Boeing 737 Max crash reveals corporate greed

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In this 2020 file photo, a Boeing 737 Max, piloted by Federal Aviation Administration Chief Steve Dickson, prepares to land at Boeing Field after a test flight in Seattle.  (AP Photo/Elaine Thompson, File)

In this 2020 file photo, a Boeing 737 Max, piloted by Federal Aviation Administration Chief Steve Dickson, prepares to land at Boeing Field after a test flight in Seattle. (AP Photo/Elaine Thompson, File)

PA

In 2018 in Indonesia and 2019 in Ethiopia, pilots of two new Boeing 737 Max jets lost full control of their planes and crashed, killing a total of 346 passengers and crew.

Bob Kustra
Bob Kustra

The Max was to be the latest version of the 737, often the workhorse of airlines. Tragically, the new 737 Max was designed to fail. A significant piece of his software would negate the pilots’ efforts to stabilize the aircraft, causing the two crashes with no survivors.

How could this happen to a company so entrenched in successfully engineering and building iconic aircraft like the 757 jumbo jet?

That’s what I asked author Peter Robison recently when I interviewed him at Reader’s Corner for his book “Flying Blind: The 737 Max Tragedy and the Fall of Boeing.” His response: corporate hubris that blew up a culture of engineering excellence and replaced it with a culture of results where the focus included cutting budgets on traditional Boeing priorities like pilot training, flight simulators to train pilots, an electronic checklist for pilots and research. to improve security.

It all started with Harry Stonecipher, the CEO of McDonnell Douglas, a defense contractor expert in cutting budgets to win contracts, who took over the reins of Boeing when the two companies merged.

Stonecipher and the CEOs who followed him from General Electric’s Jack Welch School of Management applied what author Peter Robison calls Welch’s standard business playbook: “union-busting, light regulation, heavy outsourcing.” .

Later, Boeing decided to move its headquarters to Chicago, encouraged by tax incentives from the State of Illinois and the City of Chicago. Critics have claimed that Boeing business leaders are putting short-term profits ahead of engineering excellence because they have left Boeing’s day-to-day operations and the responsibility that comes with close proximity to manufacturing to Seattle. It also moved some of its manufacturing to South Carolina, a non-union state.

As usual in corporate America, members of Boeing’s executive suites have been spared the cuts that research, safety protocols and employees have suffered at the hands of these modern-day Scrooges. Boeing CEOs posed as crooks, and so did Boeing shareholders.

As engineers were forced to downsize, Boeing executives bought back his company’s stock, raising its price and enriching shareholders. According to Robison, Boeing spent $41.5 billion on stock buybacks from 2013 to 2018. Its CEOs walked away with millions in cash generated from the buybacks.

Boeing’s board members haven’t done badly either, given that the board hasn’t noticed this constant cultural drift toward deadly mistakes. Board member Caroline Kennedy, the daughter of President John F. Kennedy, earned $800,000 from 2017 to 2019, while Kenneth Duberstein, former chief of staff to President Ronald Reagan, took home $5.3 million. dollars.

Boeing has built a lobbying team in Washington that is second to none. According to Open Secrets, a comprehensive resource for campaign contributions, lobbying data, and analysis, in 2019 alone, Boeing spent $13 million and employed more than 106 lobbyists, including some of the most successful law firms. DC’s most politically connected.

Passengers on these two deadly flights didn’t stand a chance, given Boeing’s intensive lobbying in DC

Boeing has “captured” the agency responsible for regulating the company and the airlines. The Federal Aviation Administration not only relaxed its rules that would ultimately impact company safety, but it also stripped the agency of some of its regulatory authority and handed it over to Boeing staff. (It would be like the FDA handing over its meat inspection to pork producers.)

This most egregious and egregious misuse of regulation would cost lives, the airline’s reputation and the bottom line it was so focused on. In 2020 alone, Boeing lost $11.9 billion, according to Robison.

The immediate cause of both crashes was more powerful software than Boeing claimed in documents submitted to obtain FAA approval for the aircraft. By underestimating the software’s ability to move the horizontal stabilizer, the small stabilizer on the plane’s tail, Boeing’s supposed processes for detecting problems like this failed. Airlines and industry pilots have claimed that Boeing concealed the existence of the potentially deadly software.

After the two crashes, the FAA, sometimes referred to as a “tombstone” agency because it only acts when people have died, paid tribute to Boeing by postponing the decision to ground the 737 Max.

China grounded the Max first, followed by other countries, but the FAA took its time, waiting three days after the two crashes before ordering the 737 Max from the air. Since both of these crashes happened in other countries, there were initial accusations that foreign pilot error was to blame. When the 737 Max was finally grounded, investigations showed that pilot error was not the problem. The Boeing software was!

Boeing has shown how quickly it can act when its self-interest is at stake.

After the Indonesian crash, agents from Boeing and Lion Air, the Indonesian carrier, were there at Jakarta airport offering the families “blood money” of $91,600 in exchange for a liability waiver before any world court – a pittance compared to what could be awarded for the wrongful death of a loved one. Seventy of the families of the victims have signed the settlement offer. By contrast, last November, Boeing agreed to a settlement in a lawsuit filed against the company and its board for more than $230 million. The lawsuit accused Boeing and its board of directors of failing to respond to safety warning signs before the two Max jetliners crashed.

The aftermath of the crashes produced a mixed bag of results.

Congress returned to the FAA the power to regulate Boeing that those expensive lobbyists and lawmakers gave the company. The company fixed the software issues, but the 737 Max remains the only major commercial jetliner without an electronic cockpit checklist to guide pilots. Eventually, the FAA sent the 737 Max back into the sky. Boeing also halted those generous stock buybacks that consumed money that could have been used to build planes, catch software errors and invest in research.

Who was ultimately held responsible for the deaths of 346 passengers and crew?

As is too often the case, the criminal liability went beyond the executive offices and the boardroom of Boeing and landed in the chain of command of Boeing’s chief technical pilot, who was indicted for lying about the flight control software that has claimed so many lives. A lawsuit filed by shareholders against current and former Boeing directors has been settled for $225 million and Boeing has agreed to a legal settlement with the Justice Department for $2.5 billion, resolving a criminal charge that Boeing had conspired to defraud the FAA.

After reading Flying Blind, the reader would expect a form of criminal liability like manslaughter to be imposed on the CEOs at the controls as Boeing veered off course. No such thing happened, but two months after the Indonesian crash, Boeing’s board would award then-CEO Dennis Muilenburg a record $31 million salary, including a bonus of $13 million performance.

CEOs before Muilenburg, who changed the culture and downplayed security concerns, also emerged unscathed. Robison reports on their life of luxury after Boeing thanks to their generous salaries and stock options. After learning of the Justice Department’s settlement of Boeing’s fraudulent conspiracy, Robison quotes a Boeing pilot as concluding, “Boeing got away with murder.”

Bob Kustra served as president of Boise State University from 2003 to 2018. He hosts Reader’s Corner on Boise State Public Radio and is a regular columnist for the Idaho Statesman. He served two terms as lieutenant governor of Illinois and 10 years as a state legislator.