Fixing Max, Regaining Trust Boeing's Priorities
By Scott Reeves, China Daily | Dec. 30, 2019
As the United States plane-maker Boeing seeks to regain public trust and reestablish itself as the world's preeminent aircraft manufacturer with a new CEO, engineering updates needed to correct the faults in the 737 Max jet may be the easier part, according to analysts.
To restore credibility, Boeing must be open and direct when dealing with the US Federal Aviation Administration, customers, pilots and the public, say the analysts. But a plaintiff's attorney believes harm to the company's reputation may be irreparable.
"I'm not sure there is anything the new CEO can do to correct the damage as far as how the victims' families view Boeing," Floyd Wisner, founder of Wisner Law near Chicago who has negotiated out-of-court settlements for some of the families of those killed in the Indonesian crash in October 2018, said.
"All trust is lost and there's a great deal of anger."
Analysts have estimated that Boeing will spend at least $20 billion to return the Max to service. Costs include compensation to airlines for lost revenue due to the worldwide grounding of the jet, out-of-court settlements with family members of those killed in the crashes as well as the cost of storing new but undelivered aircraft and returning grounded planes to the air.
Restoring public trust may be a bigger problem simply because there is no technical fix. A survey conducted by Boeing found 40 percent of passengers worldwide said they wouldn't fly on the Max.
New Strategies
The New York Times reported that Boeing has developed strategies to win back public trust--and customers--including handing out 3-by-5-inch cards stating why the plane is safe, having flight attendants or members of the flight crew personally address a customer's fears, or, if necessary, rebook passengers on a flight not using a Max jet.
"The perceived problems will continue until the Max returns to service and flies a couple of million hours at the fleet level without incident," Robert Mann, president of R.W. Mann & Co, an aviation consulting firm in Port Washington, New York, said.
"A few years ago, no one would fly the Boeing 787. Now, it's a great performing airplane. Ultimately, the Max will have the same trajectory and it will receive customer feedback more quickly because it flies several legs a day. If the Max does what it's supposed to do--provide more efficient and reliable transportation--few will remember (former CEO Dennis) Muilenburg."
The 787 Dreamliner hasn't been involved in a crash since it was introduced in 2009. But the entire fleet was grounded for about three months in 2013 after a lithium-ion battery started a fire during a Japan Airlines flight and an earlier fire in an All Nippon Airways plane while it was parked on the runway after passengers disembarked. There were no injuries.
Sparking Exodus
The October 2018 crash of a Lion Air flight in Indonesia and March 2019 crash of an Ethiopian Airlines flight in Africa that killed all 346 passengers and crew on board sparked the exodus of Boeing's top management.
Muilenburg, 55, was fired on Dec 23. Boeing's CFO will act as interim CEO until David Calhoun, currently board chairman, takes over as CEO on Jan 13.
Muilenburg, an aerospace engineer, became CEO in 2015 and had been with Boeing for 34 years. CNN reported last week that public filings show he could be entitled to more than $30 million--$20 million plus worth of vested stock and a pension package totaling more than $11 million--and, potentially, a severance payment of about $7 million.
He was criticized for making overly optimistic statements about the Max's return to service and for his tin ear in dealing with criticism from Congress, regulators and family members of the crash victims.
No Clarity on Recertification
After the second crash, Muilenburg said the Max would return to service by December. But United Airlines recently said it had pulled the jet from its schedule until June 4 after previously expecting flights to resume in March. Southwest and American hope the plane will return to service by spring. It's unclear when overseas regulators will recertify the Max for commercial service.
With Muilenburg's exit, other Boeing executives are leaving. The company's top lawyer, Mike Luttig, who advised Muilenburg on strategic and legal matters following the crashes, will retire in early January. Kevin McAllister has been removed as head of Boeing's commercial airliner division and Anne Toulouse will resign at the end of the year as vice-president for communications.
Calhoun, the new CEO, is former senior managing director and head of private equity at the Blackstone Group and former chairman of Nielsen Holdings, a marketing and media information company. He has served as a member of Boeing's board of directors since 2009 and like other directors approved the initial version of the anti-stall system and therefore shares final responsibility for the Max's design and the company's response to the crashes.
Calhoun already appears to be setting a different tone with the FAA. Last week, he personally called the regulatory agency and talked privately with officials rather than include other top executives on the call, The Wall Street Journal reported.
The conversation followed Boeing's release to the FAA of what some see as still more damaging documents about the Max's development. The content of the documents hasn't been disclosed, but Boeing has acknowledged they could be damaging.