One year after the crash of an Ethiopian Airlines 737 MAX that killed 157 people and triggered the worst crisis in Boeing’s history, the aviation giant is at a crossroads.
The MAX remains grounded worldwide and, after a leadership shakeup, former employees and analysts say the Chicago-based company must reform to stop such disasters from happening again, but has yet to articulate how to do so.
“They have to decide what kind of company they want to be,” Stan Sorscher, a retired engineer and union leader, told AFP.
The choice, Sorscher said, is between being a company where cutting costs is key, an approach favored by Wall Street but criticized after the MAX debacle, or one in which Seattle-engineers and their strict procedures take precedence over profits.
Fundamentals and values
In December, Boeing fired CEO Dennis Muilenburg and General Counsel Michael Luttig, whose responses to the MAX grounding beginning on March 13, 2019 were seen as inept.
The manufacturer has also separated the roles of CEO and chairman of the board of directors.
David Calhoun, the new boss, has set out to appease the demands of both the company’s investors and its engineers.
He went to Seattle in January a week after taking office to see the engineering teams and other employees, telling the engineers to go back to the drawing board for Boeing’s next aircraft the NMA, New Midsize Airplane.
To appease the markets, he compensated shareholders with a $1.2 billion fourth-quarter dividend despite the company’s making a loss in 2019.
Calhoun has been on Boeing’s board of directors since 2009, and those who know the company wonder whether he is the man to change it.
“Everyone at the board of directors comes from that financial tradition of cost cutting. I don’t expect David Calhoun to change,” Sorscher said.
Addressing the board’s culture is key, Scott Hamilton of Leeham said, because “the culture of prioritizing shareholder value and cost-cutting starts at the board of directors.”
And the body’s members aren’t necessarily there because of their technical expertise, said Richard Aboulafia, an expert at Teal Group.
“There are a lot of people who don’t know the industry but who just are there because they have political power,” such as former US ambassador to the United Nations, Nikki Haley.
Of the 13 current board members, only one is an engineer by training.
“It’s not easy to change the fundamentals and values of an organization,” said Michel Merluzeau of Air Insight Research.
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