Boeing Shake-Up Aimed Partly at Restoring Frayed Washington Ties
The company has been a player -- and spender -- in the capital for decades.
(Bloomberg) -- Within hours of Boeing Co. naming a new chief executive officer, the U.S. Federal Aviation Administration sent a blunt message on how the company should repair frayed ties with its most important regulator.
The agency said it expects the Chicago-based planemaker under its new leadership to focus on “being transparent in its relationship with the FAA as safety regulator.”
The company, reeling from a pair of deadly crashes that led to the grounding of its best-selling 737 Max jetliner, ousted embattled CEO Dennis Muilenburg, whose public comments had drawn the FAA’s ire. He will be succeeded by David Calhoun, 62, a veteran corporate executive who had served as Boeing’s chairman since October.
At the top of Calhoun’s to-do list will be restoring the company’s reputation in Washington, where it historically has enjoyed wide latitude with regulators and warm relations with lawmakers that paid off with lucrative government contracts and regulatory accommodation.
“These accidents and their aftermath have significantly damaged the relationship between FAA and Boeing, and will take a long time to repair,” said Jeff Guzzetti, a consultant who served as the FAA’s chief accident investigator until early last year.
The company has been a player -- and spender -- in the capital for decades. Political contributions from Boeing-affiliated political action committees and individuals more than doubled over the last decade to $4.3 million in the 2018 election cycle, according to figures from the Center for Responsive Politics, which tracks political funds.
Boeing was the transportation sector’s largest contributor in the 2020 election cycle by giving nearly $1.2 million, more than FedEx Corp., Delta Air Lines Inc. and General Motors Co.
For as long as anyone can recall, the head of Boeing had a direct line into the management suite at the FAA, frequently seeking to streamline the government oversight that was so critical to the planemaker.
Similarly, much of the 737 Max’s design was approved at least initially by Boeing engineers deputized to act in behalf of the FAA under a program encouraged by Congress. It was the company’s engineers who signed off on the final version of the system implicated in the crashes.
That relationship took a very different turn in recent months, culminating in a public dressing down from the FAA earlier this month.
“I can tell you that internally there are FAA senior managers and engineers who are angry at Boeing and angry at themselves for letting this happen,” Guzzetti said.
Tensions with the FAA and have been growing for months.
Last summer, a meeting between Boeing and regulators around the world, including the FAA, ended prematurely when regulators felt that company representatives didn’t produce what was expected.
In October, Boeing provided the FAA with a series of instant messages by the company’s chief technical pilot for the Max project. In the messages, the pilot expressed concern about the flight-control system that would later be implicated in the crashes, saying it was “running rampant” in a simulator test. Two months later the pilot reassured the FAA that the system was benign.
Boeing had known about the messages for months before disclosing them to the FAA. That prompted the agency’s administrator, Steve Dickson, to call Muilenburg and demand an explanation.
A Nov. 11 announcement by Boeing that it was on track for the FAA to certify the 737 Max’s upgraded software by mid-December also rankled Dickson, who hadn’t agreed to such a timeline in a conversation days earlier, according to a person familiar with the issue.
The frustration culminated in a Dec. 12 meeting in Washington between Dickson and Muilenburg in which the regulator said the agency wouldn’t be pressured to speed up its work.
“The administrator is concerned that Boeing continues to pursue a return-to-service schedule that is not realistic due to delays that have accumulated for a variety of reasons,” the agency said in an unusual admonition sent to lawmakers on Dec. 12. “More concerning, the administrator wants to directly address the perception that some of Boeing’s public statements have been designed to force FAA into taking quicker action.”
Boeing’s board said in a statement on Monday that the change in leadership was necessary to help restore confidence in the company with regulators, customers and the public.
“Under the company’s new leadership, Boeing will operate with a renewed commitment to full transparency, including effective and proactive communication with the FAA, other global regulators and its customers,” the company said in its announcement.
Muilenburg’s ouster is an important step in restoring the FAA’s confidence in the aerospace behemoth, according to current and former agency officials.
Calhoun wasted little time in reaching out to Washington. He called Dickson shortly after the announcement and his office contacted the office of Oregon Representative Peter DeFazio, the Democratic chairman of a committee investigating the crashes, to set up a conversation.
“I hope the decision to remove Muilenburg means that Boeing is also ready to mark a new chapter in its commitment to safety and accountability,” DeFazio said in a statement released by his office.
The choice of Calhoun should help the company repair its frayed Washington ties, said William Daley, who was a chief of staff to President Barack Obama.
“Knowing Calhoun, he is a pretty well plugged-in guy,” said Daley, who briefly served on Boeing’s board with Calhoun, in a phone interview. “He’s got a pretty strong personality.”
--With assistance from Courtney Rozen and Ari Natter.
To contact the reporter on this story: Alan Levin in Washington at alevin24@bloomberg.net
To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, John Harney
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