The past decade has not been kind to Boeing.
Until 2018, America’s premier aircraft builder appeared extremely successful if money was the only assessment. Boeing also had a solid defense business with billions in military contracts in addition to its space venture. By the end of 2018, the company had more than 5,000 orders for the new 737 Max aircraft. At its peak, Boeing stock traded above $440 per share. With the revenue the company earned each month, Boeing’s Board of Directors could see only one direction: up and more. Melius Research analyst Rob Spingarn estimates the company spent $68 billion on stock buybacks and shareholder dividends to reward investors.
Then came October 29, 2018, when a Lion Air 737 Max 8 crashed into the Java Sea shortly after takeoff from Jakarta, Indonesia. All 181 passengers and seven crewmembers perished in the deadliest-ever crash of a 737. Early on, experts pointed to Boeing’s new flight control software, the Maneuvering Characteristics Augmentation System, or MCAS, as being responsible. MCAS forced the nose of the Boeing down during the climb. The two pilots were unable to recover. Around the world, pilots realized their Max training never mentioned MCAS. Just five months later, another Max 8 was lost within minutes of takeoff from Addis Ababa, Ethiopia, claiming another 157 people. The initial investigation again pointed to MCAS.
The world was in shock, as apparently, was Boeing’s C-suite team. Boeing pointed the finger at the two airlines as being responsible. Following the second crash, global regulators quickly grounded the 737 Max. They didn’t fly again until December 2020. In January 2024, a door plug blew out of an Alaska Airlines 737 during departure from Portland, exposing passengers to the harsh reality of the outside atmosphere until the crew successfully landed the stricken aircraft. No one was injured during the debacle. The cause was an earlier faulty door plug reinstallation.
Since March 2019, Boeing has ousted two CEOs, Dennis Muilenburg and Dave Calhoun, as the company’s quality control system took one hit after another, including on the 787. Boeing’s current CEO, Kelly Ortberg, a mechanical engineer by education, assumed the helm in August 2024 following three decades at Rockwell Collins, where he eventually served as CEO. With Boeing the target of accusations and lawsuits, as well as increased oversight by the FAA and the company’s reputation in tatters, Ortberg had his work cut out for him. Boeing’s Starliner spacecraft returned from the International Space Station (ISS) uncrewed after an onboard systems failure. The spacecraft was deemed too risky to allow the crew to pilot it back to Earth. That crew remains stranded on the ISS to this day. In June of this year, several US Senators told CEO Dave Calhoun Boeing should face criminal prosecution for its behavior in the marketplace. In July 2024, Boeing agreed to plead guilty to conspiracy to defraud the U.S. government for misleading regulators who approved pilot-training standards for the Max.
Then, in mid-September, 33,000 members of the International Association of Machinists and Aerospace Workers (IAM) Local 751 called a strike against Boeing in Seattle that halted aircraft production, except in
the non-union factory in South Carolina. The union last negotiated a successful contract a decade ago. Analysts warned the strike could be lengthy, with demands for a 40 percent pay increase over four years and a new defined benefit pension plan on the table. There was also the union’s long memory of Boeing’s 2013 decision to move 777x production to South Carolina to avoid union entanglements. A month into the strike, with the union rebuffing both of Boeing’s initial offers, the company announced layoffs for approximately 17,000 other employees to preserve cash.
Boeing has become a global embarrassment, most of all with the company’s 170,000 employees. Boeing shares are today trading at $150 per share as the company tries to raise $10-15 billion in fresh capital to see it through the first half of 2025. [Read more…] about The Boeing Strike Is Just Another Symptom