Boeing CEO Swaps Air-Show Swagger for ‘Humility’ Amid Max Crisis

(Bloomberg) -- Boeing Co.’s top leader comes to the year’s largest aerospace trade expo without his customary swagger, or arsenal of orders, as he tries to contain the crisis that has engulfed the company’s 737 Max jetliner after two fatal crashes.

“This air show is different, it has a different tone to it,” Chief Executive Officer Dennis Muilenburg told reporters Sunday ahead of the Paris Air Show. “We come to this air show focused on safety. We come to this air show with a tone of humility and learning.”

The U.S. planemaker faces customers furious at seeing their fleets shrink during the critical summer travel season as a global grounding of the 737 Max extends into its fourth month. Suppliers are nervous about the disruption to revenue and the smooth flow of goods.

Global regulators led by the U.S. Federal Aviation Administration are conducting a broad review of the Max beyond a planned software upgrade as they study whether Boeing’s best-selling jet can safely resume commercial flights, Muilenburg said. Some agencies are also taking a deeper dive into the 737 Max design and certification.

‘Not Acceptable’

Also under review is a coding error that left a cockpit sensor linked to the accidents inoperable for many Max operators. Muilenburg said Boeing’s communications with airlines and regulators over that issue “was not acceptable.”

Boeing engineers discovered the software anomaly in 2017, ran technical analysis that determined it wasn’t a safety issue, but didn’t notify the FAA or customers until after a Lion Air Max crashed last year in October.

“We clearly had a mistake in the implementation of the alert," Muilenburg said.

The Chicago-based company is seeing a “convergence” of the more than 30 regulators involved in the examination, the CEO said, but he wouldn’t say when the company expects the grounding to be lifted.

“We do anticipate it happening this year. I’m not going to get into a specific timeline of when it will happen,” he said.

Boeing is also expanding its own study of how the design of software called the Maneuvering Characteristics Augmentation System went so badly awry, even though Muilenburg has insisted that its development adhered to standard practices.

On two flights, the once-obscure software system repeatedly pushed down the nose of the planes after receiving erroneous readings from a sensor, overwhelmed the pilots. A combined total of 346 people died in the October crash of a Lion Air 737 Max 8 off the coast of Indonesia and the loss of an Ethiopian Airlines plane less than five months later.

Board Panel

A Boeing board committee has broad internal and external resources to help with the company’s deep dive, with power to recommend changes in Boeing processes -- and personnel decisions. Chief Technology Officer Greg Hyslop is conducting a separate review, Muilenburg said.

The company has hired crisis managers and set up a Seattle-area war room from which it manages the far-reaching repercussions of the grounding. While airlines are without some jets this summer, aircraft lessors privately fret their investments will be damaged if Boeing has to rely on steeper discounts to restart Max sales.

There’s also the challenge of softening the economic blow to suppliers, knowing any layoffs now will mean they’re hampered by worker shortages later when the Max is cleared for flight and Boeing is eager to reboot production.

Almost every aspect of the crisis is complicated by the jet’s significance to Boeing. Prior to the crashes, the 737 was on track to generate about one-third of Boeing’s 2019 operating profit, according to Bloomberg Intelligence analyst George Ferguson. The company already has 4,425 Max orders in hand, sufficient to keep its factory in Renton, Washington, humming through the mid-2020s.

“This really is a defining moment for Boeing,” Muilenburg said. “It’s given us pause. We’re very reflective, and we’re going to learn. Coming out of this we will be a better and stronger company.”

To contact the reporter on this story: Julie Johnsson in Chicago at jjohnsson@bloomberg.net

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net;Anthony Palazzo at apalazzo@bloomberg.net

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