Over 33,000 Boeing machinists on strike accepted the labor contract on Nov. 4, ending almost two months of production halts. While this could be considered a win for America’s largest aerospace manufacturer, the legacy of the last five years has been dominated by instability in the company, continuing to worry investors.

“Our business is in a difficult position, and it is hard to overstate the challenges we face together,” said Kelly Ortberg, CEO of Boeing. “Beyond navigating our current environment, restoring our company requires tough decisions, and we will have to make structural changes to ensure we stay competitive and deliver for our customers over the long term,” he added.

With two crashes of its new 737 MAX models in 2019, Boeing’s last six years have been plagued by scandal and scrutiny.
Boeing has been charged with deceiving the Federal Aviation Administration (FAA) during the certification of its newest and most demanded aircraft: the 737 Max.

Just as investors believed Boeing started a new chapter after the 737 Max had been certified, another round of scandals began when a passenger door aboard a Boeing aircraft in an Alaska Airlines flight blew away mid-air and a whistleblower took his own life.

The last thing the company needed was a unionized strike, which would further delay deliveries long overdue to airlines worldwide. After more than five years of intense scrutiny, it is uncertain whether Boeing has weathered the storm.

Where did Boeing go wrong with the 737 Max?

Boeing’s mid-size aircraft, the 737, is the most sold commercial airplane in history and was in urgent need of modernization after Airbus, Boeing’s only competitor, announced a more efficient and technologically advanced version of its mid-size aircraft: the A320neo.

To match the A320neo, Boeing had to install a larger engine, which was impossible to fit in the original 737 because of how close the plane was to the ground. Because redesigning an entirely new airplane was not possible, Boeing decided to lift the engine upwards and slightly toward the front of the aircraft.

This approach causes the airplane’s nose to tilt upwards under certain conditions. To combat this problem, Boeing installed the MCAS automated system, which pushes the nose of the airplane downwards to correct its position.
Several months after the airlines had operated the new plane, Boeing discovered that the safety alert intended to warn pilots when the MCAS corrected the nose’s post needed to be fixed as well. Because in-house experts decided this error was harmless, they fixed this problem by disconnecting the alert system in the next update of the cockpit’s software.

Boeing did not inform airlines or the FAA about this decision.

On Oct. 29, 2018, Lion Air Flight 610 crashed shortly after takeoff as the sensor malfunctioned, killing 189 people on board.

On March 10, 2019, Ethiopian Airlines Flight 302 crashed shortly after takeoff as the sensor malfunctioned, killing 157 people on board.

The FAA ordered the grounding of all 737 Max jets for over 20 months; the rest of the world did the same. The shutdown of 737 Max operations instantly halted demand for their aircraft and immensely increased pressure from airlines who had signed contracts worth hundreds of millions of dollars. Boeing’s most significant success became a disaster, which started the worst six years the company could have asked for.

Legal Charges

Boeing was charged with defrauding the United States. It agreed not to contest the charges and accepted criminal conduct intended to mislead federal regulators during the 737 Max certification process.

The company settled with the Justice Department by incurring a total of $2.5 billion in penalties: $243.6 million as a criminal penalty, $1.77 billion in compensation for 737 Max customers, and $500 million for families of the crash victims on both flights to protect the company from prosecution in 2021.

However, the Justice Department filed a letter in a Texas federal court in July 2024 claiming Boeing violated the terms of their 2021 agreement by failing to follow through on promises to detect and prevent violations in their business process. Again, Boeing pled guilty and agreed to double the criminal fine it had previously agreed to, was forced to follow the directions of an outside independent monitor to oversee its activities, and was pushed to increase their safety and compliance programs.
The company has also received scrutiny from Congress.

The Senate Committee on Commerce, Science, and Transportation’s highest-ranking Democrat, Sen. Maria Cantwell, said in a public hearing with Boeing’s CEO, “We cannot have a race for commercial airplanes become a race to the bottom when it comes to safety.”

The Senate expressed its concern in a published report over Boeing’s influence over the FAA’s oversight. Management often overturned regulation decisions to side with Boeing. In addition, the company concealed crucial information, making convenient assumptions about what it had to disclose to regulatory agencies.

A Troubling 2024

Boeing’s 2024 started with yet another incident in which a mistake led to another scandal. Shortly after takeoff, the door of an Alaska Airlines 737 Max blew off. Although the plane landed safely at Portland International Airport, the incident once again put Boeing’s controversial airplane in the spotlight.

The four missing bolts were never installed at the Boeing factory, and no documentation was found showing which Boeing employee worked on the airplane’s door. This incident led the Department of Justice to reevaluate their original settlement with Boeing.

Like John Barnett, whistleblowers inside Boeing began to speak up after the third 737 Max accident. Barnett sued Boeing, claiming the company illegally retaliated against him after voicing his concerns with the production’s safety standards to the public since management would not listen. While FAA regulators and Boeing executives kept as much information behind closed doors as possible, some employees, frustrated by their employer, started to push the ideal of transparency Boeing was supposed to be following after the initial accidents.

Unfortunately, however, Barnett was found dead by suicide on March 17. Although Barnett can no longer testify against the company, concerns for Boeing’s safety procedures have remained silent. The second whistleblower, Joshua Dean, died on May 2 after a sudden bacterial infection.

There is no proven connection between Barnett and Dean’s accidents to Boeing, but it is difficult to ignore these very convenient coincidences.

To add to the constant state of scandal in the company, Boeing has an ongoing unionized labor dispute that has continued to create instability for the company.

Over 33,000 machinists at the Boeing factories in the Pacific Northwest began their strike on Sept. 13 as 94.6% of the union rejected the contract that would have raised their pay by 25% in the next four years. Because workers have not seen a salary increase in over 16 years, they believe a 40% increase is justified.

Boeing’s latest offer included a 35% pay increase, a $7,000 signing bonus, and some enhanced contributions to employee pension plans. However, 64% of union members voted to remain on strike, resulting in the offer’s rejection.

Considering the company has lost $25 billion since the first 737 Max crash, the last thing it needed was a widespread labor dispute, which poses further delays in the delivery for their airline customers. The company reported a $6 billion loss in its latest quarter on the day the union rejected the second contract.

With so many employers across the supply chain depending on one of America’s largest exporters, Boeing plays an integral role in the US economy. Boeing’s last six years have been dominated by uncertainty, and with a continuing labor dispute, long-delayed deliveries, and a falling stock price, Boeing’s years of instability will likely continue.

In another Senate committee shortly after the Alaska Airlines incident, Sen. Josh Hawley told Boeing’s CEO, “You are cutting corners, you are eliminating safety procedures, you are sticking it to your employees, you are cutting back jobs because you are trying to squeeze every piece of profit you can out of this company.”

By alienating nearly every stakeholder critical for Boeing’s success, it is difficult to think the problems the company continues to face will disappear. The company urgently needs to change its management culture and start rebuilding its credibility as the American staple it once was. By prioritizing its workforce and safety, it might not be too late for Boeing to resurrect its reputation.