#BoeingCrisis #SafetyTestimony #SenateHearing
Boeing CEO Dave Calhoun is set to testify before the Senate Permanent Subcommittee on Investigations on Tuesday, addressing concerns over the company's ongoing safety and manufacturing crises. This hearing comes on the heels of a door panel incident on a nearly new 737 Max 9 jet in January, which has raised questions about Boeing's efforts to enhance employee training, improve aircraft quality, and restore its safety reputation.
Calhoun, who has announced his intention to step down before the year's end, will face questions from the committee regarding Boeing's progress in addressing these issues. In his written testimony, he acknowledges the concerns about Boeing's culture, stating, "Our culture is far from perfect, but we are taking action and making progress."
The hearing coincides with potential U.S. prosecution against Boeing, as the Justice Department revealed last month that the plane-maker may have violated a 2021 settlement concerning the 737 Max crises that resulted in 346 fatalities. The agreement, which shielded the company and its executives from criminal charges related to the crashes, was set to expire just days after the Alaska Airlines door panel incident in January. The Justice Department has until July 7 to decide whether to pursue prosecution.
Victims' family members are expected to attend the hearing, with some having met with Justice Department officials last month to advocate for prosecution. Sen. Richard Blumenthal, D-Conn., the subcommittee's chairman, stated, "Boeing made a promise to overhaul its safety practices and culture. That promise proved empty, and the American people deserve an explanation."
The Federal Aviation Administration (FAA) has taken a firm stance against Boeing, with FAA Administrator Mike Whitaker announcing that inspectors will remain on the ground at the company's facilities until the FAA is satisfied with safety enhancements. Boeing's aircraft production has been affected by the crisis, leading major clients like Southwest Airlines and United Airlines to revise their growth and hiring plans. The company's lower production and deliveries have negatively impacted its cash flow, prompting Boeing to inform investors that it would burn cash instead of generating it in 2023.
Boeing's shares have declined by over 30% this year as of Monday's close, compared to the S&P 500's nearly 15% gain. The company is working to eliminate quality flaws on jets and minimize 'traveled work,' where production steps are completed out of order to address defects. Last month, Boeing disclosed a range of other modifications to encourage workers to report issues in its factories following whistleblower concerns about quality problems and retaliation.
Separately, Boeing is grappling with supply chain issues. Spirit AeroSystems, a significant supplier for both Boeing and Airbus, reported last week that titanium entered the supply chain with falsified documents. Despite the falsified documentation, more than 1,000 tests confirmed that the material is 'airplane-grade titanium.' Boeing is in ongoing negotiations to acquire fuselage supplier Spirit, a deal Calhoun believes is 'more than likely' to be completed in the first half of the year.
Original Article: https://www.cnbc.com/2024/06/18/boeing-ceo-dave-calhoun-senate-hearing.html
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