New Boeing CEO Dave Calhoun gave a confident, combative defense of the company Wednesday morning while promising to focus intensely on fixing the 737 MAX, improving Boeing’s engineering culture and “shining bright lights on the safety process.”
His first session with the press — an hourlong teleconference — followed a webcast with employees in which he was asked difficult questions about the culture at the company, he said.
“I believe this culture is a good one. Employees care about safety,” he told journalists. “But their confidence right now is shaken — my job is to restore it.”
Speaking from Boeing Commercial Airplanes headquarters at Longacres in Renton on a two-day visit to the area ahead of Friday’s expected first flight of the 777X, Calhoun acknowledged the design of the MAX’s new flight control system was flawed, but insisted that was not a product of any deliberate decision to put cost factors ahead of safety.
Instead, he said, the flaws came from long-standing assumptions about how pilots would react to a failure —assumptions that proved fatally wrong.
Though that analysis “should have had more light shone on it,” Calhoun said “I didn’t see at any stage in that process … nor did anyone else … an issue of a trade of safety for something else.”
Nevertheless, he indicated the accidents have marked the company indelibly and will drive changes in how manufacturers and regulators certify future airplanes.
Calhoun — a decadelong member of the Boeing board who was appointed chairman in October, and then moved to the CEO post effective last week — said he told employees he’ll work to restore trust within the company, with airline customers and with safety regulators. He also vowed to make investments to support the company’s engineering capabilities.
Reassuring local employees, he ruled out any layoffs at the company’s Renton plant that assembles the MAX.
Though Boeing on Tuesday extended the grounding of the MAX to midyear, Calhoun said that production in Renton will resume much sooner as engineers plan for a more efficient assembly process.
Calhoun also disclosed he has instructed engineers to go back to the drawing board for Boeing’s next new airplane. That reset could have a significant strategic impact on the competitive balance with rival Airbus, a sign of how deeply the MAX crisis has damaged Boeing.
The new jet that Boeing was once expected to launch last year at the Paris Air Show now seems years away.
The MAX, though, is here to stay. Calhoun said he expects it to eventually reach parity with the Airbus A320neo. He dismissed a suggestion that the MAX may never fly again, or will be renamed to disguise its history, and said passengers’ confidence in the airplane will be restored.
“I believe in this airplane,” he said. “I’m all in on it and the company’s all in on it.”
Calhoun rejected the idea that Boeing’s corporate focus on cost-cutting and the financial interests of shareholders had compromised the MAX’s safety.
“If ever there was a moment to emphasize safety as … the most important part of shareholder value, it’s now,” Calhoun said. “Safety first. Without it, there is no shareholder value.”
He said company and external investigations into the MAX crashes have “pointed to an assumption that was made with respect to pilot behavior and a set of failure analyses that were wrong.”
Boeing’s formal system safety analysis of the flight control software implicated in the crashes — the Maneuvering Characteristics Augmentation System (MCAS) — assumed the pilots would recognize what was wrong if it failed and would counter it manually within four seconds.
“It was a judgment everybody wishes they hadn’t made,” Calhoun said. He added that the crucial significance of that judgment should have been called out for MAX program leaders, “but that’s not what happened.”
He said he and the rest of the board were unaware of the problems “until too late in the game,” after the crashes.
Asked about damaging exchanges recently disclosed between pilots working to certify the MAX simulators, Calhoun said those involved were “a micro-culture” not representative of Boeing.
The two employees, chief technical pilot Mark Forkner and his deputy Patrik Gustavsson, spoke disparagingly and crudely in instant message and email exchanges about suppliers and airline officials as well as Boeing colleagues and the MAX airplane.
“This was a very unusual group of folks using horrible language,” Calhoun said.
The most startling detail in those messages was that in June 2017 — more than a year before a Lion Air MAX crashed and killed 187 people — when Lion told Boeing its pilots should receive flight simulator training, Forkner worked to dissuade the carrier and the Indonesian regulator that this wasn’t necessary. He was driven by the MAX program imperative to keep pilot training to a minimum.
Calhoun conceded the behavior of the pilots was “totally appalling” and that it’s his job “to make sure it never happens again.”
Calhoun also said he wants changes to the broader company culture.
“It’ll be built around the level of light we shed on safety processes. It’ll be built on the engineering disciplines and what we do for pilots around the world, not just pilots in the U.S.”
He said the shortcomings uncovered in the MAX certification will change certification of all airplanes going forward —starting with the re-certification of the MAX and including the new 777X. This is something Congress and investigatory panels have been calling for, as well.
“We have to make sure the flying public knows how thorough this certification effort really was,” he said of the MAX recertification. “It’s going to become the template for future certification efforts.”
He said rebranding the airplane with a new name “would be sort of silly.”
“We’ll win one pilot at a time,” Calhoun said.
Robert Clifford, a lead attorney representing some of the families of those who died on the Ethiopian Airlines MAX crash in March, said Calhoun’s remarks will be “upsetting to the families” because of how he emphasized slower pilot reaction as contributing to the accidents.
“Boeing wants it both ways,” Clifford said. “They blame the pilots, saying they didn’t properly react. Yet they didn’t want to train them properly.”
He dismissed Calhoun’s appointment as CEO as representing “no meaningful change” at the top. “He’s been on the board for over a decade. The passive, do-nothing board is part of the problem,” Clifford said.
New Boeing focus
Calhoun announced that the development work Boeing has been doing for several years on a new airplane — internally known as the New Midmarket Airplane (NMA) — is starting over.
“We’re not giving up on the future,” he said. “But for me, my attention and that of my executive team, I simply want to be focused” on fixing the MAX and re-emphasizing engineering and safety.
Boeing had hoped to have that jet in service by 2025 but the concept — an aircraft intermediate in size and range between the narrowbody and widebody jet segments — has been overtaken by Airbus’s huge sales success in selling its contender in that jet category, the A321neo.
The delay in launching the NMA means Boeing must now think even further ahead, taking account of developing Chinese competition.
“Things have changed a bit. The competitive playing field is a bit different. We have to plan for China,” Calhoun said. “We’re going to start with a clean sheet of paper again.”
And he indicated that the lessons learned from the MAX accidents, especially the change in thinking about how flight crews handle emergencies, could have a profound impact on that next new airplane design.
“We might have to start with the flight control philosophy before we actually get to the airplane,” he said. “We’ve always favored airplanes that required more pilot flying than maybe our competitor did. We are all going to have to get our heads around exactly what we want” in future.
Richard Aboulafia, longtime aviation analyst with the Teal Group, worries that Calhoun’s effectively shelving the NMA means Boeing won’t invest in a new airplane anytime soon.
Aboulafia said he fears that the new leadership is too focused on strengthening the balance sheet to please Wall Street as the MAX crisis bleeds money.
He said China is not a serious competitor and won’t be for years, but right now, “Airbus is running away with this market.”
“It’s not advisable to do nothing,” said Aboulafia.
Calhoun said Boeing’s impact on the U.S. economy and on the aerospace business means that the company’s recovery, “when it comes, it’s going to be important to the country and important to aviation.”
He said that the steady drip of bad news and the repeated pushing out of the 737 MAX’s return to service has given a mistaken impression that new, last-minute serious issues have been popping up.
Instead, he said, it’s only because the media spotlight is highlighting every turn of the rigorous re-certification process Boeing and air safety regulators are conducting.
He said Tuesday’s announcement that clearance for the MAX to fly wouldn’t come until midyear wasn’t the result of a new software glitch identified last week but was triggered by Boeing’s decision that pilots will need simulator training. Setting up procedures for that training extends the timeline, he said.
Part of the recovery plan is to take advantage of the downtime in Renton production to streamline processes there.
He said Boeing plans to restart the 737 assembly lines in Renton months before the Federal Aviation Administration (FAA) approves a return to service to ensure that production can be restarted with maximum efficiency.
“We’ll start it slow so we can practice and practice. That’s a bit of a silver lining in the [production] pause.”
Calhoun also said he’s in the job for the long haul.
“I intend to work well past 65,” said Calhoun, who is 62. “The board can have me as long as they want me.”
Before Calhoun spoke Wednesday, Boeing stock fell to $302, its lowest point since before the first MAX crash. The price rose later in the day to close at $309.