Boeing CEO Dave Calhoun and top company leaders are set to meet with the Federal Aviation Administration (FAA) on Thursday to present a comprehensive quality improvement plan. This plan is a critical response to the FAA's directive following a near-catastrophic blowout of a door panel on a new 737 Max 9 earlier this year.
The FAA mandated the report after an incident on an Alaska Airlines flight in January, where federal safety investigators discovered that crucial bolts were not installed, leading to the door panel blowout. The FAA has since prohibited Boeing from increasing 737 Max production until substantial quality control improvements are demonstrated, a restriction unlikely to be lifted immediately.
The ongoing crisis has significantly damaged Boeing's reputation, subjected it to heightened federal scrutiny, and disrupted its 737 Max production schedule. These delays have forced airline customers such as United and Southwest to adjust their growth plans. Boeing Chief Financial Officer Brian West indicated that the company anticipates burning cash this year rather than generating it, with an expected cash outflow of approximately $4 billion for the current quarter alone.
West acknowledged that the 90-day plan would not yield immediate results. "The 90-day plan ... is not a finish line," he remarked at a recent investor conference. "We look forward to the feedback that we'll get after next week."
Boeing's update on Thursday is anticipated to detail several key improvements, including enhanced staff training with simplified instructions for mechanics, better tool availability, and a reduction in "traveled work" - tasks performed out of sequence during the assembly process. Additionally, the company will elaborate on its factory "stand-downs," brief pauses in production to discuss potential improvements with employees. These pauses were implemented in response to the Alaska Airlines incident.
Calhoun, who has announced his intention to step down by the end of the year, communicated to staff in April that the company had received over 30,000 suggestions for improvement. He highlighted a 500% increase in "speak up submissions" - concerns raised by staff - compared to 2023.
The January incident has not only led to the FAA's stringent oversight but also rekindled public and regulatory scrutiny of Boeing's safety culture. Whistleblowers have accused the company of taking shortcuts that jeopardize passenger safety, claims that Boeing disputes. An FAA panel found notable shortcomings in Boeing's safety culture, prompting the agency to demand a comprehensive improvement plan.
FAA Administrator Mike Whitaker, who is scheduled to attend Thursday's meeting, emphasized that the plan is just the beginning of a long journey to restore Boeing's standing. "It's going to be a long road to get Boeing back to where they need to be, making safe airplanes," he told ABC News.
In addition to issues with the 737 Max, Boeing and its key supplier Spirit AeroSystems have faced challenges with manufacturing flaws on the 787 Dreamliner. Boeing has also encountered setbacks with other projects, including the Starliner space capsule, a military refueling tanker, and the new Air Force One presidential jets.
The ongoing production issues and safety concerns have significantly impacted Boeing's financial performance and competitive standing, especially against rival Airbus. The production setbacks have hindered Boeing's ability to generate cash, further straining its financial health.
The FAA's restriction on 737 Max production, analysts believe, has led to output levels even lower than the agency's cap. The Justice Department has also indicated that Boeing may face criminal prosecution related to previous issues with the 737 Max, particularly concerning two deadly crashes in 2018 and 2019. The Justice Department noted that Boeing violated the terms of a 2021 settlement designed to avoid prosecution for fraud, which was based on allegations that the company deceived regulators about a flight-control system implicated in the crashes.
Despite these challenges, Boeing officials have vowed to regain the trust of regulators and the flying public. The company is working to reduce "traveled work" and maintain closer oversight of Spirit AeroSystems. These efforts are part of a broader strategy to ensure that production processes meet the highest standards of safety and quality.
