It is clear that Boeing needs to do something to turn around its fortunes, but exactly what that something should be remains a subject of debate among those who follow and work with the US aerospace giant.
Some observers praise the response to recent events by Boeing and its chief executive David Calhoun, and view him as doing everything possible to right the ship. Others insist the airframer needs new leadership at the top, arguing that a fresh face can set the company on a firm recovery path.
Intertwined among leadership questions are varying opinions about Boeing’s product strategy. Some observers think the company must launch a new narrowbody jet as soon as possible to regain market share lost to Airbus, while others insist its primary goal must be financial and operational stability – the approach Calhoun has embraced.
Those starkly differing opinions arose in recent weeks, as aerospace analysts, airlines, industry leaders and suppliers came to grips with several developments in January, including the in-flight blow out of a door plug on an Alaska Airlines 737 Max 9.
Now, under pressure from the US Federal Aviation Administration (FAA), Boeing has slowed its 737 production, although executives say they have been keeping the supply chain humming at a faster clip.
REGIME CHANGE?
“If there were to be… regime change, I think they could turn it around and do a really good job,” Richard Aboulafia, aerospace analyst with AeroDynamic Advisory, said on 7 February during the annual meeting near Seattle of the Pacific Northwest Aerospace Alliance (PNAA), a trade group for Boeing suppliers.
Aboulafia describes Boeing as having “a horrible situation at the top”, calls out the company’s board of directors’ “lack of action… inexplicable” and believes leadership change is key to regaining its “status as the world’s foremost aerospace company”.
Aboulafia has long been outspoken among critics who think many of Boeing’s current problems stem from a leadership strategy that for decades prioritised returning cash to shareholders, rather than prioritising engineering excellence. They view that focus as having kept Boeing from making bold moves and led it to outsource much of its production.
Others, however, disagree.
Speaking in Singapore on 19 February, IATA director general Willie Walsh threw his support firmly behind Boeing and its chief executive. Boeing is “taking the right measures” in response to the Alaska Max 9 incident on 5 January, he says. Walsh disagrees with assertions that the company needs fresh leadership, saying he is “confident that [Calhoun] will fix it”, according to a Reuters report.
Boeing declines to comment.
Aerospace analyst with consultancy AIR Michel Merluzeau is also not convinced that replacing Calhoun would address Boeing’s problems.
“What Boeing needs right now is focus on execution. Changing the person at the top really does not impact the issues surrounding execution and quality in the near term,” he says. “It is a convenient way to deflect from the issues at the local and factory levels that have become chronic and mostly tied with the production system and its dependency on the human element, with all its implications.”
MANUAL PROCESSES
Boeing’s 737 production system, to a greater degree than many other aircraft programmes, relies on manual processes – a legacy of an aircraft originally designed in the 1960s.
The Covid-19 pandemic spurred droves of skilled workers to leave the industry. Since then, aerospace companies – including 737 fuselage maker Spirit AeroSystems – have struggled amid shortages of skilled workers. Meanwhile, numerous quality problems have surfaced, including, in 2023, issues involving mis-drilled holes that forced Boeing to inspect and rework more than 100 737s in its inventory.
Human or process errors seem also likely to have caused the Max 9’s door plug to blow out. The US National Transportation Safety Board’s initial report into the incident says it was missing four securing bolts at the time it blew out. The report also says Boeing, prior to delivering the jet, had removed the door plug, which suggests workers may have failed to reinstall the bolts.
Spirit on 9 February said it plans to improve quality by bringing more automation to the 737 fuselage production process. “Our next wave of improvement will be the deployment of… automation for sections of the airplane that remain highly manual,” says chief executive Patrick Shanahan.
That automation will involve “human-assisted technology”, he adds without being more specific, while noting that the 737’s decades-old design limits the degree of possible automation.
A source within Boeing tells FlightGlobal that the company’s 737 assembly site in Renton, Washington has in recent years been at times hobbled by issues stemming from newer, less-experienced employees.
Boeing executives addressed the company’s labour challenge at the PNAA conference.
“We’ve had so many people who had exited the industry,” says vice-president of global supply chain Ihssane Mounir. “We had to bring new people in so that we can catch up [to] where we left off right before Covid hit. And with that comes all sorts of challenges.”
Chief among those has been replacing lost institutional knowledge.
“We had a lot of tribal knowledge, and a lot of carried-on knowledge from generation to generation, and then there was a break, and the folks who came in don’t have that benefit,” Mounir says.
SUPPLIER FORUM
He adds that Boeing in 2023 created a forum of top suppliers to identify means to improve training, simplify requirements and step up verifications and validations. “We’ve taken significant steps in the last several years to strengthen our safety and quality process. But this [door plug] accident made absolutely clear we have more work to do.”
Boeing Commercial Airplanes vice-president of supplier quality Doug Ackerman says the majority of Boeing’s aircraft defects result from “instability and change” within the production system. Such changes can include shifting from one supplier to another, and worker turnover – even “a single mechanic turnover”.
Ackerman insists Boeing’ s recent high-profile quality issues “don’t represent an overall trend”, adding that the company’s defect rate has been steady over recent years.
Following the 5 January Alaska Airlines event, Boeing slowed production as the FAA said it had started an audit into the operations of Boeing and of Spirit. The FAA also capped Boeing’s production.
The rate at which Boeing is now actually producing 737s remains somewhat of a mystery. Calhoun did not clear things up when he said on 31 January during the company’s 2023 full-year earnings call that the 737 programme’s “production rate is now 38 per month”. That statement seemed misleading at best to some suppliers and analysts.
Boeing subsequently clarified that it is keeping its suppliers at the 38-monthly rate but that the airframer itself is not actually rolling out that many 737s monthly.
WHAT COMES NEXT?
Woven into any discussion about Boeing’s recovery are questions of product development – specifically, about when will the company launch development of a new narrowbody aircraft. That question has swirled for many years, and several years ago Boeing was seemingly close to launching a mid-market jet that would directly take on Airbus’s hugely successful A321neo.
In January 2020, Calhoun squashed that plan – at least in the near term. He has since said Boeing needs its next narrowbody to be 20-30% more efficient, meaning a service entry in the 2030s. Meanwhile, the company has been developing a truss-braced-wing design it says might inform its next aircraft.
Boeing’s plans to put off a new aircraft has been met both with praise and criticism.
Morgan Stanley analyst Kristine Liwag thinks the airframer is taking the right course, saying it must be on firmer ground before taking big risks.
“I think that there’s no sustainability… if Boeing is not profitable,” says Liwag.
“The reward could be great. But if you have obstacles in execution, the risk is also very great,” she notes. “A new airplane programme could be the right thing at some point. But you have to repair the balance sheet.”
Aboulafia is among dissenters, having repeatedly insisted that Boeing must act fast to counter the A321neo’s runaway success. The longer Boeing waits, the further it falls behind its European rival in the all-important market-share category, he says, noting that the airline industry will soon be “drowning in A321neos”.
BofA Global Research aerospace analyst Ron Epstein agrees.
“I think Boeing should do their airplane, because it’s good for every single stakeholder. It’s good for their customers. It’s good for their employees. And in the long run, it will be good for their shareholders. The current course isn’t sustainable.”
Boeing Commercial Airplanes (BCA) on 21 February announced that Ed Clark, vice-president and general manager of the 737 programme and the airframer’s Renton plant has left the company, replaced by Katie Ringgold. It also appointed Elizabeth Lund to the newly-created role of senior vice-president of BCA quality.
