| From: John Koligman | 5/6/2024 9:23:10 PM | | | | | | FAA opens new probe into Boeing 787 inspections
PUBLISHED MON, MAY 6 20243:59 PM EDTUPDATED 52 MIN AGO
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A Boeing 787 Dreamliner sits on the tarmac at Boeing Field in Seattle, Washington.
Robert Sorbo | Reuters
The Federal Aviation Administration said on Monday it has opened an investigation into the Boeing 787 Dreamliner after the planemaker said some employees had committed “misconduct” by claiming some tests had been completed.
The FAA said it is investigating whether Boeing completed the inspections to confirm adequate bonding and grounding where the wings join the fuselage on certain 787 Dreamliner airplanes “and whether company employees may have falsified aircraft records.”
The agency said “at the same time, Boeing is reinspecting all 787 airplanes still within the production system and must also create a plan to address the in-service fleet.”
Boeing shares were down 1.5% at $177.03 late on Monday afternoon.
Asked for comment, Boeing provided an April 29 email from Scott Stocker, who leads the company’s 787 program, to employees in South Carolina where the 787 is assembled.
He added, “our engineering team has assessed that this misconduct did not create an immediate safety of flight issue.”
Boeing said in April it expects a slower increase in the production rate and deliveries of its 787 Dreamliner widebody jets as the company wrestles with supplier shortages “on a few key parts.”
A Boeing quality engineer recently criticized some of the manufacturing practices on the 787 and 777 widebody programs and testified last month before Congress.
The Justice Department is conducting a criminal investigation into a Jan. 5 mid-air emergency of a Boeing 737 Max 9.
The National Transportation Safety Board has said four key bolts appeared to be missing from the plane that had been delivered by Boeing months earlier. Boeing has said it believes required documents detailing the removal of the bolts were never created. |
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| From: John Koligman | 5/7/2024 1:41:53 PM | | | | | | I suppose the one saving grace for Boeing is that these airlines don't have many other places to shop, and Airbus already has a very full pipeline.
Emirates’ chairman has a message for Boeing: ‘Get your act together’
PUBLISHED TUE, MAY 7 20249:05 AM EDTUPDATED 3 HOURS AGO
Natasha Turak @NATASHATURAK
KEY POINTS
- “We’re not happy really with what’s going on, we always really wanted to see this aircraft entering the fleet when it had been promised,” Emirates airline Chairman and CEO Sheikh Ahmed bin Saeed Al Maktoum told CNBC.
- With 245 passenger planes and five 778 freighters on order, Emirates is Boeing’s largest customer in terms of wide-body jets.
WATCH NOW
VIDEO07:35
‘Get your act together,’ Emirates chairman says on Boeing crisis
DUBAI, United Arab Emirates — One of Boeing’s biggest customers issued a call to action to its new management team, expressing frustration with the safety crisis facing the American plane maker and the consequent delays in order deliveries.
“We’re not happy really with what’s going on, we always really wanted to see this aircraft entering the fleet when it had been promised — and there is a delay, it’s not only to us,” Sheikh Ahmed bin Saeed Al Maktoum, chairman and CEO of Dubai’s flagship Emirates airline, told CNBC’s Dan Murphy on Tuesday at the Arabian Travel Market in Dubai.
With 245 passenger planes and five 778 freighters on order, Emirates is Boeing’s largest customer in terms of wide-body jets. But aircraft deliveries by the manufacturer dropped in the first quarter of 2024 to the lowest number since mid-2021 as the company deals with increased scrutiny after a door plug blew out from one of its 737 Max 9 planes midair in January.
Emirates airlines Boeing 777-31H(ER) takes off from Los Angeles international Airport on January 13, 2021.
Aaronp / Bauer-Griffin | GC Images | Getty Images
The company delivered 83 planes in the three months to March 31 — most of them narrow-body 737s — compared with 157 in the prior quarter and 130 planes in the year-earlier period.
Al Maktoum, who sits at the helm of the world’s largest long-haul airline and helped launch it in 1985, echoed the sentiments of many other airline CEOs when it comes to expectations for Boeing.
“I think they have to put a lot of pressure in order to make sure that they deliver to the customer whatever they promised,” he said.
Asked if he had a message for the plane maker, Al Maktoum said: “I always say, you know, get your act together and just do it. And I think they can do it.”
CNBC has contacted Boeing for comment.
The chairman did not indicate that Emirates would cancel the Boeing orders or move them to its French rival, Airbus.
“No, no — I won’t be able to say exactly what we are planning,” he replied when asked about the likelihood of such a move. “But I think you see that we are refurbishing a big number of aircraft within the existing fleet. ... And there will be no shortage within Dubai capacity.”
He cited the airline’s extension of part of its existing fleet, including the mammoth double-decker Airbus A380s, as helping provide sufficient passenger capacity.
The fuselage plug area of Alaska Airlines Flight 1282 Boeing 737-9 MAX, which was forced to make an emergency landing with a gap in the fuselage, is seen during its investigation by the National Transportation Safety Board (NTSB) in Portland, Oregon, U.S. January 7, 2024.
NTSB | Via Reuters
The recently appointed new management team at Boeing is now tasked with navigating the company’s worst crisis since 2018-2019, during which time two of its new 737 Max jets crashed within a period of six months, killing 346 people.
Following the Alaska Airlines door blowout in January, the Federal Aviation Administration’s six-week audit of Boeing and Spirit AeroSystems “found multiple instances where the companies allegedly failed to comply with manufacturing quality control requirements,” the FAA said in March. Spirit AeroSystems makes Boeing Max fuselages
“The FAA identified non-compliance issues in Boeing’s manufacturing process control, parts handling and storage, and product control,” it said. The regulatory agency said it informed Boeing’s leadership that it “must address the audit’s findings as part of its comprehensive corrective action plan to fix systemic quality-control issues,” and address its “safety culture.”
In a previous statement cited by CNBC, a Boeing spokesperson said in response to the FAA findings that the company continues “to implement immediate changes and develop a comprehensive action plan to strengthen safety and quality.”
The company’s website says it continues to support the U.S. NTSB and FAA investigations of the Jan. 5 accident.”
— CNBC’s Leslie Josephs contributed to this report. |
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| From: John Koligman | 5/15/2024 12:02:12 PM | | | | | | Justice Department says Boeing breached 2021 agreement that shielded it from criminal charges over 737 Max crashes
PUBLISHED TUE, MAY 14 20246:33 PM EDTUPDATED TUE, MAY 14 20247:43 PM EDT
KEY POINTS
- Boeing broke a 2021 settlement that protected it from criminal prosecution over two fatal crashes of the 737 Max, federal prosecutors said.
- Boeing must respond to the U.S. Department of Justice by June 13.
- The DOJ said Boeing violated the agreement by failing to set up and enforce a compliance and ethics program to detect violations of U.S. fraud laws
Boeing 737 MAX airplanes are pictured outside a Boeing factory on March 25, 2024 in Renton, Washington.
Stephen Brashear | Getty Images
Boeing violated a 2021 settlement that protected it from criminal charges tied to the fatal 737 Max crashes, opening the company up to potential U.S. prosecution, the Department of Justice said Tuesday.
Federal prosecutors said in a court filing in Texas they are still determining “how it will proceed in this matter” and that Boeing will have 30 days to respond.
The airplane manufacturer broke the agreement by “failing to design, implement, and enforce a compliance and ethics program to prevent and detect violations of the U.S. fraud laws throughout its operations,” the DOJ said.
Boeing denied those claims.
“We believe that we have honored the terms of that agreement, and look forward to the opportunity to respond to the Department on this issue,” Boeing said.
In January 2021, Boeing agreed to pay $2.5 billion to settle a conspiracy charge with the Justice Department. After a roughly two-year probe, the DOJ accused the company of concealing information about its Max plane that had been involved in two crashes that claimed the lives of all 346 people on board.
Boeing had admitted that two of its 737 Max technical pilots “deceived” the Federal Aviation Administration about the capabilities of a flight-control system on the planes that was later implicated in the two crashes, the Justice Department said at the time.
“This is a positive first step, and for the families, a long time coming. But we need to see further action from DOJ to hold Boeing accountable, and plan to use our meeting on May 31 to explain in more detail what we believe would be a satisfactory remedy to Boeing’s ongoing criminal conduct,” Paul Cassell, a lawyer for crash victims’ families said in a statement on Tuesday.
The plane-maker has been under heightened federal scrutiny after a door panel blew out midair from a 737 Max 9 operated by Alaska Airlines on Jan. 5. A preliminary investigation by the National Transportation Safety Board said bolts that hold in the door plug, which fills an optional emergency exit, didn’t appear to be in place.
The near-tragedy has created a fresh crisis for Boeing, just as it was trying to stabilize its production and improve its reputation after the 2018 and 2019 crashes. |
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| From: John Koligman | 5/22/2024 2:14:43 PM | | | | | | Frank Shrontz, 92, Dies; Led Boeing in the Last of Its Golden Years
Known for his leadership and his commitment to company culture, he left as chief executive in 1996, opening the door to a corporate makeover.
Frank Shrontz in 1991. He led Boeing through a restructuring that produced one of the most successful commercial aircraft ever put into service, the 777.Credit...Reuter Raymond/Sygma, via Getty Images
By Clay Risen
May 22, 2024Updated 11:59 a.m. ET
Frank Shrontz, a widely admired executive who led Boeing in the 1980s and ’90s, a decade of spectacular growth in both its bottom line and its prestige as one of the world’s premier aerospace companies — a period very different from its current crisis of public confidence — died on May 3 at an assisted living home in Seattle. He was 92.
His son Craig confirmed the death.
Although he spent the bulk of his career at Boeing, Mr. Shrontz, who had a law degree and an M.B.A., was an unlikely choice to lead a company that prided itself on letting engineers and not businessmen set the pace.
Yet during his time at the helm — he became president in 1985, chief executive in 1986 and chairman of the board in 1988 — he led Boeing through a growth market, a recession and a thorough restructuring that produced one of the most successful commercial aircraft ever put into service, the 777.
Mr. Shrontz was known as a calm hand at the company till, with an everymanager’s feeling for the rank and file. He walked the floors at the factories around Boeing’s headquarters in Seattle, and he regularly met with groups of employees to hear their views and gather ideas.
Mr. Shrontz in 1985. He was known as a calm hand at the company till, walking the floor at Boeing and regularly meeting with groups of employees.Credit...Peter Liddell/The Seattle Times
“Frank Shrontz is who I think about when people ask me who the Boeing C.E.O. needs to be,” Richard Aboulafia, the managing director of AeroDynamic Advisory, said in a phone interview.
His tenure started on a high note in the late 1980s, a boom time in commercial aircraft sales. But then came a pair of challenges: the recession of 1990 and 1991 and the end of the Cold War, which punched a hole in Boeing’s defense business.
Mr. Shrontz saw the downturn as an opportunity. Among other initiatives, he pushed Boeing into the space industry, landing a contract to build parts of the International Space Station. He also created teams drawn from different parts of the company — engineers, designers and manufacturing specialists — to develop and build aircraft, while investing heavily in what was then a novel technology: computer-assisted design.
The first major result of Mr. Shrontz’s restructuring was the 777. Designed from the ground up, it went from conception to production in just five years, astounding the industry. And it cost just $4 billion to develop, a figure dwarfed by the hundreds of billions the company has earned from it.
Yet he insisted that success had not gone to his head, or to Boeing’s.
“I don’t think any private company can consider itself to be bulletproof,” he told The Los Angeles Times in 1991. “I think as soon as you start getting complacent in that regard, you’re heading for serious problems. We run scared, and we think that’s the way it should be.”
Mr. Shrontz in 1986. He spent most of his career at Boeing before stepping down as chief executive and president in 1996 and as chairman a year later. Credit...Scott Takushi/The Seattle Times
Frank Anderson Shrontz was born on Dec. 14, 1931, in Boise, Idaho, the son of Thurlyn and Florence (Anderson) Shrontz. His father owned the only licensed Schwinn bicycle retailer in the city.
He studied law at the University of Idaho, graduating in 1954 and, after spending two years in the Army, enrolled in Harvard Business School. He received his M.B.A. in 1958, the same year he joined Boeing.
He married Harriet Ann Houghton in 1954. She died in 2012. Along with his son Craig, he is survived by another son, David, and two grandchildren. A third son, Richard, died in 2017.
Mr. Shrontz left Boeing in 1973 to join the Department of Defense, where he served as an assistant secretary of the Air Force and then as an assistant secretary of defense. He returned to Boeing in 1977, at which point he was singled out as a potential top executive.
He was assigned to run three of the company’s busiest programs, overseeing the 707, 727 and 737 jetliners. While many people in the company were focused on the glamorous 747, Boeing’s massive intercontinental jetliner, he invested heavily in the 737, a smaller workhorse of a plane — and his bet paid off, as domestic travel grew in the early 1980s, both in the United States and in foreign markets.
Mr. Shrontz stepped down as chief executive and president in 1996, and as chairman a year later. His departure coincided with another internal revolution at Boeing: In 1997 the company bought one of its major rivals, McDonnell Douglas, and in 2001 it moved its headquarters to Chicago from Seattle. (It is now based in Northern Virginia.)
The company had long relied on internal hires to occupy its upper ranks, but the influx of McDonnell Douglas executives changed everything. A new emphasis on profits and cost-cutting led to decades of underinvestment in safety and engineering, a change documented in the 2022 Netflix documentary “ Downfall: The Case Against Boeing.” The result, critics say, is a company very different from the one Mr. Shrontz ran.
In recent years Boeing has suffered a series of accidents and disasters. Within six months in 2018 and 2019, two Boeing 737 Max airliners crashed, one in Indonesia and the other in Ethiopia, killing 346 people.
Both crashes were traced to misfiring anti-stall sensors. A 2020 investigation by the U.S. House of Representatives found that the company had dismissed employee concerns about the sensors, and in 2021 Boeing agreed to pay $2.5 billion to settle fraud charges.
More accidents followed, including an incident in January in which a door plug on an Alaskan Airlines 737 Max blew out. (No one was seriously injured.) On May 14 the Department of Justice found that the company had violated the terms of the 2021 settlement.
Earlier this year Boeing’s chief executive, Dave Calhoun, and Larry Kellner, the chairman of the board, announced that they would step down.
Since his retirement, Mr. Shrontz had rarely spoken directly about the decline of his old company’s reputation. But his views were not hard to parse from interviews.
“There was a lot of pride among the people,” he said of Boeing in an interview with The Puget Sound Business Journal in 2015. “It was kind of a family feeling, a feeling you don’t find at modern companies where people are much more likely to hire in, stay for a few years and move on.” |
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| 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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