Aboulafia calls for “regime change now” at Boeing

By Scott Hamilton

Feb. 6, 2024, © Leeham News: With hundreds of new 737 MAXes facing delays due to the Federal Aviation Administration’s freeze on production rates, how much compensation will Boeing owe airlines and lessors?

It’s a question that’s unanswered at this time. And much depends on whether the delays are “excusable” or “inexcusable” in Boeing’s contracts.

Excusable delays are things outside of Boeing’s control, such as Acts of God, War, pandemics, etc. Inexcusable delays are things within Boeing’s control. However, there could be legal maneuvering as to just what this means. Is grounding by the Federal Aviation Administration—something outside Boeing’s control—an excusable or inexcusable delay if the grounding is caused by something within Boeing’s control?

Are problems within Boeing’s supply chain outside of its control but which delays deliveries by Boeing excusable or inexcusable delays? Contract language (which LNA has not seen) may address this.

Lawyers will argue over the contract’s meaning. But what is undisputed is that Boeing faces yet another mess with its long-troubled 737 MAX line.

Over the weekend, Reuters reported that once again supplier Spirit AeroSystems found mis-drilled holes in 737 fuselages. Boeing confirmed the Reuters report and issued a long statement from Stan Deal, the CEO of Boeing Commercial Airplanes, that 50 undelivered 737s may be affected. Deliveries will be delayed on these aircraft while inspections and repairs, if needed, are conducted. Deal’s message is at the end of this article.

At the Jan. 24-25 Aviation Week suppliers conference outside Los Angeles, consultant Richard Aboulafia called for “regime change” in Boeing’s leadership.

Regime change now at Boeing

Aboulafia is a vociferous critic of Boeing CEO David Calhoun and has long called for his replacement. Asked by Aviation Week’s Joe Anselmo to comment on the 737-9 MAX door plug quality escape and the three week grounding by the FAA, Aboulafia was typically acerbic.

“I can only give you a brief answer in six hours. So, I’ll try to manage my time here. But, you know, hashtag regime change now, right?” he said. “I mean, come on, this only ends one way. The fundamental problem here is that you have the guys at the top who are not talking to the people who are actually engaged in the core of this, which sounds like a minor managerial flaw. But it’s really catastrophic when you get right down to it because you don’t understand what the actual resources are that are needed to get the job done.”

Aboulafia noted that this is the basic challenge for any CEO or manager. Aboulafia said that he shouldn’t say there’s no hope. “They can start doing that tomorrow, but after all these years, they’re not.

“Why hasn’t that happened? Because this is the only this is the only aerospace company in the universe that has not done anything with share prices for the past three years. Usually, the Board of Directors notices these sorts of things. What is happening with the Board, I think, is the big unanswered question going on here. But if the Board doesn’t act, I can’t think of anything that changes here.”

Aboulafia said Boeing can just go on with a fairly steady share price, “marching from crisis to crisis, public disaster to public disaster, gradually getting back to something like pre-cash flow in the next few years. They can rip up the company and profit that way. But the way things are going now, the answer is I don’t see how this ends.”

Sooner than later

Michael Bruno, also of Aviation Week, predicted Calhoun will leave sooner than later.

“I can’t predict when Mr. Calhoun will leave his job. I do absolutely think it’s probably sooner rather than later, after the most recent incident. But the question about what comes next, who comes next, and what are the changes that happen. I’m almost certain, although I don’t know what will happen, I’m almost certain it’s going to be big,” he said.

“Boeing’s going to be very different in probably four or five certain years by the end of this decade than it looks now, and it will be because the next leadership comes in and executes some kind of renewal plan. And that to me is amazing, because I think as recently as last summer, we really didn’t think that was a reality. But I think it is now.”

Ron Epstein, the aerospace analyst for Bank of America, is another constant critic of Boeing’s current leadership and strategic direction. Epstein offered a graphic analogy of Boeing’s latest MAX crisis to finding cockroaches.

“You just don’t find one. You find more. When they started inspecting the Dash-9s, they started finding thousands of them in this place.” Toning the analogy down a bit, Epstein continued, “I was joking with a client of mine the other day, who happened to be 40 years old. He said, now I’m going to go to the doctor for one thing and finding something else. And that’s kind of what’s going on.

“It’s all about culture,” Epstein said. “Culture is driven by all kinds of things. It’s top-down, but it’s also about your development and what you’re doing.”

Change the culture

Epstein said Boeing still has good engineers, “but if you rewind the clock, it was an amazing engineering culture. Years ago, I worked at McDonnell Douglas.  The aero  engineering and The Boeing Co. in Seattle were high-tier.

“You get the sense now that that’s probably not the case. And to change this, you have to change a culture that changed over maybe 15, or 20 years. It’s not going to change very much.”

Epstein said all of the stakeholders should probably command some sort of leadership change. “And when I say that, it’s not just shareholders. It’s shareholders, regulators, and employees. Everybody gets impacted by this because it’s such an important employer for the U.S. It’s a huge piece of our national security infrastructure. There’s a lot at play here, and a lot at risk.”

72 Comments on “Aboulafia calls for “regime change now” at Boeing

  1. No doubt Calhoun and Deal need to leave. But who do you replace them with? This the question

    • Aboulafia’s choice of words is very appropriate: “regime”, with the insinuation of an entenched despotism, serving the interests of some narrow elitist clique, while completely indifferent to the impact on others.
      The first action of a despotic regime is secure its hold on power by eliminating or managing any avenues for change. Here this takes the form of stacking the board with financialist bean counters with the same business philosophy as Calhoun.
      In the case of a country like Mexico, elections were continued but were managed such that one single party remained in control for 80 years. The name on the president’s desk changed every 6 years, but policy remained unchanged as it was managed behind the scenes by a narrow clique of rich elites.
      Similarly, the face of the CEO changes every 6-10 years, but company culture does not cause every CEO is a righteous believer in FCF and stock buybacks.

      • Show me the part that’s not theatre. We are only
        witnessing what was decided long ago, by those slightly higher up the foodchain.

        No, there’s *not a damned thing you can do about it*, at this time. Some [stupidly] like to put their heads above the parapet..

    • Every division of Boeing is failing! SpaceX beat them, airforce tanker problems, commercial aircraft. Time to break it up into separate companies, too big to manage. Move the headquarters back to Seattle and become an engineering company, moving to DC means they are a lobbying company. M

  2. Given what has happened, yes certainly top down is needed…

    then again, given these issues with rivets, missing bolts, and loose bolts throughout assemblies..

    A bottom up appears to be also required.

    • Wie der Herr, so’s Gescherr 🙂

      If management acts as a bad role model
      your workforce won’t behave any different than management.

      Aggravated when management hates the workforce.
      ( hmm, is that because you hate in others what you don’t like in yourself?)

      • Yeah, a pithy way to say it is: the fish rots from the head.
        Of course Calhoun and all his cash flow buddies should be marched out, but by now their virus has infected the top three layers of management. How does one purge the top 3 layers of management? If the country were run by a modern Stalin he could give them all a one way ticket to the Katyn forest. But we have no Stalin and no convenient access to the Katyn forest.
        Some kind of plan B is required.

    • The bottom acts like they work AT boeing, not FOR Boeing.
      Big difference

      • When the higher ups make financial issues a priority, preferring to invest money into buybacks and dividends, instead of engineering and products…

        …this is the result you get. The rank and file ends up being there to get paid, just like the decision makers above them.

        Or do you want them to care more about the company, when it’s patently obvious that the C-suite doesn’t?


        If the bosses cared, really cared, about making quality products, they would be down there on the line – talking to the people making them. Involved with production. Living in the same location. Managing in the same location.

        Not living on the other side of the country and telecommuting.

        You SHOW the employees you care, don’t just tell them. Talk is cheap.

        • …and furthermore, to that point;

          You cannot understand how absolutely simple it is, for Boeing to solve it’s production issues.

          If Calhoun was living near the Seattle area and actually worked in the same buildings, all he would have to do is:

          1) Take one hour, every day and visit the plant(s). Leave your phone in your office.
          2) Wear what the employees wear, safety shoes, goggles, whatever
          3) Don’t do it with an entourage. No press. No underlings.
          4) Stop 15 minutes at random places and engage with the workers;

          “Hi. I’m Dave. Pleased to meet you. Tell me, what are you working on here? Can you show me?”

          After a few minutes. “Can I try one? Yah – don’t worry, if the Union files a grievance, I’ll pay it, no questions asked. I want to know how this works. Money well spent.”

          A little while longer “Is there a better way to do this? Anything you missing here? What’s that? Tough to get enough ear plugs… (pull out a notebook). Ok Thanks”

          And you move on to the next station. The next day, you personally go down with boxes of ear plugs and fill up the station.

          Install some seats with the seat guys. Put in a few rivets. Help run some wiring. Watch them power up the plane for the first time. Ask if you can push the button. Call the people by their first name and ask them to do the same to you.

          When a problem arises, you ask; “What’s the right way to do it? Then let’s do it that way.”

          Every day. Visit different shifts. Get dirty. Encourage other C-suite people to do the same thing. Don’t make a big deal of it.

          When an aircraft rolls out of the factory, be there. Take a moment and look at it. Turn to some workers around you and say “Look at this beautiful thing you’ve created. Its a marvel and you’ve done great work”

          If you show them you care and are proud of the work done, they will follow you.

          • A generation ago, you had a leader like that. His name was Alan Mullaly

          • Well said and spot on. We on the floor have been saying that for years. You rarely even see 2nd level management on the floor anymore.

        • “.. invest money into buybacks ..”

          it is growing on me that we look at buybacks from the wrong direction. i.e. think collusion.

          Holding shares and being able to effect the buybacks via some cooperation with management this is a satisfactory level divestment strategy.
          You get your money out
          in times when the share value is boyed by those buybacks that give you money.
          At the end the share value will collapse.

          • The manipulation you dissected which follow the Buybacks is Spot On!

  3. Typo in the first para, I think: shouldn’t it read “..how much will Boeing owe..” ?

    • Yep, Microsoft grammar and spell check failed again. Sorry about that.

  4. Alaska is probably going to get a few more free max as compensation from this incidents. Knowing this, O’Leary will probably ask for some on behalf of Ryanair too. For united, it’s probably going to be more complicated since they are looking for the way out of the max10 commitment. Maybe convert to more B787s or B777X.

    • This is a case again, of Criminal Professional Liability, which should in much more than repaying with aircrafts. Effect on Airlines Image to the Public, Loss of Income/ containing expenses by the Domestic and foreign Airlines, I.e, passengers impact on not wanting to fly the Max’s. The list goes on.

      • I’ve said the behavior at Boeing has been criminal all along. These hedge fund minded MBA types have little care for whatever type of company they have taken over. Materials + Labor = Product. How do you return investment cost as quickly as possible? Outsource; sacrifice oversight; increase labor output by layoffs; etc.,… These fellows know what to do. Whether it’s soft drinks; moving Oreos out of the country; steel, ICs – It’s all product. Hey, look at the market today. Everything is peachy.

    • Or since the Max 10 will be only available for delivery 1 year past the promised delivery date, and contractually that would be the cutoff line (if that’s what’s in the fine print) United can simply ask for it’s deposits back or to cancel the order and have any monies deposited applied directly to the final payments they have on any other aircraft they have on order.

  5. Totally agree with Aboulafia’s for an Urgent “Regime Change”. It is inconceivable, that its current CEO & Team of disastrous performers (several who were active during the design flaws of the B737 Max’s), are still flirting around Boeing.

  6. Amen. Hopefully, leading airline CEOs & aircraft leasing (Aengus Kelly, Steven Udvar-Hazy, etc.) executives will join widely acclaimed industry experts, Richard Aboulafia & Leeham’s Scott Hamilton, in calling for substantive change in (Mc)Boeing/McDonnell Douglas (McD) 2.0 C-Suite (& I’ll add, hopefully the enablers/sycophants in the Boardroom) at a company that long ago lost its way & needs to get back to basics prioritizing engineering excellence over shareholder greed & gluttony.

    The sooner the better.

    Or remain McDonnell Douglas 2.0 & prepare to suffer the same fate as OG McD.

    Change is not just good, but in this case, absolutely – even desperately – necessary.

    Expecting the same people “to fix” what they broke is a fool’s errand – and a waste of time & precious resources at a company that has neither to spare anymore.

  7. Who should you pick making things better not worse? Fabrice Brégier together with Alan Mulally could inject positive energy with a comeback feeling and having Norm Augustine as chairman of the board will create airline thrust things will quickly change to the better.

    • So true , change to what? One of Boeing’s best CEO was a bean counter and one of its worst had an engineering degree.

      • Great point.

        Its a board committed to reform that is needed along with taking the pain of fixing what has taken this long to hose up.

        If your orders are to pillage it matters now if you are an engineer or not.

        It all starts at the top (Board) oh, and until one of the meltdowns the Chair of the Board was also CEO (yea tell us again how that worked out, and now tell us again how its still not working out)

        • Yes, the idea is that the major shareholder select a chairman and the board to force the CEO to drive the organisation in the desired direction. Like an oxdriver (chairman) steering the oxes (CEO and executive staff) to get desired results (field perfectly ploughed). Just having the biggest shareholder as chairman make him/her just focus on getting his/her money back to pay off the banks for his loans.

  8. According to a post on the Airliners.net (see link below):
    “The most powerful people responsible for the decisions made by Boeing Commercial Airplanes including safety and product development all came from McDonnell Douglas

    Stephanie Pope, COO, started at McDonnell Douglas in 1994
    Stan Deal, Boeing Commercial Airplanes CEO started at McDonnell Douglas in 1986
    Howard McKenzie, Boeing Chief Engineer, started at McDonnell Douglas in 1987
    Mike Delaney, Chief Aerospace Safety Officer started at McDonnell Douglas in 1988
    Mike Sinnett VP of product development started at McDonnell in 1982
    Mike Fleming, VP of development programs started at McDonnell Douglas in 1986

    Below these leaders are countless others who have risen to influential positions. Good luck finding anyone who worked in engineering on the 777 program during its development in a key leadership position today. They were all purged. Harry Stonecipher was GE executive in the 70s and 80s. He then went to McDonnell Douglas as CEO and then COO and eventually CEO of Boeing after the merger. He promoted all the McDonnell Douglas leaders who raised up through the ranks and pushed out the legacy Boeing executives.


    • Don’t forget David Calhoun himself – at GE for 26 years, on the board of directors there until 2006. Kevin G. McAllister, Deal’s predecessor – at GE for 27 years.

      Boeing has really been soaked in the GE/Jack Welch/MDD school of thought for close to 30 years now.

    • Not for nothing Pedro, but I’m going to with hold judgment on Stan Deal, as one of our members here has crossed paths with him at work and calls him a ‘Straight shooter’ no nonsense type guy.


      ‘Deal has a Bachelor of Science in aerospace engineering from the University of Illinois and a Master of Business Administration from Pepperdine University.’

      Maybe….just maybe, if given the proper guidance he could return to his engineering ways?

      • Frankly that is true of all managers, they get beat on from the top down.

        The question is, are they corrupt? (morally)

        But also keep in mind they have continued to be a manager in the meltdowns and still stayed on.

        I don’t rule it out entirely but if they went along with the corrupt behaviour, then they are as bad as the uppers.

        What I told managers when they wanted me to do bad things, make it an order, put it in writing and as long as its hot illeagal, I am happy to wreck things.

        Or as I told our winning manager more than once, I don’t want to hear it, you volunteered (acualy fought for that postio0n) we all need to earn a living, you don’t have to be a manager to do so, that is all willing and tough, suck it up buttercup (yes he hated me).

    • Yes, a Failing company took over an effective one and spread the virus of failure. Plain and simple every Mac executive in the Boeing ranks should be fired and replaced by someone with a track record of success. That success would come from many of the things that Frank P indicated above. Run the company from the company, not from DC. Meet the people and live with the product. Most of all, don’t endlessly derive so called new products out of old outdated designs. Boeing flourished with the 707, the 747 and the777 because they were ground breaking. The Max, and 777X are just re-hash. The 787 just needs to be made correctly for once.

  9. Until they change the tax codes this will go on until Boeing turns into GE. Why shouldn’t stock holders burn the company down and walk away rich? It is in all of our interest that Boeing succeed. Why not make success part of the tax code. Make it expensive to pull out cash and cheap to invest in the future.

    • Which stockholders John? The ones who invested at $440 and now own shares worth less than half that?

  10. Changing the regime won’t cause the debt to disappear. Nor will it bring back all the engineering talent that has left the company in recent years.

    Rearranging deckchairs on the Titanic.

    • While that is true, if you don’t change, then the ship is guaranteed to go down.

      So not doing Regime change is also not an option.

      So no, regime change is not re-arranging the Chairs if you do it with a goal of fixing Boeing.

      Yes it is playing games with chairs if you just replace people and don’t change the direction its going.

      Doing nothing is not an option

    • “Trust Us: We’re Boeing.”

      Klown Kar- though I feel very sorry for the line employees.

    • I would wager a dog biscuit that there are most likely some very embarrassing conversations going on in CMES or SAT that Boeing doesn’t want disclosed, as stated by our whistle blower here.

      Perhaps a senior manager is documented telling the Spirit crew “Listen, just open the damn thing up, replace the seal and get it done. Don’t worry about documenting it.”

      • Obviously

        But you got part of it wrong, my dog ate my quality control system.

      • I can see a manager saying you guys fix it, you other guys get the paperwork done. We used to do that on the 777 when we set up the factory. Difference here is we would have the parts fixed and the paperwork done at the end of shift. It appears the work and the paperwork were never completed.

        • Think the FAA nowadays requires that you document as you work having approved data next to you to follow all the time, then comes quality to check at each checkpoint in your work instructions and another quality to check each shifts work. If Boeing returns all fuselages with found defects the Renton work should be simpler, standardized and streamlined.

          • Misleading.
            Not only is it not “next to you at all times” it never has been. Sure, you might have a computer terminal somewhere you can access, but most operations are preformed from memory.

            There is no time to be constantly scanning the work instructions, drawings, and specification.

            As to “Checkpoints” that is misleading as well. Those inspect-able operations, over time, have been cut to a tiny fraction of what the once were in an effort to get rid of quality assurance inspectors who work Boeing views as “non value added”.

            If you want to understand what was vs what is, pull the work packages that perform the exact same installation on the 737 and P-8A. The Navy wisely forbid Boeing to used to fractional audit system used today on the commercial lines, and instead demanded Boeing uses the old pre-audit system with all of the old inspection and witness requirements before Boeing decided that quality didn’t matter as much as profit.

            The third error you make, which amounts to an outright lie, is that one shift’s QA reviews another shifts work. That doesn’t happen unles an inspector casually observes something he has knowledge of. And a lot of inspectors (same as mechanics/installer)have very limited knowledge these day. They can’t spot a defect or problem from thirty feet away like an old hand.

            You really think Boeing can put an in work fuselage back on the railcar and send it back to Kansas?

          • space craft/hardware assembly:
            Scripted instructions on what to do.
            One person works following instructions.
            Second guy checks for compliance to the script.
            ( breaks silently on errors in the instructions.)

    • They can’t because there probably is none, though it is a requirement.

      Here’s how it probably went down:

      Spirit traveler crew shows up in position and says “we gotta”.

      If it’s prior to interior installation, the first level manager in charge says “whatever, go for it”.

      If it’s after interior installation, that same first level will have his people strip the interior, with all removals recorded for inspected re installation later. The the spirit crew does their work, and the typically, the interior reinstalled the same way, with the same checks, all documented on the removal record. Including “OK to close”

      That OK to close is critical,nad QA, and most of the time as customer coordinator QA or even live customer, will inspect the entire area before the interior is reinstalled.

      An exception can be flight-line. Sometimes I have seem them perform undocumented removes and screw up the reinstall. Something goes wrong and the installer in the factory gets fired, not the flight line people that screwed it up. And you have to be pretty experienced and pretty savvy to be able to prove it was flight line and not you that performed the illegal work.

  11. With virtually every Boeing program in trouble, how on Earth can that outfit’s stock price still be over $200 per share?

    It’s a bit strange- at least on the surface.

      • Are we in a full facts-don’t-matter realm now, or might there be some other factor in play?

        I’ll go with “some other factor”, for now.

    • The biggest and most dangerous bubble in stock market history combined with misplaced long bias and faith in a proven management failures.

      This is a 75 dollar stock that trades on nothing but hope.

      • Totally agree with your assessment, which is probably held at 200+ by the Buybacks and Stockmarket manipulators.

  12. I must be something as I have been saying just that all along.

    All hail the Chief.

  13. You cannot have a board that cannot talk to the members of the corporation. The leaders lecture the workers on quality as the management fails to exercise institutional control over construction of their products.
    Top down changes are needed for a change in Boeing.

    • Sure you can. Boeing’s board is largely a figurehead, a collection of prestige names.

  14. I would propose John Legere for Boeing CEO. Yes he has no aviation experience, but he is a smart guy who understands how to transform and inspire a company. And he understands leadership, quality, and performance

  15. As a Boeing retiree with 38 years of experience at the Everett WA Boeing plant I appreciate your continuing coverage of the ongoing debacle of Boeing Commercial Aircraft’s leadership and the lack thereof the Boeing Board of Directors.
    Vigorous federal oversight alone will not fix the internal blindness of Boeing’s leadership.
    Past Boeing leaders such as Allan Mulally and Pat Shanahan were strategic, future-oriented thinkers who thoroughly understood the manufacturing process and the importance of safety and quality Boeing products.
    The current CEO is a bean counter who does not seem to understand the complexity of the process and doesn’t live in Washington State where the bulk of the work is still done.
    As he continues to downplay the company’s accountability his board of directors blindly follows along as they also do not possess the relevant experience.
    Boeing will not survive under its current leadership.
    Shareholders, as well as other Boeing supporters, should demand a change.
    We would be fortunate to have Pat Shanahan (or someone like him) return as CEO, a man with the requisite understanding, humility and orientation to lead Boeing back to building the best aircraft in the world.

    • Mullaly was pretty much on-board with everything McNerney did, and was all in favor of abandoning the Puget Sound. i remember well his “We Suck” remark.

      Shanahan was nothing more than a straight up bully. And one with marginal results to his credit.

      Both are highly overrated.

  16. While Calhoun richly deserves dismissal, Boeing’s problems will be near impossible to fix. At best it will take years and hundreds of millions of dollars.

    All the elements of Boeing’s manufacturing and quality systems are hard wired and physically built in.

    Multiple new 737 lines and thousands more employees will be needed to meet production goals. Lean manufacturing, just in time inventory, and an audit based quality control system that reduces inspections to a fraction have all been a disaster as Boeing sought not quality, but to squeeze every penny out of vital systems and concepts to distribute to shareholders and as executive compensation.

    As well, positions on Boeing’s board are less that that of directors. More like an honorarium with check attached.

    Everyone is talking about Boeing’s need for a cultural change without stating what the cultural problem is. OK, I’ll tell you:

    Boeing’s culture is a culture of lies. Each subordinate from first level management on lies in turn to their next level. And everyone is rewarded.

    The few mangers that speak truth are told to make a problem go away, or else. Given no resources they revert to the only way out as well, the lie.

    Lying is rewarded, even when that lie is recognized as such. There is only ever a penalty for lying when something goes horribly wrong and scapegoats are needed. The goat is identified and then destroyed, often by the same people that knowingly accepted the lie.

    That is the dirty awful truth. Accountability is always driven to the lowest level possible, a tactic to protect each successive higher level.

    This is why you end up with profuse apologies and phony, sweaty and emotional mea culpas from people like Calhoun who haven’t the slightest clue as to what is actually wrong.

    • Great comment. Mister Calhoun and the rest of the C-suite Problem are not going anywhere. Loved what you aptly said about the Board.

  17. Calhoun shouldn’t be first out the door.

    That honor belongs to Stan Deal, aka “Stan the Knife”.

  18. Recommend an article of Business Insider by Linette Lopez published today regarding Boeing never ending dilemma.

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