Trouble from losing Boeing’s safety trust

Trouble from losing Boeing’s safety trust

“They’ve lost credibility,” United States Transportation Secretary Sean Duffy said of Boeing.  Duffy made the evaluation on Fox News’ “The Faulkner Focus” on March 14, one day after visiting the Boeing 737 facility in Renton, Washington.

Trouble from losing Boeing’s safety trust

Chris Rocheleau, Administrator of the US Federal Aviation Administration (FAA), meets with Kelly Ortberg, CEO of Boeing

Chris Rocheleau, the Acting Administrator of the Federal Aviation Administration (FAA), accompanied him on his journey. They toured the factory and met with Boeing CEO Kelly Ortberg. The business announced that it was “pleased to have the opportunity to present to Mr. Duffy and Mr. Rocheleau the progress being made to further enhance safety and quality.”

Sean Duffy’s visit comes six years after Ethiopian Airlines’ 737 MAX 8 crashed in March 2019, killing all 157 people on board. The tragedy caused modifications in aircraft design and pilot training.

Boeing’s years of losses

Lion Air’s (Indonesia) Boeing 737 MAX 8 crashed into the Java Sea 13 minutes after takeoff from Jakarta in October 2018, killing all 189 people on board owing to an MCAS (Maneuvering Characteristics Augmentation System) malfunction.

Boeing has suffered years of damages from the two incidents, totaling $35 billion between 2019 and 2024. Last year, the firm lost over $12 billion. According to FactSet statistics, this corresponds to a $5.46 per share loss, which is far greater than the $3.08 projected by Wall Street analysts.

Boeing lost its ‘iconic’ reputation and addressed safety concerns.

Boeing delivered 348 planes last year, down more than a third from 528 in 2023 and less than half of Airbus’s total. It has also not received any orders for the 737 MAX in at least two months. The US carrier finished last year with a net order book—new orders minus cancellations—far behind Airbus.

CEO Kelly Ortberg, who took over in August 2024, stated that Boeing had lost its “iconic” reputation and that addressing safety and quality difficulties would necessitate overhauling the corporate culture.

Trouble from losing Boeing’s safety trust

Before anybody could respond, an Alaska Airlines 737 MAX door panel exploded at 15,000 feet shortly after takeoff from Portland, Oregon, in early January. The plane was discovered to be missing four vital fasteners. Following the incident, Mike Whitaker, the FAA chief under President Joe Biden, imposed a monthly manufacturing limit of 38 737 MAXs.

Boeing still has a lot of opportunity to restore its greatness

Despite its credibility issues, Boeing stands a strong chance of restoring its sparkle. Fitch Ratings reported in early March that the firm has made initial headway in recovering production after the strike, decreasing backlogs, and managing its supply chain. Boeing has a BBB- rating from Fitch, the lowest possible before being designated as junk.

The 737 MAX is now produced at a rate of approximately 20 per month. Fitch believes that the early progress following the strike will pave the way for Boeing to achieve a production rate of 38 per month by the third quarter. Fitch reported that the US manufacturer’s commercial aircraft revenue and earnings are currently controlled by output rather than market demand.

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