The question seemed to catch Dennis Muilenburg off guard.

At the press conference that followed Boeing’s annual shareholders’ meeting April 29, the company’s CEO was asked if he had considered resigning over the 737 MAX crisis.

Muilenburg paused for a long moment before declaring that his “clear intent is to continue to lead on the front of safety and quality and integrity.”

“It was a yes or no question,” says Scott Hamilton, a Seattle-area aerospace analyst, who watched the press conference remotely. Muilenburg’s tepid response seemed “incredibly telling. Something else seems to be going on in the background.”

That’s probably an understatement.

Muilenburg is unquestionably a man on the spot. Just months ago Aviation Week named him Person of the Year, styling him “The Transformer” for his impact on Boeing and the industry.

Today, Muilenburg’s company is reeling not only from two fatal crashes of its most important aircraft, but also from suspicions that safety may have suffered in the push to get the MAX to market.

“These are economic decisions made at the top of the company,” said Jim Hall, a former chair of the National Transportation Safety Board, referring to Boeing’s focus on cost and schedule considerations in the process of certifying airplane safety.


Even blunter was consumer-safety advocate Ralph Nader, whose great niece perished in the second MAX 737 crash. “You and your team should forfeit your compensation and should resign forthwith,” Nader wrote in an April 25 letter.

In Muilenburg’s defense, the 737 MAX program was launched in 2011, four years before he became CEO.

But Muilenburg oversaw the aircraft’s final development and was in charge during the company’s widely criticized handling of the crashes.

More fundamentally, under Muilenburg, Boeing has intensified efforts to boost “shareholder value” by turning out more more airplanes even as it has wrung more costs from its supply chain and its workforce.

Those efforts have paid off — Boeing’s share price has more than tripled under Muilenburg. But some critics wonder whether the drive to please Wall Street has not only strained Boeing’s production systems, but also fundamentally altered its culture, resulting in what veteran aerospace analyst Richard Aboulafia has characterized as a “deprioritization and perhaps under-resourcing of engineering.”

Whether such a culture shift contributed to the MAX crisis may be a question for the various crash investigations now underway. But it raises a serious dilemma for Muilenburg and his overseers on the company’s board.


“If the decision was made to cut a corner by someone on the manufacturing side, then [Muilenburg] has to hold that person accountable in order to exert some leadership,” says Lawrence Parnell, an expert in strategic public relations at George Washington University who has closely followed the MAX crisis.

But if the MAX problem turns out to be more deeply rooted in Boeing’s culture, Parnell says, Muilenburg may find himself in a bind. “It’s very difficult for somebody who is a product of the culture, and now is charge of the culture, to change that culture,” Parnell says. “And unless he or she is very decisive, you end up in the same place.”

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Muilenburg’s appointment to CEO in 2015 was itself something of a culture correction.

Where predecessor Jim McNerney was a company outsider — a finance and management expert brought in from General Electric and 3M — Muilenburg was the quintessential Boeing man: an aerospace engineer who had been with the company since a 1985 college internship.

Certainly, Muilenburg brought a different style. Where McNerney was notoriously tough on workers (he forced Boeing’s machinists to give up their pensions in return for keeping 777X production in Everett), Muilenburg pushed for a much friendlier deal with the company’s engineers soon after becoming CEO.

Yet the fact is that Muilenburg was McNerney’s handpicked successor — and overall, he hasn’t strayed from Boeing’s longstanding main objectives.


Muilenburg, whom Boeing did not make available for an interview, has aggressively expanded the company’s business “footprint” in both commercial and military sales. (He ran Boeing Defense for years.) He has vigorously pushed Boeing’s take-no-prisoners fight with archrival Airbus. (It was fear of Airbus’ hot-selling new A320 neo, back in 2011, that prompted McNerney to go with the MAX — a “re-engined” 737 — rather than design a new aircraft.)

As important, Muilenburg has continued Boeing’s reorientation toward Wall Street.

Since the 1990s, Boeing has labored to transform its image among investors — from that of a traditional manufacturer, vulnerable to market cycles, to that of a diversified global player with predictable profits and a steadily rising share price.

This new Boeing doesn’t merely compete with Airbus for aircraft customers; it now vies with the likes of Apple and Exxon to attract shareholders. Or as Muilenburg told Aviation Week, “Our aspiration is no longer to be just the best in aerospace. We have to be a global industrial champion.”

Boeing’s main weapon in this new competition is cash — or, more precisely, cash flow, which is revenue less various operating expenses. The more cash that Boeing can generate, the more cash it can return to its shareholders, either as dividend payments or by repurchasing its own shares. (So-called share buybacks tend to push up overall share price.)

Other public companies shower shareholders with cash, but Boeing is notably generous: Over the last five years, Boeing’s investors have received around 92% of Boeing’s annual cash flow, for a total of $50 billion in dividends and share repurchases, according to company reports.


Much of this rising tide of cash reflects a booming jet market that is growing nearly twice as fast as the overall global economy. But it also reflects Boeing’s ability to capture that growth by aggressively ramping up jet production.

For the 737 line, output from Renton has more than doubled from 21 aircraft per month in 2005 to 52 in early 2019, just before the second MAX crash in March — and the MAX order backlog still exceeds 4,600.

But Boeing’s growing cash flow has also reflects aggressive cost-cutting. Some of that has come from labor — through layoffs and lower pension costs, for example, but also from better factory efficiencies: Even as Renton’s 737 output has more than doubled, its workforce has grown by barely a third.

As significant, Boeing has pressured its suppliers to dramatically cut prices — an initiative, known as Partnering for Success, that Muilenburg oversaw before becoming CEO.

Those lower costs mean that, even as Boeing’s sales revenues have expanded, the fraction of those revenues that can be returned to shareholders as cash has grown even faster.

That has been great news for investors, but also for Boeing’s senior executives, whose pay is directly tied to company cash flow. In 2018, Muilenburg’s total compensation was $23.4 million.


Yet so much transformation hasn’t come without a price.

Some suppliers have been hard-pressed to keep up with Boeing’s torrid output. Some are also frustrated by Boeing’s constant downward price pressure and by what some describe as a mercenary, arrogant negotiating style. “They’re basically bullies,” says one Washington state supplier who has worked with Boeing for several years. “‘Partnering for Success’? Yeah, their success, not anyone else’s.” Like many who work with Boeing, the executive insisted on anonymity to protect the firm’s relationship with Boeing.

But the larger costs may be showing up among workers.

Hamilton, the analyst, says Boeing’s earlier labor cuts likely went too deep, forcing the company to scramble to meet its ambitious production goals. Some workers say they feel worn out under a go-go program that delivers more jets with fewer employees. “They’re making a lot of airplanes, and they’re a little overwhelmed,” said one Renton line worker just a day after the March 10 Ethiopian Airlines crash. “It’s push, push, shove, shove and whatever it takes,” said a co-worker.

Boeing has also come under fire for cutbacks in quality control inspectors and for incidence in which debris was left inside finished aircraft.

As significant are concerns among Boeing’s engineers, some of whom say their influence in the company has also been cut back.

Many point to the 2001 move of Boeing’s headquarters from Seattle, where it had been surrounded by engineers, to Chicago, where many of the top management slots are held by nonengineers. The move, says a senior executive for a major Boeing customer, signaled Boeing’s transformation from a company driven by engineering and manufacturing to one “which was definitely driven by Wall Street, which was definitely driven by New York financial analysts, which was definitely driven by stock price.”

But some engineers also point to a subtler change in Boeing’s front-line culture: A company that once encouraged its engineers to raise questions or concerns about programs and designs began to be the opposite.


“There was a theme of ‘just follow the plan’, and that was code for ‘don’t bring me bad news,'” said Stan Sorscher, with the Society of Professional Engineering Employees in Aerospace (SPEEA).

In a recent research note, Aboulafia, the analyst, wrote that Boeing’s engineering culture became so averse to bad news that McNerney simply wasn’t told that the 787 Dreamliner he’d proudly rolled out on July 8, 2007, “wouldn’t be ready to fly for another year.”

A similar critique of Boeing’s culture is already emerging elsewhere.

It has been a subtext in a string of recent media accounts about tensions between Boeing and the Federal Aviation Administration over the way Boeing aircraft are certified.

It’s also showing up in legal filings on behalf of MAX crash victims and in some market analyses scrutinizing the development of the 737 MAX and the Maneuvering Characteristics Augmentation System (MCAS) system implicated in the two crashes.

“Was this [cultural] dynamic a key factor behind the mistakes that led to MCAS?” asks Aboulafia, who concludes that “in the absence of any other likely causes behind the MCAS debacle, this might be the right place to look.”

And therein lies Muilenburg’s dilemma.

As both a career Boeing man and as an engineer, Muilenburg will be seen as someone who should have been aware of any problems with the company’s culture.

By the same token, Muilenburg may also be seen as too deeply embedded in that same culture to assess or address those shortcomings.


Parnell, the public relations expert, says Muilenburg could confront that dilemma by bringing in credible outside expertise to probe the crisis — much as Starbucks did with its racial-bias controversy.

But so far, the opposite is happening.

Last month, Muilenburg asked Boeing’s board to create a committee to review the company’s aircraft design and development process. But because the committee is made up of board members with no apparent technical expertise, whatever they conclude “is not going to be critical, and it’s not going to be a game changer,” Parnell said. “It’s going to be, ‘Let’s put a fence around it and move on,’ and that’s not what people are looking for here” from Muilenburg.

In the short run, that may not matter. Investors seem largely satisfied with Muilenburg’s response: The share price, though down nearly 17% since the second crash, is still up nearly 15% on the year.  (It’s notable that shareholders recently rejected a proposal to cut executive power by barring future CEOs from also chairing the board of directors, as Muilenburg currently does.)

The company’s board still has his back. “Dennis has our complete and total confidence,” board member David Calhoun told The Washington Post recently. “We feel very strongly that he is doing the right things.”

But Muilenburg faces a rocky road ahead.

The MAX grounding has likely cost Boeing much of its anticipated cash flow for 2019, according to analysts’ forecasts and the company’s own report. If the grounding drags on too long, the market could turn against Boeing, and the board against Muilenburg.

But Muilenburg may also come under pressure if he fails to demonstrate decisively that he is rooting out whatever problems may have led to the crashes. Without such a demonstration, Parnell says, Boeing could find itself in a limbo during which any problem or incident will assume an exaggerated importance and “feed into the sense that there is an culture problem” that “doesn’t seem to be under control.”


The next few months will be critical for Muilenburg.

As Boeing races to get its MCAS fix deployed and recertified, Parnell says, Muilenburg’s actions will be closely scrutinized to determine “if this was something he was not aware of and is going to be decisive about, or, unfortunately, [that] this is part of the culture — and he is responsible, ultimately, for the culture.

“He’s not out of the woods yet.”