The Unending Crises at Boeing: A Question of Leadership and Accountability
Boeing, the aerospace giant, has faced an unrelenting barrage of challenges in 2024. From life-threatening mid-flight incidents to business debacles, the company’s woes have raised serious questions about the tenure of CEO Dave Calhoun.
“It has become an extreme embarrassment,” remarked Richard Aboulafia, a seasoned aviation analyst, in a recent interview. “The board seems absentee, investors seem complacent, and the government doesn’t appear to have a clear mechanism for addressing this.”
Boeing’s stock value has declined by over 25% this year, despite it only being March. A mid-flight blowout incident on January 5 led to multiple federal investigations, which increasingly suggest that Boeing workers neglected to install crucial bolts following repairs. Last week, investigators criticized the company for being slow in responding to their requests for essential evidence.
Boeing has stated that it is cooperating with regulatory probes and plans to enhance safety measures at its production facilities. However, the 737 Max issues alone would be significant enough for concern.
Furthermore, a Boeing 787 Dreamliner experienced a sudden mid-air incident while flying from Australia to New Zealand, leaving 50 passengers injured before landing safely. Additionally, on the same day that a Boeing whistleblower, John Barnett, was scheduled to testify about safety concerns regarding the company’s protocols, he died in an apparent suicide. Although it remains unclear whether Boeing is implicated in either event, the company did express sympathy for Barnett’s family and friends.
The persistent crises at Boeing have left many wondering why CEO Dave Calhoun still holds his position, especially considering the departure of the entire C-suite would typically be the first step toward regaining public trust.
“It’s been three years of ‘Calhoun can’t possibly stay at the helm,’” Aboulafia, managing director of the consulting firm AeroDynamic Advisory, shared. “But he seems to be staying at the helm … I don’t get it.”
Despite Boeing’s ongoing issues with the 777 program and quality control problems with the 787 that halted the company’s deliveries, Calhoun received a $22.5 million compensation package in 2022. His 2023 compensation has yet to be announced, typically revealed in April.
To provide some context, Calhoun took over a company grappling with the aftermath of two fatal 737 Max crises that forced the crucial plane into a nearly two-year-long grounding and plunged Boeing into a protracted crisis. The 1997 merger with McDonnell Douglas is often cited as the root cause of these problems, with bean-counter executives taking over and prioritizing profit over quality. In the short term, profits increased, but in the long term, Boeing lost sight of its focus.
Executives at Boeing, starting in the mid-aughts, identified an industry with significant cash flow and high barriers to entry, making only two major players – Boeing and contact rival Airbus. This situation, in the eyes of critics, set the stage for neglecting essential quality and safety measures.
Critics argue that the 737 Max crashes were not just a matter of problematic design but also deeply flawed management that eroded Boeing’s corporate culture. Calhoun was hired to restore the company, but his tenure has not resulted in sufficient quality and safety improvements, as evidenced by this year’s mounting concerns.
Gad Allon, a professor at the University of Pennsylvania’s Wharton School of Business, believes that the first step for Boeing to regain trust is to dismiss its entire C-suite. “I know that will not happen, but … there is not a single person with a ‘C’ in front of their title that isn’t responsible for what we’re seeing now,” he stated.
However, Allon is skeptical that Boeing’s board of directors will take action. “If there is a functioning board, that’s what should happen,” he said.
In summary, the ongoing crises at Boeing have raised serious questions about its leadership and accountability, leaving many wondering if CEO Dave Calhoun and his team are the right people to steer the company through these challenges.
