Boeing CEO Admits 'Our Mistake' After 737 Max 9 Door Blowout

(Bloomberg) -- Boeing Co. Chief Executive Officer Dave Calhoun fought back tears as he said the planemaker must own up to its shortcomings as it grapples with a safety incident that has renewed questions over the quality of its manufacturing.

“We’re going to approach this — No. 1 — acknowledging our mistake,” Calhoun told Boeing employees Tuesday during a companywide meeting at its 737 factory near Seattle. “We’re going to approach it with 100% and complete transparency every step of the way.”

The remarks came during an all-hands meeting called by Calhoun to reinforce safety as the company’s top priority after a door plug ejected from a 737 Max 9 last week mid-flight, leaving a gaping hole in the side of the plane. He and other senior Boeing leaders addressed employees from its Renton, Washington, factory where the 737 is assembled, and webcast their remarks to workers at other locations.

“I’ve got kids, I’ve got grandkids and so do you,” he said, as he recalled seeing photographs of the plane’s damaged fuselage. “This stuff matters. Every detail matters.”

US regulators grounded 171 of Boeing’s 737 Max 9 aircraft and ordered inspections after the Jan. 5 accident. None of the 177 passengers and crew onboard Alaska Airlines Flight 1282 were injured when the panel ripped free shortly after the plane departed from Portland, Oregon.

Boeing Commercial Airplanes CEO Stan Deal, tasked with raising output while also maintaining quality at Boeing’s largest unit, spoke alongside Calhoun at Tuesday’s presentation. Also addressing workers was Chief Safety Officer Mike Delaney, whose senior executive role was created during a previous crisis involving the US planemaker’s cash-cow Max jet: a global grounding after two fatal crashes killed a combined 346 people nearly five years ago.

Delaney will play the critical role for Boeing, Calhoun said, as himself and his team would be the only people authorized to give the green light to allow the Max 9 to fly again.

Much is at stake for Calhoun and Boeing after a series of quality issues tripped up production of its most important aircraft last year. Last week’s incident complicates the CEO’s work to rebuild Boeing’s image after the crashes and a prolonged grounding of the 737 Max.

Also in the staff address, Calhoun admitted the company had to communicate to customers to reassure them, adding they were rocked by the Alaska Air accident. He said “moments like this shake them to the bone.”

Alaska Air Group Inc. and United Airlines Holdings Inc. have both discovered other 737 Max 9 jets with loose bolts after the Federal Aviation Administration grounded the Max 9 and ordered carriers to inspect the planes. Formal inspections have yet to start — the agency said Tuesday that Boeing is revising instructions for the checks after receiving feedback, and all of the affected planes will remain idled until the regulator deems them safe.  

Alaska was still awaiting inspection and maintenance instructions from Boeing and the FAA’s approval of the procedures as of 6:30 p.m. Eastern time, the carrier said in a statement on social media platform X.

“It seems to be a bit of a moving target,” Savanthi Syth, a Raymond James analyst, said of final instructions for the inspection process. “I can appreciate the FAA’s perspective on this with the other Max issues, where they were a little too quick to say, ‘This is fine.’ They’re really trying to cross the T’s and dot the I’s on this one.”

A chorus of airline chiefs, including two of Boeing’s biggest customers — Ryanair Holdings Plc’s Michael O’Leary and Emirates’ Tim Clark in Dubai — have spoken publicly of the need for Boeing to raise quality standards. 

“They’ve had quality control problems for a long time now, and this is just another manifestation of that,” Clark said in an interview this week in Dubai. “I think they’re getting their act together now, but this doesn’t help.”

National Transportation Safety Board Chair Jennifer Homendy said Monday that her agency would consider broadening the probe. Such a move would bring deeper scrutiny for Boeing and its manufacturing processes, and magnify the issue as the US planemaker seeks to get the aircraft back into service. 

Calhoun, 66, took over as CEO of Boeing at the start of 2020 after the board ousted then-CEO Dennis Muilenburg for mishandling the grounding crisis. He canceled an annual offsite retreat for senior executives that was planned for this week in response to the Alaska incident.

Boeing Chairman Larry Kellner was also present at the meeting alongside board member David Joyce, the former long-time GE Aviation chief who now heads up the aerospace giant’s safety committee.

The panel that broke loose from Flight 1282 covered an opening on the Max 9 that can be used for emergency exits. Some airlines, including United and Alaska, cover them up because the doors aren’t needed for lower-density seat configurations.

“We do see the latest incident as eroding the fragile confidence that has been built around the 737 Max franchise,” Ron Epstein, an analyst with Bank of America, told clients over the weekend. “In our view, Boeing needs to tread carefully and cautiously through this potential reputational minefield.”

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