It’s been a rough few months for Boeing. In January, a door-like panel blew off a Boeing 737 Max 9 plane in midair, prompting an FAA investigation that led to the agency declaring that the company had “systemic quality-control issues.” In February, an expert panel convened at the request of Congress to investigate Boeing’s approach to safety issued a sharply critical report that included 53 recommendations for how Boeing can improve its safety culture.
Then, last week, the New York Times reported on allegations by a whistleblower named Sam Salehpour, a quality engineer at the company, who claims that sections of the body of Boeing’s 787 Dreamliner jet had been improperly fastened together, creating a risk of structural failure for the plane. Now, Salehpour’s charges are being investigated by the FAA, and he’s testifying before a congressional subcommittee today, even as a separate committee is holding a hearing on that expert panel’s report. Oh, and while all this was happening, Boeing’s CEO, David Calhoun, announced he would be stepping down at the end of the year.
Nor are these kinds of problems anything new at Boeing. In fact, the past half decade has been full of problems at the company, dating back to the fatal crashes of two 737 Max planes in late 2018 and early 2019. Those crashes led to the resignation of Boeing’s then-CEO, as well as the company eventually agreeing to a $2.5 billion settlement with the DOJ, which had charged that Boeing employees had conspired to deceive the FAA.
It has, in other words, been a steep decline for a company that was once seen as the embodiment of American engineering and manufacturing excellence. And while in recent years Boeing has repeatedly announced its intentions to put safety and engineering ahead of profits, the door-panel debacle suggests that it’s made only limited progress in doing so.
In part, that’s because in the early 2000s, Boeing consciously shifted its culture from an engineering-first mindset to a more finance-driven one, and reversing that shift has proven hard to do. But there’s also another, simpler reason that’s made it difficult for Boeing to change: the company is, in the end, too big to fail.
There are, after all, only two manufacturers in the world of the large wide-body jets that big airlines rely on, and Boeing is one of them. (Airbus is the other.) As a result, nobody involved in the airline industry wants Boeing to fail. U.S. politicians, particularly those who represent parts of the country where Boeing has assembly and manufacturing plants, want the company to keep producing jets. Federal regulators want to ensure that flying is safe, but they also presumably don’t want to be responsible for putting one of the country’s biggest companies out of business.
The airlines, meanwhile, do not want there to be only one jet manufacturer for them to buy from, since that would give Airbus even more pricing power than it already has. And Airbus itself likely wants Boeing to stay afloat, since safety problems are bad for the air industry in general, and since it already has more demand for its products than it can meet.
That, in turn, speaks to the other factor buoying Boeing: The demand for new jets today is massively outpacing supply, because of the combination of booming demand for air travel and older jets going out of service. At the end of last year, Airbus had an order backlog of more than 8,500 planes. Boeing, meanwhile, has, despite its troubles, an order backlog of more than 5,500 planes. At their current delivery rate—Airbus delivered 735 aircraft last year, and Boeing 528—that means it’ll take a decade just to fulfill current orders.
That means that just about everyone involved has an incentive to make it possible for Boeing to keep its assembly lines humming and its planes in the air. Everyone wants air travel to be safe, of course. But the airlines also want to keep flying full schedules, which they can’t do if, say, the FAA decides to ground a particular kind of plane. So the threshold for something like grounding planes, is very high—only something truly disastrous, like the 737 Max crashes, qualifies.
This doesn’t mean that Boeing is totally indifferent to quality problems: obviously its shareholders care about its share price (which is down sharply this year), and executives care about their bonuses and keeping their jobs. And there are also, presumably, plenty of engineers at Boeing who still care about putting out a high-quality, safe product. On Monday, for instance, top Boeing engineers held a briefing for reporters at the South Carolina factory where the Dreamliner is assembled, rebutting the new whistleblower’s charges (though without naming him) and saying that the company had done exhaustive testing on the Dreamliner’s fuselage and that it was safe.
Even so, it’s simply the case that Boeing enjoys, and has enjoyed for many years, a remarkably privileged position as an oligopolist, and this has, to some degree, insulated it from the consequences of its mistakes and failures. In the process, it has arguably made those mistakes more likely, since Boeing knows that no matter what happens, it will endure.
Capitalism usually works to push companies to deliver what their customers want, and to improve quality and efficiency, because companies know that if they don’t, their customers will move on. In Boeing’s case, that pressure doesn’t work the same way, because it knows that in the end, its customers need it as much as it needs them.