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Excerpt: The Rise and Fall of Boeing and the Way Back
Oct. 7, 2025, (c) Leeham News: Boeing’s decline into the existential crisis that befell the company in March 2019 was decades in the making. The 1997 merger with McDonnell Douglas Corp. is pegged as the tripping point. But the foundation pre-dated the merger.
In Scott Hamilton’s new book, The Rise and Fall of Boeing, and the Way Back, takes a deep dive into Boeing’s rise from its 1916 birth through the piston era and the dawn of the jet age, when Boeing’s “family” approach to airplanes thrust it past the Douglas Aircraft Co., despite nearly losing its advantage. After peaking at more than 60% of the jet market share, Boeing began a long descent.
Rise and Fall not only documents strategic and tactical wins and losses, it goes into the development of the 737 MAX and its now-infamous MCAS that led to two fatal crashes in October 2018 and March 2019, plunging the company into a path that nearly brought it to bankruptcy. The leadership eras of Phil Condit, Harry Stonecipher, Jim McNerney, Dennis Muilenburg, and David Calhoun are reviewed and critiqued by suppliers and former Boeing employees. The current CEO, Kelly Ortberg, arrived on Aug. 8, 2024, just five weeks before the contract with the 33,000-member IAM 751 touch labor union expired. The union struck for 53 days before a historic contract was reached.
Ortberg’s not insignificant challenges include returning Boeing’s production rates to levels that predated the March 2019 grounding of the MAX; returning Commercial Airplanes and the Defense units to profitability; paying down billions of dollars in debt; and deciding what new airplane programs to launch, and when.
An excerpt of Rise and Fall sets the stage. The book in softback and eBook formats is available here.
Introduction: Existential Crisis
“Alaska Flight 1282, Declaring an Emergency.”
David Calhoun and Brian West, the chief executive officer (CEO) and the chief financial officer (CFO) of The Boeing Company, were upbeat. It was November 2, 2022, and Boeing held its first investors day briefing since 2018.
The intervening years had presented existential threats to Boeing. First, the 737 MAX (“737” or “MAX”) suffered two crashes five months apart in October 2018 and March 2019. Regulators across the globe grounded the airplane. It would be twenty-one months before the Federal Aviation Administration (FAA) recertified the MAX for a return to service. Boeing had billions of dollars tied up in 450 MAXs that had been built and stored before production was suspended during the grounding. Bringing these airplanes into compliance with the necessary fixes and software updates, and simply “waking” the planes up from being stored so long, took weeks per airplane. Boeing wrote off more than $5 billion dollars for costs and customer compensation. The 737 is the company’s biggest money-maker. In any given normal year, 737 sales account for between 80 and 85 percent of Boeing’s orders.
In March 2020, just two months after becoming CEO, Calhoun was hit with another existential crisis: the new, mysterious deadly disease called COVID-19 became a global pandemic. Airlines worldwide slashed service by up to 90 percent. West had to raise an additional $25 billion to carry Boeing through the grounding and the pandemic. The additional debt nearly doubled Boeing’s long-term debt to more than $50 billion. Boeing’s credit rating was reduced, which made borrowing more expensive. Boeing’s deliveries of widebody planes ground to a halt. It would be two years before the pandemic was under control, after millions died.
787 flaws discovered
The pandemic was not Boeing’s only problem in 2020. In October of that year, production flaws in the company’s 787 model were discovered during inspections. Paper-thin gaps were found between fuselage barrel sections. Deliveries were suspended for twenty months. Reworking the 787s to shim these gaps and to fix other problems discovered during the inspections would take three to four months per airplane. Boeing built 110 787s that were stored during the delivery suspension. For the first time in the 787’s program, the company took a billion-dollar-plus write-off as costs and customer compensation mounted.
The FAA revoked Boeing’s ability to certify each 737 and 787 as airworthy, a step required before any aircraft could be delivered to a customer. This “ticketing authority” was assumed by the FAA, which had to staff up to perform its duties, adding another step to the certification process and causing public embarrassment for the company. There was no telling when, or even if, the FAA would return ticketing authority to Boeing.
Certification of the 737-7 and 737-10 MAXs was stalled once the MAX was grounded because of the lengthy time needed to make design fixes, validate them, and implement them. The MAX 7 was already in flight testing, which ground to a halt. The MAX 10’s first test airplane rolled out of the factory during the grounding and straight to a parking place while all the work required by the FAA was underway. (Unknown at the time: neither derivative would be certified during the next six years.)
The grounding, inspections, discovery of new technical problems, and the scandal surrounding the FAA’s assumption of the certification process of the MAX caused one delay after another. Boeing and the FAA were embarrassed by the revelations that emerged from multiple investigations. Certification of the giant 777X had been in process when the MAX crashes happened. After the accidents, the FAA began a review that involved looking at every step Boeing had undertaken on the plane’s production and certification steps to date. The negative halo effect of this oversight indefinitely stalled certification of the 777X. Boeing estimated at the time that certification would happen in 2025, nearly six years after it had been expected. Even this would prove optimistic.
On top of these issues, the company’s defense and space programs were running years late and up to billions of dollars over budget.
Confidence in the recovery
But by investors day in late 2022, Calhoun and West were sufficiently confident that the end of the company’s trials and tribulations was in sight. The inventories of the stored MAXs and 787s should be cleared by the end of 2024, they said. Profits and positive cash flow would return as the inventory airplanes, with concurrent increases in production of the 737 and 787 lines, were delivered. The executives predicted that by the end of 2025, the production rate for the 737 would return to fifty per month (still below the pre-grounding rate of fifty-two per month). Boeing was already alerting its supply chain that higher production rates were imminent. The 787’s production rate, reduced to a mere 0.5 per month during the delivery pause, would be back to five per month by the end of 2023 and ten a month by the end of 2025. This was well below the pre-pandemic peak of fourteen per month, but nevertheless a healthy rate for a widebody airplane.
Calhoun and West told aerospace analysts that November 2 that by 2025/2026, free cash flow should reach $10 billion a year. The analysts, more concerned about near-term shareholder value than long-term company health, were pleased. More pleasing was Calhoun’s announcement that Boeing would not “introduce” a new airplane until the middle of the 2030s. Technology, he said, would not be ready before then to produce the 20 to 30 percent improvement in cash operating costs the airlines needed to justify a new airplane.
The analysts loved hearing this. A new airplane meant a jump in spending for research and development (R&D). A jump in R&D spending meant less money for stock buybacks and dividends, i.e., shareholder value. Boeing’s stock price jumped on November 3, 2022. Within a week, it was up 18 percent and climbed further as the year ended.
For Boeing, the year 2023 was not without hiccups. Production ramp-up for the 737 was falling behind plan, and meeting announced production rates was a struggle for the company. The supply chain still hadn’t recovered from the pandemic; shipping parts was also falling behind schedule. Quality was a problem. After Boeing laid off thousands of workers during the grounding and the pandemic, thousands of new people were hired. Training and a learning curve were necessary for an efficient assembly process. Mistakes happened. Boeing was plagued by poor quality products, which it calls “quality escapes.” Planes were rolled out of the factory with missing parts because the supply chain couldn’t deliver on time. While this “traveled work” is normal (and happens at Airbus and other manufacturers), it’s annoying and inefficient. If severe enough, it causes delivery delays.
Despite these setbacks, Boeing’s stock price continued to climb. By the end of 2023, the price was more than $250 a share. This was well below the $440 a share before the March 2019 grounding of the MAX fleet but well above the five-year low of $95 per share at the start of the pandemic in March 2020.
Thus, as 2023 shifted into 2024, there was nothing but optimism at Boeing that its main troubles were behind it.
Alaska 1282 and a new crisis
Then, on January 5, 2024, at 5:06 p.m., Alaska Airlines flight 1282 took off from Portland, Oregon, for Ontario, California. There were 177 passengers and crew aboard the ten-week-old 737-9 MAX. There were only seven empty seats on the flight. Two of these seats were 26A and 26B.
Six minutes later, the plane was passing 14,830 feet on climb-out when the cabin pressure dropped from 14 pounds per square inch (PSI) to 11.64 PSI. The plane was flying at 271 knots. In the cockpit, a warning light flashed that the cabin-pressure equivalent was now greater than 10,000 feet, the altitude considered safe for humans. Within seconds, the cabin pressurization went to zero. The cabin completely depressurized. The cockpit door blew off its hinges, oxygen masks deployed, the shirt of a teenager in seat 25A was ripped off, and his mother in 25B grabbed her son and held him to prevent him from being sucked out a hole in the fuselage next to seat 26A. Had this seat been occupied, this passenger probably would have been sucked out despite being buckled in with a seat belt.
“Alaska 1282, declaring an emergency,” the co-pilot radioed. The pilots landed at Portland at 5:26 p.m., fourteen minutes after the depressurization. There were no fatalities and only minor injuries. There was damage throughout the cabin. It was a terrifying experience, but the passengers and crew were lucky. It could have been far worse.
A part of the fuselage had separated from the airplane. It was a “door plug” that fit into an opening designed to be an emergency exit for the high-density version of the MAX 9. Alaska Airlines, United Airlines, and others that configured their cabins for a lower density didn’t need this emergency exit, so instead of a removable door to allow emergency egress, a plug is installed. The plug reduces weight (63 pounds vs. 150 pounds for an emergency door) and eliminates the need for some structural components, which saves fuel. Without the emergency exit, seat pitch didn’t have to be expanded to allow unimpeded egress in the event of an evacuation.
Luck for AS1282
It was sheer luck that nobody was seated in 26A or 26B and astounding luck that the mom was able to hold onto her son in seat 25A. Flight attendants in the forward cabin didn’t know what had happened, only that the cabin depressurized. Communications between the cockpit and the flight attendants were severed due to cabin and cockpit damage. At 16,000 feet, the peak altitude of the event, the differential between the cabin air and outside atmosphere was far less than what it would have been had the event occurred at cruising altitude. At 16,000 feet, passengers were still buckled in. Had the event occurred at cruising altitude, passengers might have been moving about the cabin, flight attendants could have been serving food and beverages, and seat belts might have been loosened. Anyone standing in the cabin or sitting with a loosened seat belt could have been sucked out of the airplane. The explosive decompression at that altitude may have been too much for the airplane to withstand; the plane could have come apart, killing all aboard.
When the door plug separated from the fuselage, it missed hitting any other part of the airplane. Had it hit the horizontal or vertical tail, the structural damage could have made the plane uncontrollable. The plane could have crashed, with deaths—perhaps to all aboard—likely.
The pilots reacted as they were trained. The air traffic control recordings available on YouTube reflect a calm response to the emergency. The co-pilot, handling the radio, was communicating through her oxygen mask, which distorted her voice somewhat. This led some misogynists to claim that the female pilot was rattled and unqualified to be in the cockpit and that she was there only because of diversity policies. The claims were nonsense, of course. The co-pilot had 8,300 hours of experience, including 1,500 in the MAX. (The captain had 12,700 hours of experience, including 6,500 in the MAX.)
After the flight landed, all anyone knew was that the door plug had separated from the airplane. Within hours, Alaska Airlines grounded its MAX 9 fleet of sixty-five aircraft.[1] United, which had seventy-nine MAX 9s, followed suit the next morning. The FAA officially grounded the 171 MAX 9s flying in the United States shortly after United’s action. Foreign operators of the MAX 9 with the door plug instituted groundings of their own.
A new crisis begins
Within days, the “why it happened” narrative began to emerge. Boeing was responsible for yet another quality escape when assembling the Alaska Airlines airplane—one that could have been fatal. The FAA descended on Boeing with new factory inspections. It capped production rates and blocked the establishment of an entirely new 737 North Line at the company’s Everett, Washington, factory. The FAA rejected Boeing’s first inspection-and-repair process and kept the MAX 9 grounding order in effect for three weeks while Boeing revised the process and completed inspection of at least forty aircraft.
The company’s stock price plunged from 2023’s close of $261 to $217 (17 percent) when Boeing’s culpability became clear. Certification of the MAX 7, expected to occur early in 2024, was put off again, this time by at least nine months if not longer. Southwest Airlines, the principal customer for the 737-7, took the airplane out of its scheduling plans for 2024. Certification of the MAX 10, which Boeing hoped would take place in early 2025, was to be delayed, probably by a year. United took the MAX 10 out of its scheduling plan indefinitely.
A new crisis was underway for Boeing. Another crisis in confidence began.
Once considered the gold standard in aerospace engineering and production efficiency, many wondered how Boeing had experienced such a precipitous fall from grace. The company once commanded about 60 percent of the global airliner market. Today it’s about 40 percent and falling. Again, how did this happen?
The Rise and Fall of Boeing examines how the company became a poster child for inefficiency and quality escapes. Many of the events leading to Boeing’s fall were self-inflicted wounds; the oft-repeated accusation that illegal subsidies to Airbus were to blame is untrue. Rise and Fall tells the story.
Can Boeing recover and become a leader in the sector once again? Rise and Fall explores this question.
[1] The smaller, standard 737-8 MAX doesn’t have the emergency exit or door plug, so it was not affected.
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The Rise and Fall of Boeing and the Way Back may be viewed as the continuing story of Boeing in Hamilton’s first book, Air Wars, The Global Combat Between Airbus and Boeing.
Air Wars tells 35 years of competition between Airbus and Boeing, and the former’s John Leahy, who joined Airbus from a marketing position with Piper Aircraft. Over the next 33 years, Leahy became known as Airbus’ “super-salesman,” whose movements were tracked by Boeing as it tried to compete with the aggressive Leahy.
Air Wars tells the story of Airbus’ rise from a start-up viewed by Boeing, McDonnell Douglas, and Lockheed as just another European jobs effort that would, like so many other European companies, develop an airplane doomed to commercial failure. It wasn’t until 1992, 22 years after Airbus was formed, that Boeing woke to the threat Airbus and Leahy posed.
Air Wars continues through the MAX crisis and the COVID-19 pandemic. The story continues with Rise and Fall.
Air Wars may be found here.
Just bought the book. Great reading.
The author is to commend to shed light into the past, present and future of Boeing. I am convinced that Mr. Ortberg is the right leader to steer Boeing back to health.
Also great background around the time since the mid-nineties.
I remember the hype around return on net asset (RONA) whereby not just Boeing felt it would suffice to orchestrate a supplier concerto. Whilst these companies did it, they lost competence and know how.
Book is a „BUY“.