By, Brett Scully
Despite what often feels like countless controversies and airplane groundings, Boeing has still exceeded stock price expectations over the last couple of years. With that being said, Boeing posted its first annual loss in over twenty years arising from costs involved with the 737 MAX airplane and its crashes. As the Boeing name enters 2020 with a tarnished reputation, will Boeing continue to be able to make such strides as they did in the previous decade?
Among the variety of issues surrounding Boeing, the most infamous is certainly the worldwide grounding of Boeing’s new 737 MAX aircraft. After the two 2019 crashes that killed almost 346 people, Boeing grounded all 400 of their active 737 MAX’s, which remain grounded to this day. Although the US$10 billion in lost orders from the crisis is a tough hit to take for the aerospace manufacturer, the real hit was to the internal organizational structure.
With every massive technological issue comes a massive internal investigation to determine what went wrong. With previous CEO Muilenberg considered to have, “broad oversight of its own work,” or in other words, had power to approve his own requests, the entirety of the Boeing processes have been met with scrutiny from industry regulators.
Like any corporation with shareholders interests in mind, cutting costs and increasing profits are often in the forefront. Unfortunately for Boeing, many of their profit initiatives, such as removing copper foil from the Dreamline’s wings, were likely only passed due to internal lobbying, and may lead to a massive internal investigation. This initial finding could be the first of many further internal issues to come and increase public doubt.
Since the 737 MAX catastrophe, new CEO David Calhoun was recently brought in to build trust in Boeing’s brand again. With this new leadership, also comes massive changes. The first big change appears to be production cuts with Boeing cutting production of their 787 Dreamliners by 20.0% from 12 to 10 per month.
Going forward, Boeing has many other problems to deal with. In an effort to expand their production into space, Boeing and NASA teamed up to develop the CST-100 Starliner, a spacecraft designed to safely transport astronauts to and from the ISS laboratory. In the spacecraft’s initial flight test, the Starliner failed to properly reach the correct orbit, most of which was attributed to issues with Boeing’s software.
With these continuous deadline failures, groundings, investigations, production struggles, and overall management issues hovering over Boeing’s head, it’s unclear what 2020 has in store for them. Despite these issues, Boeing is one of the largest corporations in the world backed by some of the most brilliant minds in the industry. It’s likely that Boeing is too big to fail, that is, the US government would prevent Boeing from collapsing due to its strategic role as a major contractor to the US military.
In all, despite Boeing’s continuous failures, it’s likely that they will regather themselves and regain their global reputation. Until then, David Calhoun and Boeing have a lot of work to do, both in management and in strategy, to regain the US$100.00 in share price that they’ve lost in the last 6 months.