| From: John Koligman | 5/23/2024 1:42:13 PM | | | | | | Boeing expects a 2024 cash burn, slow recovery of airplane deliveries amid crisis, CFO says
PUBLISHED THU, MAY 23 202411:20 AM EDTUPDATED AN HOUR AGO
KEY POINTS
- Boeing’s CFO forecast the company would have negative free cash flow in 2024 as manufacturing troubles persist.
- Boeing has slowed production since a door plug blew out of a nearly-new 737 Max 9 in January.
- Aircraft deliveries won’t likely improve in the second quarter from the first, CFO Brian West said.
An American Airlines Boeing 737 MAX 8 flight from Los Angeles approaches for landing at Reagan National Airport shortly after an announcement was made by the FAA that the planes were being grounded by the United States in Washington, U.S. March 13, 2019.
Joshua Roberts | Reuters
Boeing will burn through cash this year and deliveries of new planes won’t improve in the second quarter from the first, as the manufacturer deals with a host of production challenges tied to its best-selling planes, the company’s CFO Brian West said Thursday.
A month ago, West forecast Boeing would generate free cash flow “in the low single-digit billions.” The new forecast shows the mounting costs of the planemaker’s latest crises.
Boeing burned through nearly $4 billion in cash in the first quarter and West said that figure could be similar or “possibly a little worse” in the second quarter, but that the company would likely return to generating cash in the second half of 2024.
The company’s aircraft deliveries in the first quarter fell to the lowest level since the pandemic. The bulk of a plane’s price is paid when it’s handed over to a customer.
Boeing’s shares were down 5% in midday trading after West’s comments at a Wolfe Research industry conference
“We have frustrated and disappointed our customers because of some of the production supply chain issues that we’re up against,” West said at the conference. “And while I understand that frustration, the most important thing we can do for our customers and the supply chain in the industry is to focus on the actions that are underway as we speak so that we could stabilize this production system, improve quality, and get more predictable.”
Boeing CEO Dave Calhoun in March said he would step down by the end of the year, and the company replaced the chairman and chief executive of its commercial airplane unit. Leading up to the shakeup, CEOs of major airline customers complained about delivery delays and difficulty planning flights because of surprise disruptions.
Boeing’s latest production issues surfaced after a door plug blew out midair from a nearly-new 737 Max 9 at the start of the year, just as the company was trying to repair years of reputational damage from two fatal Max crashes in 2018 and 2019.
The accident increased federal scrutiny of the company, whose executives have vowed to stamp out production flaws and regain the trust of regulators, airline customers and the public.
Next Thursday, Boeing leaders are set to meet with the Federal Aviation Administration to present the company’s plan to improve its quality control, the FAA said. The agency gave Boeing 90 days to complete the plan starting in late February.
Other problems have also sprung up, including a pause on deliveries of 737 Max planes to China to review batteries for the cockpit voice recorder. Boeing said in a statement that it is working with “our Chinese customers on the timing of their deliveries as the Civil Aviation Administration of China completes its review of batteries contained within the 25-hour cockpit voice recorder assembly unit.”
Parts shortages have also slowed deliveries of 787 Dreamliners, Boeing has said. American Airlines last month said it would cut some international flights because of delays of the wide-body jets. Other carriers, including United Airlines and Southwest Airlines, said they had to scale back some of their growth and hiring plans because of delayed Boeing jets. |
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| From: John Koligman | 5/30/2024 7:07:03 PM | | | | | | More cash burn for longer?
FAA won’t clear Boeing to increase 737 Max production for several months, agency head says
PUBLISHED THU, MAY 30 20248:28 AM EDTUPDATED 3 HOURS AGO
KEY POINTS
- Boeing’s departing CEO Dave Calhoun and other top leaders met with the Federal Aviation Administration to present its safety plan.
- The FAA in February gave Boeing 90 days to come up with a quality improvement plan in the wake of a near-catastrophic door plug blowout on an Alaska Airlines flight in January.
- Boeing spelled out improvements in employee training, platforms for workers’ concerns and the reduction of out-of-sequence work
Boeing 737 Max 8 fuselages manufactured by Spirit Aerosystems in Wichita, Kansas are transported on a BSNF train heading west over the Bozeman Pass March 12, 2019 in Bozeman, Montana.
William Campbell | Corbis News | Getty Images
It will likely be months before the Federal Aviation Administration clears Boeing to increase production of its bestselling 737 Max, the head of the agency said Thursday.
The FAA in January barred the manufacturer from boosting production of the planes weeks after a door plug blew out midair from a new 737 Max 9, just minutes into an Alaska Airlines flight. Federal safety investigators found that the bolts that hold the panel in place appeared not to have been installed before the plane was delivered to Alaska Airlines last year.
Boeing CEO Dave Calhoun and other top company leaders met with FAA Administrator Mike Whitaker and other agency officials earlier Thursday to present a quality improvement plan that the agency gave Boeing 90 days to produce, in which the company outlined its efforts to improve staff training and production practices at its factories.
“We will not approve production increases beyond the current cap until we’re satisfied,” Whitaker said. He said there isn’t a timeline but it wouldn’t likely be in the next few months.
Whitaker said at a press conference after the roughly three-hour meeting that Boeing’s work was far from complete and that the strong agency oversight of the company would continue.
Whitaker’s comments suggest a long road ahead for Boeing to ensure manufacturing quality. Meanwhile, it’s grappling with a crisis that has drained cash from an iconic U.S. company eager to improve its reputation after two fatal Max crashes in 2018 and 2019 killed 346 people. Whitaker is scheduled to brief lawmakers on the House Committee on Transportation and Infrastructure on June 4.
“Boeing has laid out their roadmap, and now they need to execute,” he said.
The FAA said its senior leaders will meet with Boeing every week to review their performance metrics.
Federal Aviation Administration Administrator Mike Whitaker speaks at a news conference on the FAA’s work to hold Boeing accountable for safety and production quality issues, at the Federal Aviation Administration Headquarters on May 30, 2024 in Washington, DC.
Andrew Harnik | Getty Images
Boeing has reduced its production of the Max to stamp out production flaws, improve manufacturing processes and address increased FAA oversight.
Resulting aircraft delays have meant airline customers, such as United and Southwest, have had to redraw their growth plans.
Boeing has produced an average of 21 Max planes a month over the last three months, according to an estimate from Jefferies, well below the target rate of around 38 per month that it disclosed in mid-2023.
Lower production drives up costs, and fewer aircraft deliveries deprive the company of cash because airlines pay for the bulk of the plane’s price when they receive it.
Boeing Chief Financial Officer Brian West on May 23 said that the company expects to burn cash this year instead of generating it. For the current quarter alone, Boeing expects to use about $4 billion.
Boeing executives have acknowledged that the new plan won’t turn things around immediately.
“The 90-day plan ... is not a finish line,” West said at an investor conference last week. “We look forward to the feedback that we’ll get after next week.”
Boeing’s report detailed steps it’s taken to invest in its workforce, which is composed of thousands of new employees after experienced staff took exit packages during the pandemic. The manufacturer also said it would improve safety culture and eliminate defects.
The company said it has added 300 hours of training material and introduced workplace coaches. It said it is also clearing more time on managers’ schedules to be present on factory floors instead of in meetings.
The company said it has also reduced so-called traveled work, where required tasks on the planes are done out of sequence.
“We are confident in the plan that we have put forward and are committed to continuously improving,” said Stephanie Pope, chief executive of Boeing’s commercial airplane unit, who was appointed in March after an executive shake-up at the company. “We will work under the FAA’s oversight and uphold our responsibility to the flying public to continue delivering safe, high-quality airplanes.”
The manufacturer also included in its report information about factory “stand-downs,” in which it paused work to have conversations about potential improvements on production lines with employees. The manufacturer implemented those brief work pauses in the months after the Alaska Airlines door plug blowout.
Calhoun, who said he would step down by the end of the year, told staff in April that the company has received more than 30,000 “ideas on how we can improve” and that “speak up submissions” — concerns raised by staff — and comments were up 500% over 2023.
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| From: John Koligman | 6/10/2024 2:08:42 PM | | | | | | A Big Decision for Boeing’s Next C.E.O.: Is It Time for a New Plane?
Some analysts say building a new plane soon would help the company regain ground it has lost to Airbus. But doing so would be difficult and expensive.
Credit...Palesa Monareng
Listen to this article · 8:08 min Learn more
By Niraj Chokshi
More than a decade ago, executives at Boeing made a pivotal decision: To keep up with the company’s main rival, Airbus, they gave up on the idea of developing a new airplane and raced to update the 737, the company’s most popular jet.
That effort culminated in the 737 Max, which had two fatal crashes in 2018 and 2019 and attracted more scrutiny this year when a panel blew out of one of the planes during a flight in January. The jet’s troubles have left Boeing behind Airbus in the global market for single-aisle planes, which it once dominated.
Now, Boeing, which is expected to appoint a new chief executive by the end of the year, has to make another critical choice: When should it develop its next brand-new plane?
If the company missteps, it could spend billions of dollars and still lose market share to Airbus, which is based in Toulouse, France. Both manufacturers also face a distant but rising threat from China and growing pressure to cut planet-warming emissions.
“That will be one of the most important decisions for whoever steps into the C.E.O. role,” said Ken Herbert, an aerospace and defense analyst at RBC Capital Markets. “Their legacy is going to be defined by what they do with the portfolio.”
Boeing declined to provide comment for this story.
Commercial planes are generally divided into two groups. Narrow-body, or single-aisle, planes like the 737 typically carry 100 to 200 passengers on domestic U.S. flights. Wide-body, or twin-aisle, planes can take more passengers farther — from, say, New York to London or Tokyo.
Boeing and Airbus sell many more narrow-body jets, but airlines are increasingly demanding larger versions of those planes because of limited gates and runway capacity at many airports and growing demand in travel.
The Max was designed to compete against the Airbus A320neo family of planes. Experts say the verdict in that contest is clear: Boeing lost. Airlines around the world have ordered many more of the Airbus jets, especially the largest, the A321neo. The European company’s lead was solidified after the Max crashes — which experts traced to poor design and engineering decisions — and the ensuing 20-month global ban on the plane.
In 2019, for the first time, Airbus had more passenger planes flying around the planet than Boeing did, according to Cirium, an aviation data provider.
The Max remains popular, especially with airlines in the United States, which have a long history of flying Boeing planes. The company is working to fill about 4,300 orders for the Max, a backlog worth hundreds of billions of dollars. But Airbus has sold far more of the A320neo family, with more than 7,100 outstanding orders for the three variants of that plane.
Boeing still leads when it comes to larger, twin-aisle planes, but Airbus’s dominance in the lucrative single-aisle market could prove self-reinforcing, experts said. With more sales coming in, Airbus can invest more in research and development. With more planes flying, it can earn more from selling spare parts and providing services.
“The entire time Boeing has been running around putting out fires, Airbus has just been running their business,” said Ron Epstein, an aerospace and defense analyst at Bank of America.
Boeing has also squeezed all it can out of the 737, which debuted in the late 1960s. In developing the Max, the company pushed that plane’s structure to its limits. Its next plane is likely to be one that it builds from the ground up, aviation experts said.
It was not clear what that new jet might look like or when it might arrive.
Dave Calhoun, Boeing’s chief executive, has said the company won’t roll out a new plane until the mid-2030s — partly because such a monumental effort would be worthwhile only when companies like General Electric, Rolls-Royce and Pratt & Whitney introduced more efficient engines.
But building a new plane could help Boeing fill an important gap in the market for larger-narrow-body jets, some experts said.
Airbus’s most popular plane, by far, is the A321neo, which has the most seats and can travel the farthest of the company’s three neo models. Boeing’s answer to that plane, the 737 Max 10, does not fly quite as far and has yet to be approved by regulators.
Mr. Epstein of Bank of America estimated last year that Boeing could sell 6,500 larger single-aisle jets to airlines, mostly to replace smaller narrow-body planes. That jet could be developed in seven to eight years for an investment of up to $20 billion, with Boeing generating at least five times as much in gross profits, he said at the time.
Some aviation experts also argue that Boeing and Mr. Calhoun have been too cautious about committing to a new plane, which they said could be more efficient even without waiting for new engines. Newer materials, different kinds of wings and other advancements could help Boeing achieve meaningful improvements, they said.
“If you present the airlines with a reasonably good plane, they’ll take it,” said Michel Merluzeau, an analyst at AIR, an aerospace and defense consulting firm.
The longer Boeing takes to build a new plane, some said, the longer Airbus has to expand its lead. And while new engines promise big gains in efficiency, they may fall short in practice. Airlines may also be slow to buy planes powered by those engines, especially after problems with the current generation’s engines, which have needed more and longer repairs than expected.
But others said it could be wise for Boeing to wait. If the company moves too soon, Airbus could swoop in with an even newer, better aircraft.
Most analysts expect Airbus to release a new plane in the middle of the next decade, around the same time that Mr. Calhoun has targeted. Aviation experts disagree on whether Airbus would move first or wait to follow Boeing, but say the European manufacturer is well positioned for either approach.
Developing a new plane is a huge undertaking. Unlike wide-body planes, narrow-body jets are sold in larger numbers and, thus, need to be churned out rapidly; Boeing and Airbus aim to produce dozens every month. To accommodate that pace, Boeing will have to develop a complex production system and prepare its suppliers. Airlines will also probably have to be willing to train pilots for a new jet, an expensive and time-consuming process.
Ultimately, any new plane will also have to last for decades, Mr. Calhoun said in an interview with Aviation Week, a trade publication, last year.
“Twenty years is a disaster; 30 years is a disaster,” he said. “They’ve got to last 50 years.”
Of course, Boeing would not be starting from scratch. The company and Airbus are constantly developing and issuing new techniques, technologies and tools. Boeing can apply lessons learned elsewhere, for example, from developing the wide-body 787 Dreamliner, which it first delivered to an airline in 2011, or the coming 777X, a more efficient version of an existing wide-body Boeing plane whose wing the company will make in house with composite materials.
The company is also working on experimental technologies. With NASA, Boeing is developing a longer, thinner wing supported by braces, a design known as the Transonic Truss-Braced Wing. It also maintains a research program known as the ecoDemonstrator, which uses modified planes to test new technologies. Both Boeing and Airbus are also separately experimenting with the use of sustainable fuels, which can be made from used cooking oil, waste, corn and other materials.
Aviation experts said building a new plane could generate new enthusiasm for the company after its recent problems.
“If they can make it easier for people to like them, I think they’ll find there is quite a lot of support out there for a new, improved Boeing,” said Rob Stallard, an analyst who covers both Boeing and Airbus at Vertical Research Partners.
Niraj Chokshi writes about aviation, rail and other transportation industries. More about Niraj Chokshi |
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| From: John Koligman | 6/14/2024 12:57:26 PM | | | | | | F.A.A. Investigating How Counterfeit Titanium Got Into Boeing and Airbus Jets
The material, which was purchased from a little-known Chinese company, was sold with falsified documents and used in parts that went into jets from both manufacturers.
A Boeing manufacturing facility. The company has been under intense scrutiny after a series of recent mishaps and safety issues.Credit...Logan Cyrus/Agence France-Presse — Getty Images
By Mark Walker
Reporting from Washington
June 14, 2024, 5:00 a.m. ET
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Some recently manufactured Boeing and Airbus jets have components made from titanium that was sold using fake documentation verifying the material’s authenticity, according to a supplier for the plane makers, raising concerns about the structural integrity of those airliners.
The falsified documents are being investigated by Spirit AeroSystems, which supplies fuselages for Boeing and wings for Airbus, as well as the Federal Aviation Administration. The investigation comes after a parts supplier found small holes in the material from corrosion.
In a statement, the F.A.A. said it was investigating the scope of the problem and trying to determine the short- and long-term safety implications to planes that were made using the parts. It is unclear how many planes have parts made with the questionable material.
“Boeing reported a voluntary disclosure to the F.A.A. regarding procurement of material through a distributor who may have falsified or provided incorrect records,” the statement said. “Boeing issued a bulletin outlining ways suppliers should remain alert to the potential of falsified records.”
The revelation comes at a moment of intense scrutiny of Boeing and the broader aviation industry, which is reeling from a series of mishaps and safety issues. In January, a door panel blew off a Boeing 737 Max 9 jet while it was in flight, prompting several federal investigations. In April, Boeing told the F.A.A. about a separate episode involving potentially falsified inspection records related to the wings of 787 Dreamliner planes. Boeing reported to the F.A.A. that it might have skipped required inspections involving the jet’s wings and that it would need to reinspect some of the Dreamliners still in production.
On May 30, Boeing submitted a plan to the F.A.A. outlining safety improvements it planned to make and committed to weekly meetings with the agency. Dave Calhoun, the Boeing chief executive, is set to testify on Tuesday before a Senate panel on the company’s safety issues.
The use of potentially fake titanium, which has not been previously reported, threatens to extend the industry’s problems beyond Boeing to Airbus, its European competitor. The planes that included components made with the material were built between 2019 and 2023, among them some Boeing 737 Max and 787 Dreamliner airliners as well as Airbus A220 jets, according to three people familiar with the matter who spoke on the condition of anonymity because they were not authorized to speak publicly. It is not clear how many of those planes are in service or which airlines own them.
Spirit is trying to determine where the titanium came from, whether it meets proper standards despite its phony documentation, and whether the parts made from the material are structurally sound enough to hold up through the projected life spans of the jets, company officials said. Spirit said it was trying to determine the most efficient way to remove and replace the affected parts if that ended up being necessary.
“This is about documents that have been falsified, forged and counterfeited,” said Joe Buccino, a Spirit spokesman. “Once we realized the counterfeit titanium made its way into the supply chain, we immediately contained all suspected parts to determine the scope of the issues.”
The titanium in question has been used in a variety of aircraft parts, according to Spirit officials. For the 787 Dreamliner, that includes the passenger entry door, cargo doors and a component that connects the engines to the plane’s airframe. For the 737 Max and the A220, the affected parts include a heat shield that protects a component, which connects a jet’s engine to the frame, from extreme heat.
Boeing and Airbus both said their tests of affected materials so far had shown no signs of problems.
Boeing said it directly purchased most of the titanium used in its plane production, so most of its supply was unaffected.
“This industrywide issue affects some shipments of titanium received by a limited set of suppliers, and tests performed to date have indicated that the correct titanium alloy was used,” Boeing said in a statement. “To ensure compliance, we are removing any affected parts on airplanes prior to delivery. Our analysis shows the in-service fleet can continue to fly safely.”
Airbus likewise maintained that “the A220’s airworthiness remains intact.”
“Numerous tests have been performed on parts coming from the same source of supply,” an Airbus spokeswoman said in a statement, adding, “The safety and quality of our aircraft are our most important priorities, and we are working in close collaboration with our supplier.”
The European Union Aviation Safety Agency did not respond to a request for comment.
Spirit has suffered from quality issues and financial troubles in recent years, and it came under new scrutiny this year after the episode in January involving the door panel of the 737 Max, whose fuselage it makes.
The problem illustrates the complex global supply chain used in producing modern jetliners, and the story of what appears to have gone wrong involves companies in China, Italy, Turkey and the United States.
The issue appears to date to 2019 when a Turkish material supplier, Turkish Aerospace Industries, purchased a batch of titanium from a supplier in China, according to the people familiar with the issue. The Turkish company then sold that titanium to several companies that make aircraft parts, and those parts made their way to Spirit, which used them in Boeing and Airbus planes.
In December 2023, an Italian company that bought the titanium from Turkish Aerospace Industries noticed that the material looked different from what the company typically received. The company, Titanium International Group, also found that the certificates that came with the titanium seemed inauthentic.
Turkish Aerospace Industries did not respond to a request for a comment.
Spirit began investigating the matter, and the company notified Boeing and Airbus in January that it could not verify the source of the titanium used to make certain parts. Titanium International Group told Spirit that when it bought the material in 2019, it had no clue that the paperwork had been forged, according to Spirit officials.
Francesca Conti, a general manager for Titanium International Group, said that the episode was under investigation and that she could not provide additional details. “We are cooperating with relevant authorities to address any issue eventually identified,” she said in an email.
The documents in question are known as certificates of conformity. They serve somewhat as a birth certificate for the titanium, detailing its quality, how it was made and where it came from, Spirit officials said.
People familiar with the situation said it appeared that an employee at the Chinese company that sold the titanium had forged the details on the certificates, writing that the material came from another Chinese company, Baoji Titanium Industry, a firm that often supplies verified titanium. Baoji Titanium later confirmed that it had not supplied the titanium. The origin of the titanium remains unclear.
“Baoji Titanium doesn’t know about the company and has no business dealing with this company,” the firm said in a statement to The New York Times.
Without knowing where the material came from or how it was handled, it is impossible to verify the airworthiness of the parts, said Gregg Brown, the senior vice president for global quality at Spirit.
“Our quality management process relies on the traceability of the raw materials all the way from the mills,” Mr. Brown said. “There has been a loss of traceability in that process and a documentation challenge.”
Spirit officials said they had started testing titanium parts to make sure aviation-grade material was used. The company is testing components that are still in stock and that are on undelivered fuselages.
So far, Spirit’s testing has confirmed that the titanium is the appropriate grade for airplane manufacturers. But the company has been unable to confirm that the titanium was treated through the approved airplane manufacturing process. The material passed some of the materials testing performed on it but failed others.
Mr. Buccino, the Spirit spokesman, said the company was working with customers to identify the affected planes. Aircraft that are already in service will be monitored by airlines and removed from service earlier than normal if warranted, he said. More likely, he said, the affected parts will be removed during routine maintenance checks regardless of whether the titanium checks out.
Olivia Wang contributed reporting from Hong Kong. Kitty Bennett contributed research. |
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| From: John Koligman | 6/14/2024 8:55:26 PM | | | | | | Investigation underway into rare, unsafe airliner roll experienced by a Boeing 737 Max
By Gregory Wallace, CNN
3 minute read
Updated 3:46 PM EDT, Fri June 14, 2024
A Southwest Airlines check-in area at the Oakland International Airport in Oakland, California, US, on Tuesday, Sept. 19, 2023.
David Paul Morris/Bloomberg/Getty Images/File
CNN —
Federal authorities and Boeing are trying to figure out why a 737 Max 8 experienced a rare, unsafe back-and-forth roll during flight.
The oscillating motion is known as a Dutch roll, and one characteristic described by the Federal Aviation Administration is the nose of an aircraft making a figure-eight.
There were no injuries onboard Southwest Airlines flight 746 on May 25, according to the airline and a preliminary report by the FAA. The report said the crew “regained control,” and the plane safely landed.
But the aircraft suffered “substantial” damage and the FAA classified the incident as an “accident.” The FAA report said an inspection “revealed damage to the standby PCU,” or power control unit, which controls the rudder.
It is unclear if the damaged unit led to or was a result of the roll.
The plane has not flown since landing in Oakland, California after the incident, except to move it to a Boeing facility in Washington state. Boeing did not immediately comment to CNN.
Southwest told CNN it referred the incident to the FAA and National Transportation Safety Board and is participating in and supporting the investigation.
The incident occurred almost three weeks ago and was added to a FAA database this week. There were 175 passengers and six crew onboard, according to the airline.
The NTSB confirmed it has opened an investigation into this incident. Investigators have downloaded data from the flight data recorder, which “will aid investigators in determining the length and severity of the event.”
Voice recordings from the voice data recorder – the other of the so-called black boxes - were overwritten.
In February, the FAA required airlines flying some 737 Max 8 and similar aircraft to inspect the rudder assembly for loose or missing nut, washer and bolt. It said the flaw would prevent the pilots from controlling the rudder using foot pedals. Authorities have not said if this condition and the Dutch roll last month are related.
An unusual motionMost passengers have never felt a plane make this movement — and most airline pilots have never experienced it in actual flight.
“It’s very obscure,” aviation safety analyst and former airline pilot Kathleen Bangs told CNN. “It’s a very uncomfortable movement and you feel the tail swinging around.”
While moving forward in flight, airplanes can pivot along three axis: Nose up and down, known as pitch; wings dipping down or raising up, known as roll; and the tail shifting left or right, known as yaw.
Airliners turn using a typically seamless combination of roll and yaw coordinated by the aircraft’s computers. These large aircraft also have yaw dampers that make small adjustments throughout flight.
In the Dutch roll, the plane both rolls and yaws excessively. Passengers would feel the plane shift to one side, and back to the other — moving back and forth, Bangs said.
She said airline pilots train for scenarios where their yaw dampers fail. They could take an aircraft simulator to a high altitude and turn off the yaw damper.
“Then you stomp on a rudder pedal really hard to try to initiate [the roll] in the simulator,” Bangs said.
To get out of a Dutch roll, pilots can slow the aircraft and descend to thicker air. Modern airliners are designed to be inherently stable in air, she said, so the plane may return to level flight with minimal additional input.
But the forces can be powerful. In 1959, four of the eight occupants on a Boeing 707 test and training flight were killed just outside of Washington, DC, after extremely steep Dutch rolls.
“The aircraft immediately yawed and rolled violently to the right,” reads a report from the Civil Aeronautics Board, which investigated the incident. “Several gyrations followed and after control of the aircraft was regained, it was determined that three of the four engines had separated from the aircraft and it was on fire.” |
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| From: John Koligman | 6/18/2024 1:52:19 PM | | | | | | Boeing CEO heads for Senate grilling as new whistleblower alleges company hid bad airplane parts
PUBLISHED TUE, JUN 18 20245:00 AM EDTUPDATED 12 MIN AGO
KEY POINTS
- Boeing CEO Dave Calhoun faces a Senate panel over ballooning safety and quality control crises with the plane-maker.
- Boeing is under fire after a door plug blew out of one of its nearly new 737 Max planes in January during a flight.
- The Senate subcommittee released whistleblower claims on Tuesday from Boeing employee Sam Mohawk, alleging the company lost track of parts that were damaged or not up to specification.
Dave Calhoun, CEO of Boeing, leaves a meeting with Sen. Dan Sullivan, R-Alaska, in Hart Building, on Wednesday, January 24, 2024. Calhoun was meeting with senators about recent safety issues including the grounding of the 737 MAX 9 planes.
Tom Williams | Cq-roll Call, Inc. | Getty Images
Boeing CEO Dave Calhoun plans to tell a Senate panel on Tuesday that the company’s culture is “far from perfect” as fresh whistleblower claims surface just hours before the hearing that allege the company mishandled hundreds of defective parts.
“I’m here to answer questions. I’m here in the spirit of transparency, and I’m here to take responsibility,” Calhoun told reporters before the hearing.
Calhoun, who has said he will step down before the end of the year, faces questions from the Senate Permanent Subcommittee on Investigations as the company works to improve employee training and aircraft quality and to fix its tarnished safety reputation. The company has still not named a replacement for Calhoun, who took over after its previous leader was ousted for his handling of two fatal Boeing crashes.
“Much has been said about Boeing’s culture. We’ve heard those concerns loud and clear. Our culture is far from perfect, but we are taking action and making progress,” Calhoun plans to tell the subcommittee, according to written testimony ahead of the hearing.
The subcommittee released whistleblower claims on Tuesday from Sam Mohawk, a quality assurance investigator at Boeing, alleging the company lost track of parts that were damaged or not up to specification and that “those parts are likely being installed on airplanes.” The parts Mohawk flagged were in Boeing’s Renton, Washington, plant, where the company makes its best-selling 737 Max.
Mohawk said he was retaliated against and that he was told by supervisors to hide evidence from the Federal Aviation Administration, according to a memo shared by the committee on Tuesday. Dozens of important parts were stored outside during an FAA inspection, including 42 rudders as well as winglets and stabilizers, Mohawk alleged in claims with the Occupational Safety and Health Administration, the memo said.
A Boeing spokeswoman said that the company received the claims Monday night and that staff are reviewing them.
“We continuously encourage employees to report all concerns as our priority is to ensure the safety grof our airplanes and the flying public,” she said.
The FAA said it has seen an increase in the number of reports from Boeing staff since the door-plug blowout in January.
“We thoroughly investigate every report, including allegations uncovered in the Senate’s work,” the agency said Tuesday. The FAA declined to comment on the specifics of the latest allegations.
Mohawk is not testifying before the Senate subcommittee’s hearing, which starts at 2 p.m. ET.
The hearing and new whistleblower claims are further complicating matters for Boeing. The company already faces potential U.S. prosecution after the Justice Department said last month that the plane-maker violated a 2021 settlement tied to 737 Max crashes in 2018 and 2019 that claimed 346 lives. That agreement, which protected the company and its executives from facing criminal charges tied to the crashes, would have expired just days after the blowout of the Alaska Airlines door panel in January. The Justice Department has until July 7 to decide whether to prosecute.
Several victims’ family members are expected to attend Tuesday’s hearing. Relatives of Max crash victims met with Justice Department officials late last month to urge the U.S. to prosecute.
“Boeing made a promise to overhaul its safety practices and culture. That promise proved empty, and the American people deserve an explanation,” said Sen. Richard Blumenthal, D-Conn., the subcommittee’s chairman, upon announcing the hearing earlier this month.
WATCH NOW
VIDEO15:04
Why the Boeing 737 Max has been such a mess
The FAA has taken a hard line against Boeing, with FAA Administrator Mike Whitaker saying the regulator will keep inspectors on the ground at the company’s facilities until the agency is satisfied with safety improvements.
The FAA had already halted Boeing’s ability to increase production of the Max, its bestselling plane. Whitaker last month said it would likely be several months before lifting that restriction.
Boeing’s aircraft output has suffered from the resulting crisis, forcing big customers s uch as Southwest Airlines and United Airlines to adjust their growth and hiring plans.
Boeing’s lower production and deliveries have hurt its cash flow, and the company warned investors last month that it would burn instead of generate cash this year.
Boeing’s shares are down more than 30% so far this year as of Monday’s close, compared with a nearly 15% gain in the S&P 500.
The company is trying to stamp out quality flaws on jets and reduce so-called traveled work in which production steps are completed out of order, something it has done to address defects. Last month Boeing pointed to a host of other changes to encourage workers to speak up about problems in its factories after several whistleblowers raised concerns about quality issues and retaliation.
Separately, Boeing is facing supply chain issues. Spirit AeroSystems, a major supplier for both Boeing and Airbus, said last week that titanium entered the supply chain with falsified documents. The supplier said that despite the falsified documentation, more than 1,000 tests confirmed that the material is “airplane-grade titanium.”
Boeing has been trying to purchase fuselage supplier Spirit, a deal Calhoun said is “more than likely” to be finalized in the first half of the year. |
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| From: John Koligman | 6/25/2024 2:12:12 PM | | | | | | Boeing Is Said to Offer Stock to Buy Spirit, Preserving Cash Amid Struggles
The plane maker is expected to soon strike a deal to acquire most of the operations of Spirit AeroSystems, a troubled supplier that makes the bodies of the 737 Max.
In buying Spirit AeroSystems, Boeing hopes to improve quality problems that have plagued the supplier in recent years.Credit...Nick Oxford/Reuters
By Niraj Chokshi and Lauren Hirsch
June 25, 2024Updated 1:45 p.m. ET
In a bid to acquire a key supplier, Boeing has shifted how it plans to pay for the deal, according to two people familiar with the negotiations, a move that could help the plane maker preserve money as it addresses safety and quality problems.
Boeing would use stock instead of cash to buy Spirit AeroSystems, said the two people, who were not authorized to speak publicly about the deal. One added that Boeing would pay more than $4 billion for Spirit, which produces aviation parts, including the body of the Boeing 737 Max, the company’s most popular plane.
One of the people familiar with the talks said that the decision to shift to stock from cash was not expected to significantly delay a deal, which could be announced as soon as next week.
Based on its stock price on Tuesday, Spirit has a market value of more than $3.6 billion.
News that Boeing was proposing to use its stock, rather than cash, to buy Spirit was reported earlier by The Wall Street Journal.
Paying in stock could help Boeing’s financial situation as it invests in improving production quality. The Federal Aviation Administration limited the company’s ability to increase production of 737 Max, its most popular commercial jet, after the January incident. In May, Boeing said that its operations would use more cash than it brings in this year.
The negotiations to acquire Spirit have been complicated by the fact that Spirit also supplies parts to Boeing’s biggest competitor, Airbus. That company is expected to take over the operations of Spirit that produce parts for Airbus.
Federal investigators have said that the plane involved in the January incident appeared to have left a Boeing factory without the bolts needed to secure the panel in place. In the months that followed, Boeing has taken a number of steps to improve quality. Last week, its chief executive, Dave Calhoun, faced tough questioning from lawmakers about the episode and two fatal crashes involving the Max in late 2018 and early 2019.
Boeing’s problems with the 737 Max were compounded by the pandemic, which disrupted the supply chain across the aviation industry. While the supply of materials and parts has recovered somewhat, it remains challenged.
On Monday, Airbus lowered the number of commercial planes it expected to deliver to airlines this year to 770, from a previous estimate of around 800. The company, based in Toulouse, France, said it was struggling to get enough engines, plane structures and cabin equipment. As a result of that change and problems in its space business, Airbus lowered its profit and cash flow forecast for 2024. The company’s stock was down 10 percent on Tuesday after its announcement.
Niraj Chokshi writes about aviation, rail and other transportation industries. More about Niraj Chokshi
Lauren Hirsch joined The Times from CNBC in 2020, covering deals and the biggest stories on Wall Street. More about Lauren Hirsch |
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