Boeing faced intense scrutiny during congressional hearings on Wednesday, April 17, 2024, as lawmakers delved into allegations of major safety failures within the beleaguered aircraft manufacturer. The hearings came amidst a financial crisis for Boeing, which reported a loss of $355 million in the first quarter of the year.
CEO David Calhoun acknowledged that the company is facing a significant challenge and that its focus is squarely on resolving its manufacturing issues, rather than financial results. The company has been grappling with safety concerns since a door plug blew out of a Boeing 737 Max during an Alaska Airlines flight in January, leaving a gaping hole in the plane. This incident halted Boeing’s progress toward recovery following two deadly crashes of Max jets in 2018 and 2019.
Boeing executives have been compelled to prioritize safety over financial considerations since the Alaska Airlines incident. In a memo to employees on Wednesday, Calhoun outlined a series of actions the company is taking to improve manufacturing quality, including slowing down production. He reported “significant progress” in reducing flaws in fuselages coming from key supplier Spirit AeroSystems.
Despite the company’s efforts to address safety concerns, it faces ongoing challenges. Relatives of passengers who died in the second Max crash met with government officials in Washington, urging them to revive a criminal fraud charge against Boeing for violating terms of a 2021 settlement. Boeing officials did not comment on the meeting, but emphasized their renewed focus on safety during their quarterly earnings discussion.
Boeing’s stock has plummeted by about one-third since the Alaska Airlines incident, and the Federal Aviation Administration has increased its oversight of the company. Airline customers are also facing disruptions in the delivery of new planes due to manufacturing problems.
Despite the setbacks, Boeing remains a major player in the aircraft industry, along with its duopoly partner Airbus. The company has a backlog of orders from airlines seeking new, fuel-efficient planes, and it is a significant defense contractor for the Pentagon and governments worldwide.
Analysts remain optimistic about Boeing’s prospects, with 20 analysts in a FactSet survey rating the company’s shares as “Buy” or “Overweight” and only two recommending “Sell.” The company’s first-quarter loss, excluding special items, came to $1.13 per share, exceeding analysts’ expectations of a $1.63 per share loss. However, revenue fell by 7.5% to $16.57 billion.
