How do we solve a problem like Boeing?

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New York CNN —It took decades for Boeing to build a reputation as one of the most reliable companies on the planet.
It’s taken less than six years to undo it all and leave the once-great American company facing an uncertain future.
Regulators, airlines, fliers and even Boeing’s own workers are practically in revolt after a series of mid-flight disasters and a steady erosion of the company’s quality standards.
Investors are none too thrilled, either: Boeing’s stock (BA) is down 27% for the year, making it the second-worst performer in the S&P 500, behind Tesla.
The latest headache for Boeing came Monday, when a 787 Dreamliner flying from Australia to New Zealand plunged suddenly mid-flight, injuring several passengers.
It’s not clear what, if any, culpability Boeing has here — it said it’s gathering information about what went wrong.
But the accounts from passengers are hardly flattering at a moment when Boeing is already under federal investigation for the Jan. 5 door-plug blowout.
Brian Jokat, a passenger on Monday’s Latam Airlines flight, told CNN he was jolted awake when the plane began falling so suddenly that people were tossed into the cabin ceiling.
(In a separate interview with The Wall Street Journal, he said: “You know in The Exorcist, when the girl flies from the bed and hits the ceiling?
It’s exactly that scene.” )Video Ad Feedback Passenger shares what pilot told him after plane’s mid-air drop 04:32 – Source: CNNFor any other company, now would be the time to call the lawyers and start working on a sale or a bankruptcy.
Within the past six years, Boeing has been found responsible for two fatal crashes that killed 346 people, lost tens of billions of dollars, paid billions more in fines and settlements, and it made headlines for repeated quality control problems.
But Boeing is not any other company.
It is, for all intents and purposes, an untouchable American institution — an aerospace utility essentially posing as a private enterprise.
And it barely even has regulators to stand up to.
The FAA is so underfunded that it relies on Boeing to “self-regulate.” So it’s no wonder the FAA administrator this week was shocked, SHOCKED, to find Boeing has failed half of its audit of its production facility.
Boeing, in a statement, said it is working diligently to work out the issues highlighted by the FAA.
“Based on the FAA audit, our quality stand downs and the recent expert panel report, we continue to implement immediate changes and develop a comprehensive action plan to strengthen safety and quality, and build the confidence of our customers and their passengers,” Boeing said in a statement.
“We are squarely focused on taking significant, demonstrated action with transparency at every turn.”Too big to failThe company is often called a duopoly, not a monopoly, because it is, technically, competing globally with its European rival Airbus.
But it’s not a true competition.
Boeing’s main customers are airlines, which can’t suddenly switch to Airbus if they’re upset with Boeing.
Pilots are certified in one or the other, so once you make your choice, you’re pretty much stuck with it.
Given Boeing’s singular importance in the American aviation industry, it is the definition of Too Big to Fail.
Boeing is immune to most of the forces, like consumer choice, that other companies must contend with to stay in business.
We the people couldn’t get rid of it if we wanted to.
So, how do we solve a problem like Boeing?
“If you ask me, the first thing that needs to happen for Boeing to gain trust is to basically fire the entire C suite,” Gad Allon, a professor at the University of Pennsylvania’s Wharton School of Business, told me Tuesday.
“I know that will not happen, but … there is not a single person that has a C in front of their title that is not responsible for what we’re seeing now.”Allon isn’t holding his breath for Boeing’s board of directors on that front.
Another idea that’s occasionally bandied about: Nationalize Boeing.
Matt Stoller, the director of research at the American Economic Liberties Project, a progressive think tank, made that case in January in his newsletter, arguing that the government has a history of nationalizing utilities, railroads and aerospace firms.
And after all, he notes, Boeing already counts about 40% of its revenue from government contracts and much of the rest from plane orders that US officials regularly peddle abroad.
“Boeing is a state-backed national champion,” Stoller wrote.
“The fairy tale of a private firm is only hindering a fix to this once-great organization.”Of course, Boeing isn’t in the kind of financial distress that typically precedes a government takeover (a fact that’s also courtesy of years of government support, but still).
Nationalization seems politically interesting but practically unlikely.
“There’s really no short- and mid-ter

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Boeing took many years to establish a solid reputation as one of the world’s most dependable corporations. Less than six years were needed to undo it all, leaving the once-great American company with an unclear future.

Following several mid-air disasters and a steady deterioration of the company’s quality standards, regulators, airlines, pilots, and even Boeing employees are practically in revolt. Investors are also not too happy: after Tesla, Boeing’s stock (BA) has underperformed the SandP 500 by 27 percent this year.

A 787 Dreamliner traveling from Australia to New Zealand abruptly plunged mid-flight on Monday, injuring multiple people, causing Boeing’s latest headache. Boeing claimed it was gathering information about what went wrong, so it’s unclear how much, if any, responsibility it has in this case. However, the passenger testimonies are hardly encouraging at this point, since Boeing is already the subject of a federal investigation regarding the Jan. 5 blowouts in door plugs.

According to Brian Jokat, a passenger on Monday’s Latam Airlines flight, he was startled into wakefulness when the plane started to descend so quickly that individuals were flung against the ceiling of the cabin. (In a different interview, he stated to The Wall Street Journal: “You know that scene in The Exorcist where the girl jumps out of bed and hits the ceiling? That’s exactly it. “).

Video Ad Feedback: 04:32: Passenger discusses what the pilot told him following the plane’s mid-air descent. Source: CNN.

For any other business, this would be the moment to get in touch with attorneys and begin the process of either a bankruptcy or a sale. Boeing lost tens of billions of dollars, had to pay billions more in fines and settlements, and made headlines for recurrent quality control issues after being found culpable for two deadly crashes that claimed 346 lives in the previous six years.

However, Boeing is not a typical business.

It is essentially an aerospace utility that is operating under the guise of a private company, making it an untouchable American institution. It hardly even faces opposition from regulators. The FAA depends on Boeing to “self-regulate” because it is so underfunded. It is therefore understandable why the FAA administrator was shocked—shocked, to be exact—to discover this week that Boeing had failed half of its production facility audit.

As stated in a statement by the FAA, Boeing is making every effort to resolve the issues at hand.

“We continue to implement immediate changes and develop a comprehensive action plan to strengthen safety and quality, and build the confidence of our customers and their passengers,” Boeing said in a statement. “Based on the FAA audit, our quality stand downs, and the recent expert panel report.”. “At every step, we are committed to implementing meaningful, observable action and maintaining transparency.”. “.

Too big to go wrong.

Because it is, in theory, in global competition with its European rival Airbus, the company is frequently referred to as a duopoly rather than a monopoly. However, it’s not a real rivalry. Airlines are Boeing’s primary clientele; if they become dissatisfied with Boeing, they are unable to abruptly transfer to Airbus. Since pilots are only certified in one, once you select one, you’re essentially limited to that option.

In the American aviation industry, Boeing is the epitome of “Too Big to Fail,” given its unique significance. Most of the forces that other businesses have to deal with in order to stay in business, such as consumer choice, do not affect Boeing. Even if we wanted to, we as the people were unable to get rid of it.

How then do we address an issue such as Boeing?

As far as I’m concerned, firing the entire C suite should be Boeing’s first move toward earning trust, according to Gad Allon, a professor at the University of Pennsylvania’s Wharton School of Business, who spoke with me on Tuesday. “I am aware that won’t occur, but every single person whose name ends in a C is accountable for the current state of affairs. “.

On that front, Allon isn’t holding his breath waiting for the board of directors at Boeing.

Nationalize Boeing is an additional suggestion that is periodically made.

The government has a history of nationalizing utilities, railroads, and aerospace companies, according to Matt Stoller, the director of research at the progressive think tank American Economic Liberties Project, who made that argument in his newsletter in January.

Moreover, he points out that Boeing already receives roughly 40% of its revenue from government contracts and the majority of the remaining revenue from aircraft orders that American officials frequently sell abroad.

As Stoller put it, “Boeing is a state-backed national champion.”. “This once-great organization is only being hampered by the fairy tale of a private firm. “.

Naturally, and thanks to years of government assistance, Boeing isn’t in the kind of financial trouble that usually precedes a government takeover. Although it seems unlikely in practice, nationalization appears intriguing politically.

As Allon puts it, “there really isn’t a good short- and mid-term option.”.

He is more worried about what will happen if these isolated frightening incidents—like door plugs ripping off in midair, for example—become more common.

Video Ad Feedback: At 3:05, Muntean demonstrates a missing bolt from a Boeing plane’s door plug. Source: CNN.

Given how many companies worldwide depend on Boeing aircraft, “this can be really as big as a financial crisis.”.

It’s not that I believe there is a chance that all of these planes will crash into the ground tomorrow, he continued. “But the moment we start seeing these things as more recurring, I think it moves from being an ‘event risk’ to a ‘continuous risk,'” he said, which could have disastrous results.

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