The former head of Rockwell Collins is ‘so competitive it’s scary’ says one industry insider, with a reputation for building a positive corporate culture and treating employees well.



Wall Street wanted an outsider with engineering and manufacturing experience to be Boeing’s next CEO. The embattled company’s board of directors delivered Wednesday, announcing that former Rockwell Collins CEO Robert “Kelly” Ortberg will take the reins on August 8. He will replace outgoing CEO David Calhoun, who struggled to lead the company through confidence-shaking problems with the quality of its airplanes and lingering dislocations from the steep drop in production during the Covid pandemic.



Analysts and aerospace consultants praised the appointment of Ortberg, 64, who built Rockwell Collins into one of the industry’s dominant avionics suppliers, growing revenue from $4 billion in 2013 when he became CEO to $9 billion in 2018, when the Cedar Rapids, Iowa-based company was acquired by United Technologies.



Loren Thompson, a longtime aerospace and defense consultant who worked with Rockwell Collins, described Ortberg as one of the most impressive CEOs he’s dealt with. “He’s so competitive it’s scary,” Thompson told&nbsp;Forbes. &#8220;He’s an exceptionally focused, detail-oriented executive.”



Ortberg, an Iowa native who earned a mechanical engineering degree from the University of Iowa, built a positive corporate culture and a strong leadership team at Rockwell, Sheila Kahyaoglu, an analyst with Jefferies, wrote in a note. “He was well liked by employees and direct reports and very personable. This was while being a tough negotiator dealing with a diverse set of customers.”



His biggest customer: Boeing.



Ortberg’s deep background with parts makers makes him a good pick at a time when the aerospace and defense supply chain is struggling to meet airplane and weapon makers’ demands to raise production, Richard Aboulafia, a managing director at AeroDynamic Advisory, told&nbsp;Forbes. It should also help Boeing improve relations with suppliers who have felt squeezed by the company’s attempts to wring cost savings out of them over the past decade, he said.



“Most of Boeing’s problems are rooted in two dysfunctions: how they treated their workforce and how they treated their supply chain,” said Aboulafia. “I think he&#8217;ll really understand what needs to be done with both of them.”



At Rockwell, Ortberg’s focus on technology development was key to building an outperformer in a place not known for corporate world-beaters, said Thompson. Under Ortberg, Rockwell “pioneer[ed] the idea of a connected aircraft across avionics, auxiliary power units, controls, flight decks, and more,” wrote Kahyaoglu.



Ortberg was chosen over Stephanie Pope, an insider with a finance background&nbsp;<a href="https://www.forbes.com/sites/jeremybogaisky/2024/04/05/boeing-737-max-stephanie-pope/">whom Calhoun had championed</a>, and Pat Shanahan, a former Boeing executive and CEO of key supplier Spirit AeroSystems, which&nbsp;<a href="https://www.forbes.com/sites/jeremybogaisky/2024/07/01/boeing-spirit-737-max/">Boeing agreed to buy earlier this month</a>.



One of the first challenges Ortberg will face is contract negotiations with the union representing Boeing’s machinists and assembly workers at its factories in Washington State, which will get under way in earnest next month.



They’re expected to be contentious: Boeing workers are still angry over the terms the company negotiated in 2013, including the end of their pension plans. Meanwhile Boeing took a hard line in contract talks earlier this year with its firefighters and pilots. The 32,000 members of the International Association of Machinists District Council 751 voted earlier this month to authorize their leaders to call a strike.



“We wonder if management and the board will seek to avoid a high-profile strike so early in the tenure of a new CEO who is intended to help Boeing turn over a new leaf,” Seth Seifman, an analyst with JPMorgan, wrote in a note.



Ortberg faces a host of other issues. Boeing has slowed production of its best-selling airliner, the 737 MAX, as it seeks to eliminate&nbsp;<a href="https://www.forbes.com/sites/jeremybogaisky/2024/02/17/boeing-737-max-workers/">long-festering manufacturing problems</a>&nbsp;spotlighted in January in the wake of the shocking midair blowout of a panel on an Alaska Airlines plane. The company has agreed with federal prosecutors to plead guilty to a felony charge of defrauding the U.S. government by failing to abide by the terms of a deferred prosecution agreement it struck over its role in two deadly 737 MAX crashes in 2018 and 2019. And in tandem with announcing Ortberg’s appointment, Boeing reported a wider than expected net loss of $1.44 billion for the second quarter. It hasn’t posted an annual profit since 2018.



“Clearly there are a massive number of problems at Boeing, but with Kelly as CEO we think there is at least a chance of fixing them,” wrote analyst Robert Stallard of Vertical Research.



Investors reacted positively to the news: Boeing shares were trading up 3% to $193 shortly after noon Wednesday.

Operations Inside The Rockwell Collins Inc. Production Facility

Boeing May Have Gotten It Right With Kelly Ortberg As CEO

<h2 class="wp-block-heading" id="h-topline">TOPLINE</h2>



Boeing is expected to avoid criminal prosecution after the Justice Department recently found it&nbsp;<a href="https://www.forbes.com/sites/antoniopequenoiv/2024/05/14/boeing-violated-agreement-protecting-it-from-criminal-charges-over-737-max-crashes-justice-department-says/">violated a $2.5 billion settlement</a>&nbsp;shielding it from charges over two 737 Max 8 model crashes in 2018 and 2019 that killed a total of 346 people, according to&nbsp;<a href="https://www.nytimes.com/2024/06/21/us/politics/boeing-doj-deferred-prosecution-agreement.html?smtyp=cur&amp;smid=tw-nytimes" rel="noreferrer noopener" target="_blank">The New York Times</a>, which reported that department officials have deemed prosecution of Boeing “too legally risky.”



<h2 class="wp-block-heading" id="h-key-facts">KEY FACTS</h2>



Instead of criminally prosecuting Boeing, the Justice Department plans to offer the aerospace company a deferred prosecution agreement requiring it to install an independent government watchdog tasked with keeping track of safety and quality control, the Times reported, citing two anonymous sources.



The Justice Department was able to seek prosecution of Boeing, which was charged with&nbsp;<a href="https://www.justice.gov/opa/pr/boeing-charged-737-max-fraud-conspiracy-and-agrees-pay-over-25-billion" rel="noreferrer noopener" target="_blank">conspiracy to defraud the U.S.</a>, in May after federal officials said the company&nbsp;<a href="https://www.forbes.com/sites/antoniopequenoiv/2024/05/14/boeing-violated-agreement-protecting-it-from-criminal-charges-over-737-max-crashes-justice-department-says/">violated its 2021 prosecution agreement</a>&nbsp;by “failing to design, implement and enforce a compliance and ethics program” made to detect and stop potential fraud violations.



The installation of a federal monitor to supervise safety improvements at Boeing is seen by officials as a more efficient way to get the company to fall in line with safety and quality control improvements, according to the Times.



The new settlement offer is expected to be given to Boeing within the month, though terms of the deal could still change, the Times noted.



Boeing and the Justice Department did not immediately respond to Forbes’ request for comment.



<h2 class="wp-block-heading" id="h-big-number">BIG NUMBER</h2>



$2.5 billion. That is the whopping figure Boeing agreed to pay in the settlement, which included $1.77 billion in compensation to be paid out to Boeing 737 Max airline customers, a $500 million crash-victim beneficiary fund and a criminal penalty totaling $243.6 million.



<h2 class="wp-block-heading" id="h-key-background">KEY BACKGROUND</h2>



Boeing’s 2021 settlement was reached after the company was accused of conspiracy to defraud the FAA’s aircraft evaluation arm in connection with the agency’s probe into the 737 Max airplane. Boeing&nbsp;<a href="https://www.justice.gov/opa/pr/boeing-charged-737-max-fraud-conspiracy-and-agrees-pay-over-25-billion" rel="noreferrer noopener" target="_blank">admitted in court documents</a>&nbsp;it misled the FAA about a part known as the Maneuvering Characteristics Augmentation System, which automatically pushes down the nose of the aircraft when it detects too high of a pitch. Boeing’s cover-up led to pilots flying the 737 MAX for Boeing’s airline customers without being provided information on the system in manuals or training materials. The FAA concluded the system may have played a role in the 2018 and 2019 crashes that occurred near Indonesia and Ethiopia. The 2018 Indonesia crash killed all 189 passengers and crew on board while the 2019 crash killed 157.



<h2 class="wp-block-heading" id="h-further-reading">FURTHER READING</h2>



<a href="https://www.forbes.com/sites/antoniopequenoiv/2024/05/14/boeing-violated-agreement-protecting-it-from-criminal-charges-over-737-max-crashes-justice-department-says/">Boeing Violated Agreement Protecting It From Criminal Charges Over 737 Max Crashes, Justice Department Says&nbsp;</a>(Forbes)



<a href="https://www.nytimes.com/2024/06/21/us/politics/boeing-doj-deferred-prosecution-agreement.html?smtyp=cur&amp;smid=tw-nytimes" rel="noreferrer noopener" target="_blank">Boeing Is Expected to Evade Criminal Charges for Violating Settlement</a>&nbsp;(New York Times)

British Airways Retires First Of Its Last 747 Jumbo Jets

Boeing Will Likely Avoid Criminal Charges After Violating $2.5 Billion Settlement Linked To Fatal Crashes, Report Says

It’s not enough for Boeing to fix the 737 Max program. To remain competitive against Airbus, the planemaker needs to make a big bet on a new jet.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



To Boeing’s<a href="https://www.forbes.com/companies/boeing" target="_blank" rel="noreferrer noopener">Boeing</a> <a href="https://www.forbes.com/companies/boeing">0.0%</a> long list of urgent near-term problems, add one more. It needs a new airplane.



With its best-selling plane, the 737 Max, the subject of public and federal scrutiny after the&nbsp;<a href="https://www.forbes.com/sites/jeremybogaisky/2024/01/09/a-blowout-on-an-alaska-plane-is-the-least-of-boeings-problems/">terrifying midair blowout</a>&nbsp;of a panel on an Alaska Airlines jet in January, the world&#8217;s largest aerospace company is struggling to recover from a nightmare that’s slashed $28 billion from its market cap. And its two decades of procrastinating the launch of another new plane program since development of the 787 formally kicked off in 2003 is increasingly looking costly. Analysts told&nbsp;Forbes&nbsp;the clock is ticking for Boeing to come up with a new narrowbody plane to stem a steep loss in market share to rival Airbus.



In November 2022, CEO David Calhoun ruled out introducing a new plane until the mid-2030s, saying the technology for a step change in fuel efficiency wouldn’t be ready till then. Critics said it was a risk-averse move that would allow Boeing to save billions in the short-term and boost investors’ returns while sabotaging its future. But Boeing is now in the midst of&nbsp;<a href="https://www.forbes.com/sites/jeremybogaisky/2024/03/25/boeing-next-ceo-who-could-succeed-calhoun/?sh=8173af574414">a management shakeup</a>, with a new board chairman who’s aiming to hire a replacement for Calhoun before year-end. Analysts expect the next CEO to take a fresh look at developing a new airplane.



Airbus’ A320neo family has outsold the 737 Max line nearly 2 to 1, largely on the strength of the largest planes, the A321 and A321XLR. They can carry more passengers farther than the 737 Max 10, the biggest Max variant, which Boeing has yet to bring to market. Meanwhile, Airbus has a newer, more efficient small airliner, the A220, that it’s considering stretching into a larger version that would threaten the lower end of the 737 line.



“Boeing&#8217;s in the middle” between the A321 and A220 “with an aircraft that&#8217;s had trouble — not a great place to be,” Robert Spingarn, an analyst at Melius Research, told&nbsp;Forbes. “You&#8217;re getting to the point where your competitive edge is at risk.”



With everything that will be on the new CEO’s plate – including what promise to be difficult contract talks with Boeing’s machinists in Washington state – there’s a risk that person won’t want to touch a new airplane till the near-term problems are solved. That would be a mistake, said Spingarn.



“They should be able to do both of these things simultaneously, get the safety and quality back to where it needs to be, and at the same time figure out what the future is going to hold.”



However, analysts warn that if Boeing moves too soon, Airbus could trump it a year or two later with a plane tailored to beat it, as well as miss out on new technologies under development that promise to lower carbon emissions.



Failing to roll out a new plane before 2035 means Boeing’s share of the narrowbody market could slide under 40%, Ron Epstein of Bank of America has estimated.



That’s a sharp change from the previous generation of both planes, where Boeing had a roughly 52% market share – and commanded higher prices to boot, said Nick Cunningham, an analyst with equity research firm Agency Partners.



Boeing’s market share losses could be hard to reverse given the stickiness of incumbency with airlines, which are reluctant to switch plane types due to the high expense of retraining pilots to fly them, said Ken Herbert, an analyst at RBC Capital Markets.



“Calhoun &#8230; says that it&#8217;s too expensive and too risky and has given all sorts of reasons why they shouldn&#8217;t do it,” said Cunningham. “The problem is if they don&#8217;t do it, then that&#8217;s effectively a counsel of despair. It means that you&#8217;ve accepted that you are now only about a third of the narrowbody market as opposed to half the narrowbody market. And it runs a risk that you end up becoming McDonnell Douglas.” That once-proud American planemaker lost market share for decades as it limited investment to updating older models, and was bought by Boeing in 1997.



Right now, even if management wanted to launch a new plane program, Boeing likely couldn’t afford to, with a cash outflow of $3.9 billion in the first quarter and expectations the bleeding will continue in the second quarter, with 737 assembly rates slowed while the company works through improvements to the manufacturing process. After that, Boeing hopes to unlock a torrent of cash by delivering by the end of the year most of the 170 Max 8s and 60 787s it had piled up in inventory as of March 31. Airlines typically pay 65% to 70% of the purchase price of a plane on delivery. It also aims to raise 737 production to 38 per month in the second half and with a goal of 50 by 2026. But many analysts are skeptical it will come off as promised. “If there has been one thing that has been consistent about Boeing over our many years of covering the company it has been its hopelessly optimistic timetables for improvement,” Robert Stallard of Vertical Research wrote in a note. For example, Boeing had planned at the beginning of 2022 to deliver 500 737s that year. It managed 386.



<h2 class="wp-block-heading" id="h-plane-in-vain">Plane In Vain</h2>



Boeing has prevaricated for two decades on launching a program to replace the 737, an aircraft design that dates back to the 1960s, or to build a plane sized between the 737 and its 787 widebody.



In the early 2000s, a project called Yellowstone sketched out plans for a new narrowbody in tandem with designs that became the 787. The narrowbody would have used many of the same technologies, including a carbon fiber composite body. Boeing executives tentatively discussed bringing it to market<a href="https://www.wsj.com/articles/SB10001424052748703293204576105722792053588" rel="noreferrer noopener" target="_blank">&nbsp;in 2020</a>, but those plans were up-ended in 2011 when American Airlines warned it was considering buying hundreds of an updated A320 with more efficient engines. To prevent American and other customers from defecting to Airbus, Boeing shelved the new plane and took the quicker, cheaper route of re-engining the 737, too.



The difficulties of placing a larger engine on a plane originally designed to be<a href="https://www.forbes.com/sites/jeremybogaisky/2019/03/15/should-boeing-have-replaced-the-737-instead-of-re-engining-it/?sh=1efd59e91061">&nbsp;low to the ground to allow boarding by ladder</a>&nbsp;led to the need for stability augmentation software that malfunctioned in two deadly crashes in 2018 and 2019, throwing the company into crisis.



From 2015 to 2020, Boeing also went back and forth on building a larger jet aimed at replacing the 757 and 767. When Calhoun was made CEO at the beginning of 2020, he sent designers back to the drawing board, saying the playing field had shifted. By 2021, there were reportedly plans for a smaller version to compete with the A321neo.



Calhoun’s decision to punt on a new plane till the 2030s would give Boeing time to stabilize operations, including integrating its 737 fuselage supplier, Spirit AeroSystems<a href="https://www.forbes.com/companies/spirit-aerosystems" target="_blank" rel="noreferrer noopener">Spirit AeroSystems</a>&nbsp;<a href="https://www.forbes.com/companies/spirit-aerosystems">0.0%</a>, which it’s in negotiations to acquire, and harvest cash from its current lineup. That includes raising production rates and bringing to market three long-delayed variants of existing planes — the Max 7, Max 10 and 777X. The company projects that will allow it to raise free cash flow to $10 billion annually by 2026, helping it pay down its net debt of roughly $40 billion – up from about $13 billion at the end of 2019.



But Cunningham thinks Boeing has quietly given itself financial headroom to invest in a new jet through the structuring of $10 billion in debt that the company raised in late April to bolster its depleted cash reserves. Despite high interest rates averaging 6.6%, Boeing has pushed out repayment for a strangely long time, he notes: about 65% of it matures from 2034 to 2064. Cunningham thinks that’s a sign the company plans to direct free cash flow to R&amp;D. “They can build up a cash position which would enable them to develop a new airplane,” he said.



Boeing declined to respond to questions on the company’s plans, but referred&nbsp;Forbes&nbsp;to Calhoun’s statement Friday at the annual shareholders meeting that investments in its factories and R&amp;D would increase in 2024 from nearly $5 billion the year before. “Our mission is to mature the essential technologies that will enable safe and sustainable flight in the years ahead,” he said.



Analysts expect a new plane could cost $20 billion to $30 billion in R&amp;D and capital expenditures over eight to 10 years. If Airbus stretches the A220, Boeing might need to counter with a second, smaller plane as well, some analysts think.



A problem Boeing faces is that with Airbus in a stronger position, the European company could wait for Boeing to show its hand and then counter with something designed to top Boeing’s plane.



“The one thing they don&#8217;t want to do is go too soon and limit themselves to a certain kind of technology … and then discover that Airbus comes out with something that&#8217;s a much bigger evolutionary or revolutionary change in technology two years later,” said Spingarn. “That is largely unrecoverable and both of them are nervous about this.”



But Airbus may be forced to move faster than it would like due to greater pressure in Europe to reduce aviation’s carbon emissions, said Herbert.



It’s pledged to introduce a small, zero-emission aircraft powered by hydrogen in 2035.



It’s unclear what a new Boeing plane could look like, but one potential element it’s experimenting on with NASA is a long, thin wing mounted high on the fuselage that would be braced with diagonal struts. The lighter, more efficient wings could enable a 10% reduction in fuel burn, according to NASA. With $425 million in NASA funding, Boeing is working to mount prototypes of the truss-braced wings on an MD-90 jet for flight-testing that is scheduled to begin in 2028.



To future-proof its next plane, Boeing could develop an airframe with a conventional propulsion system to start but with the capacity to be upgraded to run on hydrogen or hybrid electric power, said Spingarn. The truss-braced wing would have plenty of room to accommodate a large open-rotor engine under development by General Electric<a href="https://www.forbes.com/companies/general-electric" target="_blank" rel="noreferrer noopener">General Electric</a>&nbsp;<a href="https://www.forbes.com/companies/general-electric">0.0%</a>&nbsp;and Safran dubbed Rise that could reduce fuel use and carbon emissions by 20%.



Boeing will likely approach airlines with two designs – a conservative one and a more radical one – and gauge interest before choosing which to go forward with.



With uncertainty about technology readiness and how Airbus could respond, Boeing faces tough decisions, but it has to embrace risks to get back on top, said Cunningham.



“It got to be the great company it was by having very bold, very competent management taking big decisions. And they unavoidably have to get back to that.”

Etihad Boeing 777 with contrails on blue

Why Boeing Needs A New Plane — Soon

<h2 class="wp-block-heading" id="h-topline">TOPLINE</h2>



The Federal Aviation Administration&nbsp;<a href="https://www.faa.gov/newsroom/faa-halts-boeing-max-production-expansion-improve-quality-control-also-lays-out-extensive" target="_blank" rel="noreferrer noopener">announced</a>&nbsp;Wednesday a pathway toward resumed flights for Boeing 737 Max 9 jets, but it won’t allow Boeing to expand production of the planes after a hole was blown into the side of an Alaska Airlines flight using one of the jets earlier this month, prompting temporary groundings and thorough inspections from the FAA.



<h2 class="wp-block-heading" id="h-key-facts">KEY FACTS</h2>



Boeing will be prohibited from expanding production of its Max jets, including the 737-9 Max model, under the order from the FAA on Wednesday.



The FAA also said it approved an inspection and maintenance process that will be performed on all of the 171 grounded Boeing 737-9 Max planes, which if successful, will make the aircraft eligible to return to service.



The inspection and maintenance process was approved after the FAA reviewed data collected from inspections on 40 grounded planes.



Maintenance performed on the aircraft will involve inspection of exit door plugs and parts associated with them, bolts, guide tracks and the correction of damage.



FAA Administrator Mike Whitaker said in a statement that the extensive review of the planes wouldn’t mark a return to “business as usual for Boeing.”



<h2 class="wp-block-heading" id="h-key-background">KEY BACKGROUND</h2>



The National Transportation Safety Board is&nbsp;<a href="https://www.forbes.com/sites/siladityaray/2024/01/09/investigators-will-probe-if-alaska-airlines-737-maxs-door-panel-was-securely-bolted/?sh=1f28f5fd6228">investigating</a>&nbsp;whether or not the door panel that blew off the Alaska Airlines flight was properly bolted before takeoff. Investigators have found the plane’s plug door but have yet to recover the bolts associated with it. The FAA recommended this week that airlines inspect door plugs on Boeing 737-900ER aircraft, a different model from the one involved in the Alaska Airlines incident. The agency, which said the 737-900ER’s door plugs “have an&nbsp;<a href="https://www.forbes.com/sites/siladityaray/2024/01/22/faa-asks-airlines-to-inspect-door-plugs-on-boeing-737-900er-planes/?sh=7222a8fafe91">identical door plug design</a>” to the Max 9, asked airlines to inspect four points where a bolt is used to secure the door to the airframe of the 737-900ER.



<h2 class="wp-block-heading" id="h-further-reading">FURTHER READING</h2>



<a href="https://www.forbes.com/sites/siladityaray/2024/01/22/faa-asks-airlines-to-inspect-door-plugs-on-boeing-737-900er-planes/?sh=7222a8fafe91">FAA Asks Airlines To Inspect Door Plugs On Boeing 737-900ER Planes</a>&nbsp;(Forbes)

FAA Clears Way For Boeing 737 Max 9s To Potentially Resume Flying—But Prohibits Increased Production

<h2 class="wp-block-heading" id="h-topline">TOPLINE</h2>



The Federal Aviation Administration announced Thursday it’s investigating whether Boeing failed to ensure its planes were safe for flying after a a “plug” door fell off a 737 Max 9 plane flying from Portland, Oregon.



<h2 class="wp-block-heading">KEY FACTS</h2>



The FAA&nbsp;<a href="https://twitter.com/FAANews/status/1745491519266542047" target="_blank" rel="noreferrer noopener">said</a>&nbsp;it notified Boeing of the investigation, saying it was prompted by the Alaska Airlines 1282 flight, where a “plug” type passenger door blew off the Boeing Model 737 Max 9 plane mid-air, prompting an emergency landing.



Every Boeing 737 Max 9 with a “plug” door has been grounded since Saturday.



The FAA said that the “incident should have never happened and it cannot happen again.”



In a&nbsp;<a href="https://www.boeing.com/737-9-updates/index.page" target="_blank" rel="noreferrer noopener">statement</a>&nbsp;Thursday, Boeing said it would cooperate “fully and transparently” in both the FAA investigation and an ongoing National Transportation Safety Board investigation.



<h2 class="wp-block-heading">KEY BACKGROUND</h2>



Safety concerns regarding Boeing’s 737 Max 9 planes have continued since the Jan. 5 incident. Both Alaska Airlines and United Airlines—the two U.S. airlines that use the 737 Max 9 planes—have&nbsp;<a href="https://www.reuters.com/business/aerospace-defense/no-data-captured-alaska-airlines-737-cockpit-voice-recorder-ntsb-chair-2024-01-08/" target="_blank" rel="noreferrer noopener">reported</a>&nbsp;finding loose parts on grounded Max 9 aircraft. And Wednesday, Alaska Airlines&nbsp;<a href="https://www.forbes.com/sites/tylerroush/2024/01/10/alaska-airlines-cancels-all-boeing-737-max-9-flights-this-week-after-hole-blown-into-plane-during-flight/?sh=6d5a18062273">canceled</a>&nbsp;all flights using Boeing 737 Max 9 planes, awaiting instruction from the FAA. It represents the latest major safety setback for Boeing, which garnered international scrutiny in 2019, two Boeing 737 Max 8 planes were involved in fatal crashes within the span of less than a year. The National Transportation Safety Board is also conducting an investigation into the Alaska Airlines incident, and has since&nbsp;<a href="https://www.forbes.com/sites/roberthart/2024/01/08/jet-door-blown-off-alaska-airlines-plane-is-found-in-oregon-schoolteachers-backyard/?sh=2aa3337e2d43">found</a>&nbsp;the plane door, which landed in an Oregon school teacher’s backyard.



<h2 class="wp-block-heading">TANGENT</h2>



Elon Musk has used the Boeing incident to continue his attacks on diversity, equity and inclusion corporate policies, implying without evidence on X in recent days that the plane-maker’s pursuit of diversity may have made air travel less safe. The posts drew <a href="https://www.nbcnews.com/tech/internet/elon-musk-boeing-dei-diversity-x-posts-pilots-rcna133351" target="_blank" rel="noreferrer noopener">rebuke</a> from civil rights groups.



<h2 class="wp-block-heading">WHAT WE DON’T KNOW</h2>



When the grounding of Boeing planes with “plug” doors may end. The FAA said in its Jan. 9 announcement that “the safety of the flying public, not speed, will determine the timeline for returning the Boeing 737-9 Max to service.”

US-AVIATION-BOEING

Boeing Under Investigation For 737 Max 9

<h2 class="wp-block-heading" id="h-topline">TOPLINE</h2>



Rescue efforts are underway after a China Eastern Airlines plane carrying 132 people crashed in Guangxi province, Chinese state&nbsp;<a href="https://news.cgtn.com/news/2022-03-21/Rescue-underway-following-aviation-incident-in-China-18AbXSz8ohi/index.html" target="_blank" rel="noreferrer noopener">media</a>&nbsp;and local aviation officials&nbsp;<a href="https://www.bbc.co.uk/news/world-asia-china-60819760" target="_blank" rel="noreferrer noopener">said</a>, causing a fire on the mountainside.



<h2 class="wp-block-heading" id="h-key-facts">KEY FACTS</h2>



The number of casualties and the precise cause of the crash is not known, according to state-owned media outlet&nbsp;<a href="https://news.cgtn.com/news/2022-03-21/Rescue-underway-following-aviation-incident-in-China-18AbXSz8ohi/index.html" target="_blank" rel="noreferrer noopener">CGTV</a>.



The Boeing 737 jet was carrying 123 passengers and nine crew members, according to the Civil Aviation Administration of China.



Rescue crews and a team of CAAC officials have been&nbsp;<a href="https://apnews.com/article/china-media-accidents-b0644cb141eb7313bfa4e1e250033017" target="_blank" rel="noreferrer noopener">dispatched</a>&nbsp;to the scene.



The flight—which appears to be China Eastern Flight MU5735—was traveling from Kunming to Guangzhou.



Data from flight-tracking website <a href="https://www.flightradar24.com/data/flights/mu5735#2b367bc1" target="_blank" rel="noreferrer noopener">FlightRadar24</a> shows the plane losing speed and altitude before it stopped transmitting data near the city of Wuzhou.



By Robert Hart, Forbes Africa

Incheon International Airport As South Korea Lifts Quarantine For Fully Vaccinated Travelers

Boeing 737 Jet Carrying 132 People Crashes In China

<a href="https://policies.google.com/privacy" target="_blank" rel="noreferrer noopener"></a>TOPLINE Boeing’s board of directors agreed Friday to pay the company hundreds of millions of dollars and impose new safety measures, closing out a lawsuit brought by Boeing shareholders that began after two crashes of the latest version of its best-selling passenger jet killed hundreds of people and caused regulators to ground the jet worldwide.



<h2 class="wp-block-heading" id="h-key-facts">KEY FACTS</h2>



The proposed settlement — which a Delaware state judge&nbsp;<a href="https://www.wsj.com/articles/boeing-board-to-add-safety-expert-make-other-changes-in-737-max-settlement-11636150675" target="_blank" rel="noreferrer noopener">still needs to approve</a>&nbsp;— comes more than a year after New York State Comptroller Thomas P. DiNapoli and the Fire and Police Pension Association of Colorado&nbsp;<a href="https://www.osc.state.ny.us/press/releases/2020/08/new-york-state-comptroller-dinapoli-fire-and-police-pension-association-colorado-announce-appointment" target="_blank" rel="noreferrer noopener">sued</a>&nbsp;Boeing’s directors.



As part of the settlement, members of Boeing’s board of directors agreed to pay $237.5 million directly to the company — a sum that will come from the directors’ insurers — according to a copy of the&nbsp;<a href="https://www.osc.state.ny.us/files/press/pdf/stipulation-of-settlement-boeing.pdf" target="_blank" rel="noreferrer noopener">agreement</a>&nbsp;released Friday evening by DiNapoli’s office.



Boeing will also hire an ombudsperson to serve as a “neutral third party” to handle any concerns from&nbsp;<a href="https://www.faa.gov/other_visit/aviation_industry/designees_delegations/delegated_organizations/" target="_blank" rel="noreferrer noopener">company employees</a>&nbsp;who work with the Federal Aviation Administration.



The board of directors will add a new member with experience in “aviation/aerospace, engineering, and/or product safety oversight,” and moving forward, it’s expected to ensure at least three board members have a background in those areas.



The settlement agreement noted the defendants “have denied and continue to deny” any allegations of wrongdoing.



Boeing told&nbsp;Forbes&nbsp;in a statement the company has already “taken significant actions to reinforce and strengthen our commitment to aviation safety,” and said the settlement “builds on those actions with additional oversight and governance reforms.”



<h2 class="wp-block-heading" id="h-crucial-quote">CRUCIAL QUOTE</h2>



“This settlement will send an important message that directors cannot shortchange public safety and other mission-critical risks,” DiNapoli, whose office oversees New York’s pension fund for government employees, said in a&nbsp;<a href="https://www.osc.state.ny.us/press/releases/2021/11/nys-comptroller-dinapoli-and-fire-and-police-pension-association-colorado-statements-proposed" target="_blank" rel="noreferrer noopener">statement Friday</a>.



<h2 class="wp-block-heading" id="h-key-background">KEY BACKGROUND</h2>



Boeing’s first 737 MAX entered service in <a href="https://www.boeing.com/company/about-bca/washington/737max-1st-delivery-05-17-17.page" target="_blank" rel="noreferrer noopener">2017</a>, the latest iteration of the company’s best-selling plane, which first flew in 1967. But the new version of the plane was grounded worldwide and deliveries halted after the crash of a MAX jet in Ethiopia in March 2019, which came five months after a crash in Indonesia.The crashes, which killed 346 people, were <a href="https://www.nytimes.com/2019/09/18/magazine/boeing-737-max-crashes.html" target="_blank" rel="noreferrer noopener">blamed on</a> a faulty addition to the flight control system that hinged on a <a href="https://www.nytimes.com/2019/06/01/business/boeing-737-max-crash.html" target="_blank" rel="noreferrer noopener">single sensor</a>, causing the planes to pitch downward if it sensed that the plane’s angle of attack was too high. The FAA eventually cleared the MAX to return to service <a href="https://www.forbes.com/sites/jemimamcevoy/2020/11/18/boeing-737-max-cleared-to-fly-again-after-nearly-two-years/?sh=1ffba36b704e">late last year</a>. But DiNapoli and the Colorado pension plan argued the disaster was linked to a broader lack of attention to safety by board members, who they <a href="https://www.osc.state.ny.us/press/releases/2020/08/new-york-state-comptroller-dinapoli-fire-and-police-pension-association-colorado-announce-appointment" target="_blank" rel="noreferrer noopener">claimed</a> “breached their fiduciary duties to the company by dismantling Boeing’s lauded safety-engineering corporate culture in favor of what became a financial-engineering corporate culture.” The two shareholders <a href="https://www.osc.state.ny.us/press/releases/2020/08/new-york-state-comptroller-dinapoli-fire-and-police-pension-association-colorado-announce-appointment" target="_blank" rel="noreferrer noopener">served as lead plaintiffs</a> in a lawsuit filed against the board <a href="https://www.osc.state.ny.us/files/press/pdf/stipulation-of-settlement-boeing.pdf" target="_blank" rel="noreferrer noopener">on Boeing’s behalf</a>, an arrangement known as a “derivative lawsuit.”



By <meta charset="utf-8">Joe Walsh, Forbes Staff

Boeing Directors Settle Shareholder Lawsuit Over 737 MAX Crashes For $237.5 Million

TOPLINE Boeing was <a href="https://www.faa.gov/news/press_releases/news_story.cfm?newsId=25740" target="_blank" rel="noreferrer noopener">fined</a> $6.6 million by the Federal Aviation Administration Thursday over issues related to safety and compliance, as both the embattled firm and the Federal Aviation Administration continue to face significant scrutiny following the crashes involving Boeing’s 737 MAX aircraft.



<h3 class="wp-block-heading" id="h-key-facts">KEY FACTS</h3>



<ul class="wp-block-list"><li>Boeing will pay $5.4 million because it failed to meet the conditions of a 2015 settlement <a href="https://www.faa.gov/foia/electronic_reading_room/settlement_agreements/media/20151218-boeing-settlement-agreement.pdf" target="_blank" rel="noreferrer noopener">agreement</a> requiring the company to improve its regulatory compliance processes. </li></ul>



<ul class="wp-block-list"><li>Boeing will also pay an additional $1.2 million to settle two enforcement cases, one of which <a href="https://www.faa.gov/news/press_releases/news_story.cfm?newsId=25156" target="_blank" rel="noreferrer noopener">alleged</a> that some Boeing managers who oversaw staff issuing safety certifications on behalf of the FAA were not approved to do so.</li></ul>



<ul class="wp-block-list"><li>In that case, the FAA also alleged Boeing managers “exerted undue pressure or interfered with” those staffers involved in safety checks.</li></ul>



<ul class="wp-block-list"><li>The other case alleged Boeing failed to follow its own quality control procedures and pressured staffers who were inspecting the 787 Dreamliner, which later was found to have several <a href="https://www.wsj.com/articles/boeing-widens-787-dreamliner-inspections-after-finding-more-assembly-line-defects-11607971193" target="_blank" rel="noreferrer noopener">defects</a>.</li></ul>



<ul class="wp-block-list"><li>In a statement, Boeing said “the announcement today fairly resolves previously-announced civil penalty actions.”</li></ul>



<h3 class="wp-block-heading" id="h-key-background">KEY BACKGROUND</h3>



Boeing is still trying to move past two crashes in 2018 and 2019 involving its 737 MAX aircraft that left 346 dead. Not only did the crisis tarnish its image, the crashes cost the company more than $19 billion. The Justice Department last month ordered the company to pay $2.51 billion to resolve criminal charges related to the crash after prosecutors alleged Boeing knowingly deceived the FAA during the 737 MAX certification process. The Transportation Department Inspector General also&nbsp;<a href="https://www.oig.dot.gov/library-item/38302" target="_blank" rel="noreferrer noopener">concluded</a>&nbsp;this week that the FAA’s lax certification process doesn’t offer enough oversight and needs to make improvements to prevent other disasters.



<h3 class="wp-block-heading" id="h-further-reading">FURTHER READING</h3>



<a href="https://www.forbes.com/sites/nicholasreimann/2021/01/07/boeing-to-pay-25-billion-for-misleading-us-government-about-737-max/?sh=781c452e6f59">Boeing To Pay $2.5 Billion For Misleading U.S. Government About 737 MAX&nbsp;</a>(Forbes)



<a href="https://www.forbes.com/sites/jemimamcevoy/2020/11/18/boeing-737-max-cleared-to-fly-again-after-nearly-two-years/?sh=475fe12d704e">Boeing 737 MAX Cleared To Fly Again After Nearly Two Years</a> (Forbes)



By Rachel Sandler, Forbes Staff

US-AIRPLANE-TRAVEL-TRANSPORT

Boeing Fined $6.6 Million For Failing To Comply With FAA Rules

Topline: After 20 long and turbulent months of being grounded, the Boeing 737 MAX is ready to take off into the skies as it gets approval to return to commercial service, says the U.S.  Federal Aviation Administration (FAA) on Wednesday, November 18.  This follows after The Boeing Company had to suspend the services of the airplanes due to the crash of Ethiopian Airline’s Boeing 737 MAX in March 2019.



<h4 class="wp-block-heading">Key Facts</h4>



<ul class="wp-block-list"><li>The FAA released a <a href="https://www.faa.gov/foia/electronic_reading_room/boeing_reading_room/media/737_RTS_Summary.pdf">comprehensive and methodical safety review process</a> report on Wednesday that took 20 months to complete. The report is to address the safety issues regarding the plane.&nbsp;</li><li>Boeing 737 MAX was grounded in March 2019 when 346 lives were lost within a five-month timeline.&nbsp;</li><li>On October 29, 2018, a Lion Air&nbsp; Boeing 737 MAX crashed after taking off from Jakarta, Indonesia. 13 minutes after takeoff, Flight 610 crashed killing 189 people.</li><li>Five months later, Ethiopian Airlines Flight 302 crashed shortly after take-off on March 10 killing all 149 people on board.&nbsp;</li><li>This led to many big airlines having to ground their Boeing 737 Max planes due to safety concerns. This included the Civil Aviation Administration of China (CAAC) who ordered all Chinese airlines to ground their Boeing 737 MAX 8 jets a day after the fatal Ethiopian crash. American Airlines, Comair Airways, and Ethiopian Airlines are just to name a few that also made the decision to ground their 737s.&nbsp;</li><li>“Throughout our transparent process, we cooperated closely with our foreign counterparts on every aspect of the return to service. Additionally, FAA Administrator Steve Dickson personally took the recommended pilot training and piloted the Boeing 737 MAX, so he could experience the handling of the aircraft firsthand,” the FAA statement read.&nbsp;</li><li>This stamp of approval allows airlines that are under the FAA&#8217;s jurisdiction to take the necessary steps to resume services.&nbsp;</li></ul>



<h4 class="wp-block-heading">Crucial Numbers</h4>



According to <a href="https://edition.cnn.com/2020/11/17/business/boeing-737-max-grounding-cost/index.html">CNN</a>, Boeing stated that this longest grounding in commercial aviation history has cost the company $20 Billion. This includes $8.6 billion to compensate customers who had their planes grounded, $5 billion for unusual costs of production, and $6.3 billion for increased costs of the 737 Max program.



<h4 class="wp-block-heading">Crucial Quote</h4>



&#8220;We will never forget the lives lost in the two tragic accidents that led to the decision to suspend operations,&#8221; said David Calhoun, chief executive officer of The Boeing Company. &#8220;These events and the lessons we have learned as a result have reshaped our company and further focused our attention on our core values of safety, quality, and integrity.&#8221;

Boeing 737 MAX Gets Approval To Fly Again After Almost 2 Years of Suspended Services

Dennis Muilenburg has earned a reputation as a high-energy CEO, bicycling 140 miles a week, sometimes taking groups of employees along for high-speed bonding sessions. The 55-year-old may need every ounce of energy he’s got as he faces one of the worst crises for Boeing in over 50 years: two crashes that killed 346 people, linked to the automated flight controls of the 737 MAX and leading to the grounding of the company’s bestselling plane.



The stakes for Boeing, and its CEO,&nbsp;are huge. The 737 accounts for 33% of Boeing’s revenue and almost 50% of its profit, according to Berenberg analyst Andrew Gollan.&nbsp;Deliveries have been halted since the plane was taken out of service worldwide after the March 10 crash of an Ethiopian Airlines plane, airlines are demanding compensation, and the company faces scrutiny from Congress, a Department of Transportation inquiry and a federal criminal probe. The stock (BA) has fallen 10%. Lawsuits filed by relatives of the dead and shareholders could take years to conclude.



Over the past few weeks, the 34-year Boeing veteran has been traveling heavily to shore up support from airline customers and investors. An aerospace engineer by training, Muilenburg has kept a close eye on the Boeing team rewriting the faulty flight control program; last week he went up in a plane that tested out its effectiveness.



But many observers are giving Boeing and Muilenburg poor marks for their public handling of the crisis. Until late last week, Muilenburg was largely invisible and the company’s public statements, while expressing sympathy for family and friends of the deceased, were short on substance.



“I give them a B,” says Jeffrey Sonnenfeld, a professor of leadership at the Yale School of Management. Muilenburg needs to put a human face on Boeing, he says, and get out in public and engage with the media to try to correct misperceptions and address the many questions about what went wrong, even if he doesn’t have ready answers to offer. &nbsp;



Muilenburg hasn’t shown the media sophistication of his predecessor, Jim McNerney, who’d previously helmed GE’s prized aircraft engine division and 3M. “He’s got a catastrophe as his training ground,” says Sonnenfeld.



<a href="https://www.forbes.com/sites/jeremybogaisky/2019/04/04/ethiopian-crash-report-fingers-boeing-flight-control-system-but-undercuts-claim-that-pilots-followed-proper-procedures/" target="_blank" rel="noreferrer noopener">Preliminary reports</a>&nbsp;from the investigations into the crashes of Lion Air Flight 610 in October and Ethiopian Airlines Flight 302 last month suggest that the pilots of both planes struggled to counter a flight control program called MCAS that erroneously pushed the planes’ noses down due to malfunctioning angle-of-attack sensors. After Ethiopian investigators released their report last Thursday, Boeing put out a video&nbsp;<a href="https://boeing.mediaroom.com/2019-04-04-Boeing-CEO-Dennis-Muilenburg-Addresses-the-Ethiopian-Airlines-Flight-302-Preliminary-Report" target="_blank" rel="noreferrer noopener">statement by Muilenburg</a>&nbsp;in which he said Boeing accepted responsibility for the role that MCAS played as one of the “chain links” in the two accidents.



Aviation regulators in other countries have questioned the Federal Aviation Administration’s certification of the MCAS system and its initial reluctance to pull the 737 MAX out of service; several have said they won’t just take the FAA’s word that it’s safe to fly again, making it uncertain when the plane will return to the skies worldwide.



With the prospects of a quick resolution fading, Boeing announced&nbsp;<a href="https://www.forbes.com/sites/jeremybogaisky/2019/04/05/boeing-cutting-output-of-737s-amid-crash-investigations-and-delivery-freeze/#354bd7925c8a" target="_blank" rel="noreferrer noopener">last Friday</a>&nbsp;it would throttle back 737 production to 42 a month from 52—a sharp reversal from its plan to raise output to 57 by the summer.



Analyst Richard Epstein of Bank of America/Merrill Lynch downgraded the stock to neutral Monday, estimating that Boeing likely won’t be able to resume deliveries for six months and won’t get back on pace until 2021, reducing earnings through 2023 before interest and taxes by $13.7 billion.



Whether Muilenburg’s job is threatened or not may depend on the stock price, says Richard Aboulafia, an aerospace analyst with Teal Group.



The board is loyal to Muilenburg, observers say, and his record so far has given them little reason to doubt having signed off on then-CEO and chairman McNerney’s decision to promote him to the top job in 2015 at age 51.



<h5 class="wp-block-heading">Engineer With Focus On Financial Discipline</h5>



<figure class="wp-block-image"><img decoding="async" src="https://specials-images.forbesimg.com/imageserve/1133157944/960x0.jpg?fit=scale" alt="US-aviation-ACCIDENT-BOEING"/><figcaption>Workers stand under the wing of a Boeing 737 MAX airplane at the Boeing Renton Factory in Renton, Washington on March 27, 2019. Boeing gathered hundreds of pilots and reporters at its factory to unveil a fix to the flight software of its grounded 737AFP/GETTY IMAGES</figcaption></figure>



The hard-charging, detail-oriented engineer presented a strong contrast to McNerney, a liberal arts major at Yale and Harvard M.B.A. who rose up through the ranks at General Electric when it was a star factory under Jack Welch. Native to Iowa, Muilenburg grew up milking cows every morning on his family farm and graduated from Iowa State before going straight to work at Boeing. Health-conscious and rail thin, he drinks Diet Mountain Dew to get a calorie-free caffeine fix and has been known to order turkey sandwiches with no mayo.



Though he’s cut head count, Muilenburg has cultivated a more positive relationship with the workforce than McNerney, who clashed with the machinist’s union and infamously joked of workers “cowering” from him.



However, Muilenburg has followed in McNerney’s footsteps with a laser focus on financial discipline, including boosting profits by wringing discounts from suppliers. Muilenburg has even gone&nbsp;<a href="https://www.forbes.com/sites/jeremybogaisky/2018/06/06/boeings-vertical-leap-where-will-it-squeeze-suppliers-next/" target="_blank" rel="noreferrer noopener">a step further</a>, moving to make more components in house and aiming to more than triple sales from lucrative aftermarket maintenance and services to $50 billion a year.



Like his two predecessors, Muilenberg has continued to sweeten the pot for investors, devoting roughly 95% of operating cash flow to the company’s steadily rising dividend and share buybacks.



The stock has taken off, climbing fourfold from February 2016 to a peak of $446 at the beginning of March, compared with a 63% rise for the Dow industrials over the same period. The March selloff has only pushed the stock back to where it stood at the end of January.



But to Aboulafia, the flawed design of the MCAS flight control system, combined with the continuing problems with the KC-46 tanker and delays in the crewed space-launch program are further evidence for criticism he’s leveled at Boeing for almost two decades: that the company’s focus on shareholder rewards has come with a “deprioritization and perhaps under-resourcing of engineering.”



Boeing says it’s maintained R&amp;D spending at a steady level and has a healthy corps of 56,000 engineers.



The question of how MCAS was certified has raised concerns over whether Boeing has gained too cozy a relationship with the FAA; a wildcard going forward is whether any evidence of wrongdoing will emerge.



If whistleblowers had any damaging information we likely would have heard it by now, says Mark Dombroff, an aviation attorney at LeClairRyan and former head of the Department of Justice’s aviation division. He expects that the DoJ will seek to determine within 90 to 120 days whether there’s a case to pursue.



Aviation experts are optimistic that Boeing’s software patch and training revisions will solve the 737 MAX’s safety problems. Boeing&#8217;s disclosure this week that it logged zero orders for the MAX in March generated negative headlines, but with a whopping 15,000 total narrow-body orders placed over the past seven years, there aren’t really any&nbsp;<a href="https://www.forbes.com/sites/richardaboulafia/2019/04/11/boeing-airbus-orders/#68b9038b3b74" target="_blank" rel="noreferrer noopener">airlines left with sizable needs</a>, says Aboulafia, with the notable exception of Chinese carriers. Any trade deal between the U.S. and China that would change the balance of trade will likely include Boeing sales.



Boeing’s last major crisis came in 2013, when the 787 was grounded for three months due to battery fires, two years after the plane entered service following years of production snafus and spiraling costs. While the financial stakes were large, no lives were lost. The last time Boeing faced a safety crisis of a comparable nature to the current one was the mid-1960s, when four new 727 jets crashed in a span of four months.



Like then, Boeing faces the task of convincing a fearful public that the MAX will be safe to step into again. Sonnenfeld says Muilenberg needs to take a page from James Burke, the late CEO of Johnson &amp; Johnson, who pulled off the tall task of convincing Americans that Tylenol was still safe after seven people were killed by cyanide-laced capsules in 1982. “It’s going to take the CEO to be out there.”



-Jeremy Bogaisky; Forbes Staff

Tag: boeing

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