following a year of turmoil and challenges for the company. A year ago, Boeing was thrust back into the spotlight for concerns over safety and quality when a fuselage panel that covered an unused emergency exit door blew out mid-air from a nearly new Boeing 737 Max 9 operated by Alaska Airlines. The accident terrified those on board, although no one was seriously injured and the plane made a safe emergency landing back in Portland, Oregon.

Key bolts were not installed before the aircraft left Boeing’s Renton, Washington, 737 factory, a preliminary National Transportation Safety Board report found, again tarnishing the image of the marquee U.S. exporter.

Boeing’s stock price is down more than 30% over the past 12 months, while the S&P 500 is up nearly 27%.

Boeing and S&P 500 Performance

Boeing’s leaders have spent the past 12 months making major changes that span replacements in its executive ranks, including a new chief executive, to more robust training for hundreds of factory workers, many of whom are new.

The company has outlined its progress over the past year, including initiating random quality audits at factories. Boeing said it has "significantly" reduced defects in 737 fuselages made by Spirit AeroSystems, which it is buying back, and cut down on so-called "traveled work," where tasks to build aircraft are done out of sequence, in an effort to reduce flaws. The manufacturer also said it addressed much of the feedback from employees provided during sessions with management throughout the year.

Federal Aviation Administration’s Increased Oversight

Since the accident, the Federal Aviation Administration increased its oversight of Boeing, capping its production of its best-selling 737 Max jets, though output is still below those levels. FAA chief Mike Whitaker, who said he will step down on January 20, warned the company on Friday that "enhanced oversight is here to stay."

He said Boeing’s turnaround "is not a one-year project."

"What’s needed is a fundamental cultural shift at Boeing that’s oriented around safety and quality above profits. That will require sustained effort and commitment from Boeing, and unwavering scrutiny on our part," Whitaker said in a statement.

Mounting Losses, Delivery Delays

Boeing has not posted an annual profit since 2018. That year was the first of two fatal crashes of its 737 Maxes that killed 346 people — Boeing’s worst crisis in recent memory. A flight-control system was implicated in both crashes, and the aircraft was grounded worldwide for almost two years.

Boeing has lost more than $30 billion since 2019, and its new CEO is tasked with ensuring Boeing can increase production without defects that have slowed deliveries in the past.

New CEO and Labor Deal

In August, Boeing brought in Kelly Ortberg, a former CEO of Rockwell Collins with three decades of experience in aerospace, as Boeing’s new chief executive, replacing Dave Calhoun. Weeks into Ortberg’s tenure, Boeing machinists went on strike for nearly two months, a work stoppage that ended after they approved a new four-year labor deal with 38% raises. Some longtime workers sought to have Boeing reinstate pensions, but that was not part of the new labor deal.

Conclusion

Boeing is facing another challenging year as it works to regain the trust of regulators, customers, and the public. The company’s new CEO, Kelly Ortberg, has outlined a plan to address the company’s quality issues and improve its production processes. However, the road to recovery will be long and difficult, and will require significant changes to Boeing’s culture and operations.

Frequently Asked Questions

Q: What is Boeing’s current stock price?
A: Boeing’s stock price is down more than 30% over the past 12 months.

Q: What is the current production level of Boeing’s 737 Max jets?
A: Boeing’s 737 Max production is capped, with output still below pre-accident levels.

Q: What is the new CEO’s plan to address Boeing’s quality issues?
A: The new CEO, Kelly Ortberg, has outlined a plan to reduce defects, improve production processes, and address employee feedback.

Q: What is the impact of the strike on Boeing’s production?
A: The strike idled production of most of Boeing’s jets, although factories have resumed output in recent weeks.

Q: What is the new CEO’s plan to address Boeing’s workforce?
A: The new CEO, Kelly Ortberg, has announced plans to cut 10% of the workforce, or around 17,000 employees, as part of an effort to streamline the company and improve efficiency.