Boeing's Turbulent Path: From Record Profits to Record Losses

For a long time, Boeing was like a giant in the American business world, known for making amazing airplanes and leading the way in flying technology.

by Faruk Imamovic
Boeing's Turbulent Path: From Record Profits to Record Losses
© Getty Images/Stephen Brashear

For a long time, Boeing was like a giant in the American business world, known for making amazing airplanes and leading the way in flying technology. But since the end of 2018, things haven't been going well for them. They used to be seen as the best in safety and quality, but now they're going through a really rough time because of some terrible crashes, losing a lot of money, and people not thinking as highly of them as they used to.

The Beginning of Boeing's Crisis

The descent into crisis began on a tragic note on October 29, 2018, with the crash of Lion Air Flight 610. The incident, which resulted in the loss of all 189 lives aboard shortly after takeoff from Jakarta, Indonesia, was a grim prelude to a series of setbacks that would beset the aviation giant.

Merely months later, Ethiopian Airlines Flight 302 met a similar fate, plunging the company into deeper turmoil. The consecutive disasters led to the global grounding of Boeing's best-selling jet, the 737 Max, marking an unprecedented moment in the company's storied history.

The grounding of the 737 Max fleet was not merely a logistical nightmare but a significant blow to Boeing's financial stability and industry standing. The Federal Aviation Administration (FAA), along with aviation authorities worldwide, instituted a ban that would last 20 months, spotlighting significant concerns over the aircraft's safety systems, particularly the Maneuvering Characteristics Augmentation System (MCAS).

The MCAS, designed to prevent the plane from stalling by automatically adjusting the nose down, was implicated in both crashes.

Financial Fallout and Reputational Damage

The financial repercussions of these events have been staggering, with Boeing incurring losses running into tens of billions of dollars.

The company's second-quarter earnings in 2019 reflected a record loss of $3.7 billion, a stark departure from the record earnings and revenues it boasted just months before the first crash. The cessation of the 737 Max production and the subsequent job cuts further exemplified the scale of the crisis.

Boeings Turbulent Path: From Record Profits to Record Losses© Getty Images/David Ryder

Adding to Boeing's woes were incidents that raised questions about its manufacturing processes and culture of safety.

Among these was an alarming incident involving an Alaska Airlines 737 Max 9 flight, where a door plug detached mid-air, creating a potentially catastrophic situation. Although disaster was averted, the incident underscored ongoing concerns about Boeing's quality controls and oversight.

In response to mounting scrutiny, Boeing has faced numerous investigations and audits, revealing a culture and practices at odds with its legacy of excellence. The FAA's sharp criticism and the State Department's fine for violating the Arms Export Control Act further highlight the systemic issues plaguing the company.

Regulatory Response and Boeing's Acknowledgment

Following the tragic crashes and the subsequent grounding of the 737 Max fleet, Boeing found itself under an intense microscope. Regulatory bodies around the globe initiated investigations, leading to a critical examination of Boeing's practices and safety protocols.

The FAA, once one of the last to ground the 737 Max, played a pivotal role in overseeing the rectification efforts, demanding comprehensive fixes to the MCAS and a thorough review of the aircraft's safety features. Boeing's acknowledgment of the MCAS's role in the crashes marked a significant moment in the crisis.

This admission was a departure from the company's initial stance and set the stage for a long and complex process of reevaluation and correction. The challenges were compounded by the revelation of internal communications that cast doubt on the 737 Max's safety, with one employee infamously describing the aircraft as "designed by clowns, who in turn are supervised by monkeys." The fallout extended beyond the 737 Max.

Issues with other aircraft models, such as the grounding of certain 787 Dreamliners over manufacturing concerns, further eroded trust in Boeing's quality assurance processes. These incidents underscored systemic issues within the company, prompting a reevaluation of its safety culture and manufacturing oversight.

The Path to Recovery and Ongoing Challenges

Boeing has been working hard to bounce back from a tough spot. Getting the OK to fly their 737 Max planes again in November 2020 was a big step forward after making a bunch of fixes.

But, they're still dealing with the fallout from losing money and people losing trust in them. Then, the Covid-19 pandemic made things even trickier, hitting the whole airplane business hard. Because fewer people were flying, airlines didn't need as many planes, which meant even more financial trouble for Boeing and led to them having to let go of 23,000 workers.

Boeing hasn't given up, though. They've been making changes to how they do things to make sure their planes are as safe as possible and to win back people's trust. They're being checked on by the people in charge of airplane safety to make sure they're sticking to the plan.

But with new problems popping up, like issues with some of their other planes, it's clear they've still got a ways to go before everything's back to normal.

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