Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- How Boeing’s actions affect Products, Airbus: Analysis (Update) October 11, 2024
- Boeing Announces Preliminary Significant Q3 Loss: Cuts 767 Freighter Program, Delays 777X EIS, Major Layoffs October 11, 2024
- Bjorn’s Corner: New engine development. Part 28. Wrapup. October 11, 2024
- Boeing strike hits suppliers, Airbus steps in October 10, 2024
- Boeing-IAM contract talks fail, no new negotiations scheduled, no end in sight October 9, 2024
Boeing unlikely to meet FAA’s 90-day deadline for new safety program
By Scott Hamilton
April 18, 2024, © Leeham News: Boeing appears unlikely to meet a 90-day deadline to submit a comprehensive plan to address safety concerns, insiders tell LNA.
The Federal Aviation Administration (FAA) on Feb. 28 gave Boeing three months to address “systemic quality-control issues,” a move sparked by new safety concerns following the Jan. 5 accident of Alaska Airlines flight 1282. A 10-week-old 737-9 MAX was minutes into climb-out from the Portland (OR) airport when a door plug blew out, prompting explosive decompression of the cabin. Nobody died but there were injuries and damage throughout the cabin.
“FAA Administrator Michael Whitaker told Boeing that he expects the company to provide the FAA a comprehensive action plan within 90 days that will incorporate the forthcoming results of the FAA production-line audit and the latest findings from the expert review panel report, which was required by the Aircraft Certification, Safety, and Accountability Act of 2020,” the FAA said in the Feb. 28 press release.
- Boeing firefighters union rejects contract again; free to strike May 3. See below.
- SPEEA, Boeing’s engineer and technician union, tells members to start saving for a strike. See below.
“The plan must also include steps Boeing will take to mature its Safety Management System (SMS) program, which it committed to in 2019. Boeing also must integrate its SMS program with a Quality Management System, which will ensure the same level of rigor and oversight is applied to the company’s suppliers and create a measurable, systemic shift in manufacturing quality control.”
Now 45 days later, LNA is told Boeing is unlikely to meet the deadline. Furthermore, Boeing’s engineering and technicians union has had no outreach from Boeing seeking its input into the plan.
Collaboration Needed
“The current status of safety culture issues at Boeing underscores the need for collaboration between the company and its labor unions. This collaboration is necessary to elevate an unfiltered voice for safety experts who have been ignored and employees who have been silenced,” SPEEA said in a memo reviewed by LNA.
SPEEA proposed several steps to improve safety and quality assurance, but so far with little progress, according to the memo.
Boeing’s touch-labor union, the IAM 751, has not heard from Boeing.
Boeing did not respond to a request for comment.
What happens if Boeing fails to meet the deadline?
What happens if Boeing fails to meet the deadline set by the FAA? One former Boeing employee whose duties included safety compliance told LNA at the time the FAA issued the mandate that Boeing would be unlikely to meet the deadline due to the complexities of the task.
On the one hand, the FAA could extend the deadline. On the other hand, the FAA could take the extreme step, if unlikely, of suspending Boeing’s PC 700 production certificate for the troubled 737 line. (It could also suspend the production certificate of all 7-Series airplanes, including the 737- and 767-based military aircraft. This seems highly unlikely.)
Boeing firefighters could strike on May 3
Separately, Boeing’s in-house firefighters rejected on April 15 for the second time a contract offer from the company. It may strike on May 3. Boeing is advertising for replacement workers (“scabs” in union nomenclature). Boeing Firefighters IAFF Local I-66 “represents the uniformed Firefighters, Inspectors and Lieutenants of the Boeing Fire Department. We have departments in Seattle, Everett, Renton, Auburn, Fredrickson and St. Louis,” the union says on its Facebook page of Boeing’s facilities.
If the union goes on strike, it will be the first time in 40 years anywhere in the US. But the union has little power. Provisions in the contracts of the IAM 751 and SPEEA prohibit them from honoring picket lines or lockouts.
SPEEA tells members to start saving
“The time to start saving is NOW.” That’s the message the Society of Professional Engineering and Employees in Aerospace (SPEEA) sent to its members in its April house publication, Spotlite. The newsletter was published April 1.
SPEEA’s current contract doesn’t expire until October 2026, 30 months from now. But Spotlite is laying the foundation for members to prepare for a strike authorization vote as a bargaining chip when negotiations begin. Typically, negotiations start around nine months before contract expiration.
“The tenor of the negotiations along with any decision on calling for a strike authorization vote is yet to be determined. However, what is known is if a strike vote authorization is called, it is best to approve the strike authorization to show strength and unity,” Spotlite said. “The decision to seek a strike authorization vote of the membership is made by negotiating teams and is not taken lightly. It is extremely premature to discuss a strike on the merits of any contract offer, but it is never too early to prepare.”
Spotlite plans a series of articles to tell members how to prepare for a potential strike. The leadership wants members to have the financial resources to honor a picket line and not go into credit card debt because of a lack of preparedness.
Create a special savings account
Members are urged to create a special savings account with three to six months of cash available to cover expenses.
SPEEA leadership tells its members that a strike is “extremely unlikely.” SPEEA doesn’t have a strike fund. “In the event a strike is called, you will need to support yourself with your own emergency funds. Every single represented individual in the SPEEA Professional and Technical units can save 8% in the after-tax 401(k) to support themselves for a 75-day strike in the extremely unlikely event a work stoppage is called.
“The time to start saving is now. If every single SPEEA-represented person changed their 401(k) contributions and saved 8% in their after-tax 401(k), Boeing would know that SPEEA is unified and prepared to do what it takes to get the contract we deserve in 2026,” Spotlite wrote.
More of the same.
Meanwhile the board and top management continue to enjoy their benefits…this is a shameless operation.
Boeing is really down the drain.
+1 Exactly. Boeing’s continued brazenness is just stunning: apparently they have no fear of their “regulators” at all.
New safety program, huh?
Seems like something you would give to the Chief Operations Officer and let her run with it, given how she is in control of ops.
After all – it’s why the position is there, right?
This news isn’t shocking in the least. Boeing was destined to fail at this task because it is incapable of allowing a single individual to have the authority to make the changes needed. This timeline forced Boeing to choose a single subject matter expert to define the changes and path forward as a team would never arrive at implementable solitions. Some of us believe Boeing to be incapable of changing the corporate toilet paper vendor in 90 days let alone something as complex and sweeping as the task before thwm….
‘Boeing to be incapable of changing the corporate toilet paper vendor in 90 days ‘
You mean West doesn’t run to Costco when the roll starts to get low?
It sounds like it is business as usual for the workforce : “the beatings will continue till morale improves!”
This defies belief.
What does Calhoun do all day?
He didn’t bother to go to the safety hearing in Washington, either, despite being summoned.
Total contempt and indifference.
He’s finalizing his package. Priorities, man. He wants all stock options taken out and replaced with gold and silver.
Christ, the pantomime just keeps on running:
“FAA Publishes New AD On 737 MAX 8 & MAX 9 Electrical Fault As Watchdog Calls For Fleet Grounding”
“The FAA’s latest airworthiness directive (AD) mandated the installation of two bonding jumpers on certain Boeing 737 MAX 8 and MAX 9 aircraft.
“The directive only affects 79 aircraft in the US.
“However, The Foundation for Aviation Safety, citing continuous electrical issues with the aircraft, called for another grounding of the type.”
“The FAA warned that a failure of the SPCU and ground through the P6 panel can potentially result in a significant loss of flight crew instrumentation and displays, leading to a safety risk. As a result, the regulator mandated that operators install two bonding jumpers from the P6 panel structure to the primary structure.”
https://simpleflying.com/faa-ad-737-max-electrical-fault-watchdog-calls-fleet-grounding/
What a mess. I do find it fascinating that the new CEO and current COO Pope is no where to be seen or heard. At least with Stan ‘let’s make a’ Deal he made himself available and tried to project some semblance of leadership.
Integration of SMS with their current QMS is an extremely complex task requiring thousands of writings, e.g. policies/procedures to be edited by SME’s and managers…. People who need to be involved with ensuring their employees are taken care of….. and current safety standards are upheld. BTW, almost all of these writings require FAA review and approval. Time consuming to the Nth degree.
Once integrated into the system then performance audits accomplished for merit.
IMHO what Boeing should have done to meet this 90 day plan was hire hundreds of contractors/consultants and have them work thru the minutiae interviewing employees and managers for input and guidance for formulating a plan.
Of course at the end of the day the executive corps has to review and signoff and that my friends is the crux of the problem.
The Boeing arrogance never ceases to amaze me.
The beatings will continue until morale improves…..
The professional Firefighters at Boeing potentially going on strike May 3rd should make ALL of the shareholders nervous!
They are a big part of the safety culture at Boeing. When management says they care about the safety & well being of their employees, it’s a line of BS!
But as usual, what is said to the media by management and what is real, are worlds apart!!!!
Certainly no surprise. Rats are leaving the badly damaged ship, Calhoun got 35 million last year, though he got no bonuses (wow , he should get no Salary either but….)
The best analogy is expecting an Elephant to fly. Even if it wanted to it can’t. Calhoun and the clowns do not know how to do safety, their DNA drives them to just the opposite.
That said I also see the so called Fire Union as piling on. Nice cushy job that either is already well paid or they are not any good and no fire department wants them.
And yes, I was a member of 3 Unions and two of them threw us to the wolves and were deep into games in the management sector. They were all angling to go to managers so they did not have to work.
One did a good job though it was all new at the time.
No fire department wants them? Little do you know that the Boeing Fire Department turnover is incredibly high due to these firefighters getting hired with other departments…GOOD DEPARTMENTS! Not only that, they have the strong support of countless jurisdictions that appreciate what they do. Your comments are very inaccurate
The CEO could behaving passive aggressively here. He may be striking himself to get a better sign-off compensation package. I have always been dumfounded by the shareholders of this company. Are they that rich that they can let their investment in the second largest aerospace company in the World languish? Where’s a Carl Icahn when you need one? Is this board of directors still cowed by the CEO?
Answering last first, board was run by Kelnor and its clear he was also a do nothing and no follow up type. I had some hopes but he quit to which tells you all you need to know.
The board is going to be a quagmire of back stabbing by (majority or they would have had a new Chair) and some want to do the job right.
Calhoun did not show up to work and the board should have done something about that.
Shareholders are institutions and they don’t want to do anything either.
Also keep in mind a sucker is born every minutes, look at Bitcoin.
With old established corporations many times there are factions on the board that have different ideas. Some boards have worker representation through their unions. Allowing CEOs to pick their own board members is like asking the wolves to guard the henhouse. Still, I think CALPERS or other organizations with huge positions in the company should be forth coming. ETFs or mutual funds should also speak up. I’m sure Boeing stock is one of the widely held certificates in the country.
Hah, Carl Icahn couldn’t even save a rental car company and didn’t he bankrupt TWA?
“But the death knell for TWA came in 1988: Icahn took the company private. Icahn cashed in on $469 million, but the airline was straddled with a $540 million in debt.
“It became more and more apparent that Carl was not interested in growing the airline but in using TWA as a financial vehicle to acquire wealth for himself,” a TWA pilot told St. Louis Magazine in 2006.
Icahn systematically sold the airline’s assets to repay those debts. He most notably sold TWA’s London routes to American Airlines for $445 million in 1991. A year later, TWA filed for bankruptcy.”
https://skift.com/2024/02/13/carl-icahn-bet-on-a-struggling-twa-in-the-1980s-now-hes-trying-again-with-jetblue/
The TWA ALPA pilots got bamboozled by Icahn to thwart Frank Lorenzo’s big. Lorenzo wanted to grow his Texas Air empire and TWA (his first job in the airline business) would have added to it. The pilot opposition was a classic case of cutting off the nose to spite the face.
Yeah, I know Boeing does not need a corporate raider. In Minnesota we had one come in and take over Northwest Airlines. He pocketed $300 million then ran unsuccessfully for Governor of California.
I am just astounded that major shareholders of Boeing aren’t more vocal about this succession of low caliber CEOs. The McConnell Family I can understand. But Boeing must make up a good portion of many funds that bought the stock for dividends.
“IMHO what Boeing should have done to meet this 90 day plan was hire hundreds of contractors/consultants and have them work thru the minutiae interviewing employees and managers for input and guidance for formulating a plan.”
Adding man power to a late project makes it later 🙂
@uwe
Let me explain. I should have said that from first moment the FAA put the 90 day notice they hired externally.
After all they hired a contractor submarine admiral and what have we heard from him so far?
External people can focus on the task and the everyday worker bees can continue to focus on building safe jets.
We did this at one time in my airline career after an accident and it was extremely helpful.
But the word I’m getting from current Boeing employees is it’s chaos.
In the 80’s, i worked as a subcontractor on the 737, 747 and mainly the 767. I think that Boeing had one of the best QC system at that time. Why would they have to reinvent the wheel? Go back to basics and change the culture of fear.
The new managers, circa the year 2000, had a completely different mindset. Armed with MBA and hedge fund philosophy, they gutted everything in the office that did not contribute directly to the bottom line. They could justify anything in the name of increasing shareholder value. Quality was hamstrung. Libraries gone or got less square footage. IT, food service, maintenance, security outsourced. Then, shipping jobs to LCCs, that be low cost countries. GE, Boeing, UTC led the charge in Aerospace.
I saw a rundown of analysts a few days or a week ago.
I think there was 7. One was sell, 5 hold and one buy.
The ones holding Boeing stock are simply stupid and not going to do anything.
The guy I work with has mutual funds that sort and sift and dump the non performers.
At one time I had my stocks with another firm and market had been going up for a while and nothing was going up in my funds.
I gave it 8 months and then called and had them kill the funds and send me the check.
When I was doing it the guy I was talking to was incensed I was killing the funds. His statement was, We Are In the Business to Create Wealth.
Well buddy, your firm may be getting wealthy but I am not so close it out and this is not a discussion. You can’t even get stocks that work in a very up market.
The dumb ones believe the spin not the reality and clearly don’t bother to read the data or the ones that have the capability to assess and fully understand what is happening to Boeing.
In regards to the Boeing Fire Fighters, the biggest issues there are:
Pay at Boeing is significantly below the pay at municipal fire departments in Seattle and its suburbs.
In addition, Boeing is proposing a change so that it would take its Fire Fighters 19 years to reach the top of their pay scale, up from the current 12. (Seattle’s union firefighters reach the top of their scale in 3.5 years.)
Boeing Fire Department staffing is about 40% below the guidelines set by the International Association of Fire Fighters.
Whether a fire fighters’ strike would shut down production or not (and I think there’s a potential for one to significantly disrupt test and delivery flights of completed aircraft), picking a fight with your emergency service responders when you’re in the midst of a safety crisis is a really bad look.
And provoking a strike by firefighters while you’re in the midst of negotiating with already-angry Machinists is certainly a unique labor relations strategy.
As I stated over the so called Admiral who is Chairman of IHI, these guys all sit in each others pockets.
And you can see why Calhoun did not have time for doing his job (not that he knew how to do his job of course)
https://www.totallandscapecare.com/business/article/15669010/boeings-outgoing-ceo-exits-caterpillars-board
“We have the power of subpoena, but I’m not going to specify,” Senator Blumenthal.
https://pbs.twimg.com/media/GLh6sKGWUAA2KZn?format=jpg
The article claims:
“Now 45 days later, LNA is told Boeing is unlikely to meet the deadline”
Ok.. told by who? This is an important detail blatantly left out for vagueness. What a joke.
As it says: “insiders tell LNA.”
Read the article.
Sounds like BA corporate might be digging
You can watch the vid.
WALTZ: How much do you think the Air Force pays for this bag of bushings?
USAF SEC. KENDALL: I don’t know, Congressman.
WALTZ: $90,000.
https://twitter.com/RepWaltzPress/status/1780628531237601330
Drug dealers have got nothing on these guys
A lot of standard business practices are morally if not criminally considered acceptable. That’s why they love to outsource and move equipment production to LCC (low cost countries.)
In this week’s earnings conference call, would any analyst dare to ask the TIA/certification timeline of the 777-9?
“Revenues are projected to reach $17.69 billion, declining 1.3% from the same quarter last year.
The consensus EPS estimate for the quarter has undergone a downward revision of 127.8% in the past 30 days*, bringing it to its present level.”
“In lawsuits over the two fatal 737 MAX crashes, Ralph Nader says Boeing wants “to prevent a public trial by jury … the discovery of internal documents and deposition of Boeing executives”
Two families, including Nader’s, want that trial and won’t settle
https://twitter.com/dominicgates/status/1782160616008102114
Excellent. Discovery would be an absolute b***h for Boing.
As indicated by Scott H in the most recent article on transparency:
(Reuters) -Boeing expects a slower increase in the production rate and deliveries of its 787 widebody jets as the U.S. planemaker wrestles with supplier shortages “on a few key parts,” an executive on the program told workers on Monday.
Boeing still plans to steadily increase its rate to meet “strong demand,” according to the memo seen by Reuters from Scott Stocker, 787 vice president and general manager, to workers at its South Carolina facility.
“We continue to manage through supplier shortages on a few key parts,” the memo said. “To that end, we have shared with our customers that we expect a slower increase in our rate of production and deliveries.”
—————————————–
Gotta wonder sometimes, if articles like the one Scott H posted, spur a reaction from BA?
A few short months ago at Q4 2023 earnings release:
“Fourth Quarter 2023
787 production rate at five per month; 737 production rate at 38 per month […]
The 737 program continues to deliver airplanes and its production rate is now at 38 per month. The 787 program production rate is now at five per month.
https://investors.boeing.com/investors/news/press-release-details/2024/Boeing-Reports-Fourth-Quarter-Results/default.aspx
Shouldn’t there be an SEC investigation?
Amongst all the things out there, mis-representing the production rate is the least of their worries or things that should be looked at.
Agreed- but it *is* telling. Little lies tend to cause / turn into bigger ones. As an aside, I wonder how the 737-7, -10, and 777-X are coming along?
What an outfit.
Nah analysts built their P&L/FCF etc projection based on mgmt’s guidance (including credit analysts from Moody’s to S&P – see why BA can maintain its investment grade credit rating, mostly based on BA’s [faulty/optimistic] forecast to clear its 737 MAX inventory within two years i.e. by 2022).
I’m sure that Scott will have an analysis on this but:
………………………………………….Q1………Q4/2023
Cash and cash equivalents $6,914 $12,691
Short-term and other investments 615 3,274
Almost an $8.5 billion drop. They also took in a bunch more cash from customers
Current liabilities
Advances and progress billings 58,972 56,328
Customers gave them another $2.6 billion in Unearned Revenue
That’s an $11.1 billion swing for the quarter