Yahoo Finance How Boeing is fighting back from disaster – and killing off the 747
Inside Boeing’s cavernous factory at Everett, 30 miles north of Seattle, engineers quietly put the final touches to its new Jumbo Jet.
Dressed in protective green paint, ‘Line 1572’ – a cargo version of the world’s best-known commercial aircraft – will be delivered to American carrier Atlas Air later this month. Lines 1573 and 1574 are on track for completion by the end of the year.
At that point, commercial production of Boeing’s 747 – the “plane that shrunk the world” – will cease for the first time since it took to the skies in 1969. One private order will still need to be fulfilled. Air Force One jets will take until late 2026 to be completed.
Covering nearly 100 acres and boasting the largest freestanding building in the world, Everett was once a hive of energy. The deafening sounds of construction could be heard from the nearby state highway 526, as tens of thousands of workers scrambled to get the Jumbos ready for airlines desperate to jump on-board the air travel revolution.
Now, the factory is a more sedate affair. Aside from the 747 production being wound down, just two 777 jets – another of the plane maker’s long-haul fleet – roll out of the factory each month. Prior to the pandemic it was nearly four times this number. The assembly of the newest of Boeing’s long-distance fleet, the 787 Dreamliner, has been moved to North Charleston, South Carolina, where trade unions wield considerably less power over executives.
Founded by William Boeing in Seattle in 1916, Boeing laid claim to being America’s biggest exporter by value as recently as 2012. But its reputation nosedived following two fatal crashes of a flagship 737 Max jets in late 2018 and early 2019.
The Max tragedies, which claimed the lives of 346 people, plunged Boeing into its biggest-ever crisis as the integrity of one America’s best-known corporations was called into question. It is still scrambling to win back the confidence of investors, airlines and the flying public.
Among a litany of allegations are that Boeing was culpable for the crashes by cutting corners to save money, prioritising profits over safety as it tried to regain lost ground against Franco-German rival Airbus – most notably in the recent Netflix documentary “Downfall: The Case Against Boeing”.
Facing a backlash from Congress, repeated public apologies of chief executive Dennis Muilenburg proved insufficient. He was ousted in December 2019 and replaced by current boss David Calhoun.
Game-changer
The crashes of Lion Air Flight 610 on October 29, 2018, and Ethiopian Airlines Flight 302 on March 10, 2019, left aviation regulators with no option to ground the deadly jet indefinitely. Boeing’s reputation was left in tatters, sparking a run on its shares that wiped tens of billions from its stock market value.
Dubbed a “game-changer” plane by the likes of Ryanair for cutting fuel costs by 20pc and efficient use of space, there were high hopes the Max would rejuvenate the fortunes of Boeing. Airbus had eroded Boeing’s dominant market position during the previous three decades, turning a monopoly into a duopoly. Airlines increasingly saw Boeing’s short-haul fleet as less attractive than those produced by its European rival.
Convincing regulators in Washington to sign off the airworthiness of the Max has been – and remains – a herculean task.
Two of the aircraft’s four derivations – the 737 Max-8 and Max-9 – were cleared to return to service by December 2020. The other two – the Max-7 and Max-10 – are stuck in red tape to this day.
Mike Fleming is senior vice president of the ‘737 Max return to service’ initiative. Speaking from a vast office complex outside the Everett factories, he refers to the crashes as “the two unfortunate accidents”.
It is the only occasion during The Telegraph’s two-day tour of Seattle’s factories and offices that a Boeing executive directly references the tragedies.
“I think everyone, from Congress, to the regulatory agencies, to the Boeing company, are all doubling down and really focused on making sure that we've done a very thorough job of analysing and assessing our aeroplanes,” he says. “From the design, from the build, from the training standpoint, airlines standpoint, and that slowed us down.”
Toxic combination
Getting the jets signed off is only half of the problem, however. Boeing, like many other companies globally, is grappling with a toxic combination of labour shortages and supply chain issues.
An hour’s drive to the south of Seattle stands another of Boeing’s gargantuan factories at Renton. More than a century old, the plant played a crucial role during the Second World War, with more than 1,100 B29 Superfortress bombers built on the site.
These days it is the home of the Max, where workers are greeted by a sign at the entrance that reads “Safety and quality start with us”.
The level of energy at Renton contrasts with Everett. At the beginning of their shifts, staff gather around whiteboards on the factory floor. Boxes containing the correct tools and parts are prepared in advance so workers have everything they need to hand. The beeping of cherry pickers and forklifts is omnipresent as armies of staff inside the fuselage get to work.
But because of events largely outside of Boeing’s control, the factory is still not working at full tilt. In previous years, more than 50 Max aircraft rolled out each month.
Dennis Eng, director of business operations at Renton, explains that only two of the three production lines are currently in operation. Renton is trying – but so far failing – to “ramp up” production to 31 jets each month.
He refuses to elaborate on what is preventing the factory from producing the max number of Max’s, describing it as “a combination of factors”.
Nevertheless, it is hardly a secret that the factory, like the rest of America, is grappling with a red-hot labour market and supply chain problems.
“The focus is on getting production stability,” Eng says. In other words, he needs the manpower and the certainty of supply before opening Renton’s third production line.
‘We haven’t been able to deliver’
Boeing’s problems are not limited to the Max. Production of the 787 Dreamliner, the flagship long-haul plane, has also suffered a turbulent few years.
Regulators began raising concerns about the Dreamliner’s fuselage not meeting specifications almost two years ago and deliveries to airlines were halted between May and October last year. The company remains locked in negotiations with regulators before it can return to full production.
On top of this, the rollout of the 777X – a new, more fuel-efficient version of the 777 – has also been delayed. British Airways was among the first of Boeing’s customers to place an order in 2019, with jets due to be delivered this year. Now, the 777X will not be handed over to the UK flag carrier until 2025 at the earliest.
“I’m not going to sugarcoat the fact [that there is] disappointment among our customers that we haven't been able to deliver, when they want [and] what they want,” says Darren Hulst, one of Boeing’s marketing executives.
“Our goal is to continue to find ways to work with our customers to make those aircraft available when they need them.”
Boeing’s production travails, coupled with a battle to convince regulators to sign off the airworthiness of its jets, come with the territory of being the world’s biggest plane maker.
Hulst stresses the planes are far superior in comparison with those built by Airbus in terms of fuel efficiency and economic performance – claims its rival would dispute.
Outside of Boeing’s control?
The jury is out on whether Boeing can return to the undisputed position as the world’s pre-eminent plane maker.
What seems certain is that in order to regain past glories, Boeing needs to start delivering more planes.
The production blockages of the Max and 787 are “partially based on factors outside of most individuals’ control,” Sheila Kahyaoglu of Jefferies said earlier this month.
A fifth of the backlog of Max orders, some 823 aircraft, are Max-7 and Max-10 jets. Assembling and delivering those aircraft depends on regulators such as America’s Federal Aviation Authority giving Boeing the green light to bring them into service.
Boeing is similarly at the mercy of regulators to return the Dreamliners to full production while labour shortages and supply chain issues, endemic across much of the Western world, compound the situation.
Despite everything, chief executive Calhoun remains bullish about Boeing’s prospects.
"Demand for aeroplanes is as robust as I've ever seen it. I think it will get more robust,” he said from the new corporate headquarters in Arlington, Virginia last week.
Fleming, who arguably has the toughest job at Boeing, in returning the 737 Max to service, is equally as optimistic: “It's a good problem to have when the demand is not your problem”.
