Boeing Feels Pretty Confident, Pretty Soon, That It Will Be Pretty Much Able to Deliver a Pretty Good Aircraft.

That’s not necessarily my take on it, but according to Boeing CEO Kelly Ortberg. He spoke out thusly at a Morgan Stanley investor conference earlier this month, “I feel pretty confident that we’ll be in a position here pretty soon to sit down with the FAA and go through what we call a capstone review, which is the process we go through to not just go through these key performance indicators, but to look at our entire supply chain readiness, our continued production readiness and move forward with that,” he said.

I understand your hopes, Kelly, but Boeing was once the finest aircraft builder in the world, and a credit to American ingenuity.

Bill Boeing, the company founder, was an engineer and he ran an engineering based company. He realized that flights of fancy didn’t keep planes in the air, it was physics (the sciences of matter and energy and their interactions). Not only that, but aircraft are complicated, and each innovation adds to that complication. Serious engineers discussed and applied their minds to these serious complications, with very serious consequences if those minds were absent.

Being wrong didn’t kill a couple of people, it killed hundreds. And Boeing hadn’t had a flight death outside the 737 series in over five years, and none had suffered an in-flight mechanical accident in more than sixteen. Bill Boeing was very proud of that record, but Bill retired in 1934 after the passage of the Air Mail Act (which forced aircraft manufacturers to separate from airlines, breaking up Boeing’s United Aircraft and Transport Corporation).

No longer able to own an airline, Boeing built them for others, continuing its dedication to engineering. Bill died in 1956, at the age of 74, of a heart attack aboard his yacht, Taconite, on Puget Sound.

And then the bean-counters took control, which is bad news at any corporation, and became fatal at Boeing.

Trim a little here and trim a little there, and all the trim a littles drop to the bottom line. Profits soared Wall Street loved it, the stock price loved it, and owners of stock-options (senior Boeing executives and board members) were over the moon. The Board of Directors wondered why this wasn’t a priority decades ago. A focus on stock price, at the cost of engineering, may be possible if you’re not NASA or an airline manufacturer. But Boeing was a manufacturer and disaster eventually caught up with it.

So, what happened at Boeing when profit became a priority over engineering?

An excellent and crucial question, I’m glad you asked.

It goes to the heart of Boeing’s transformation from one of the most engineering-driven companies in history to a Wall Street-managed corporation. The short version is that Boeing’s cultural pivot from “engineers in charge” to “financial managers in charge” began in the mid-1990s, and the roots of nearly every problem since (including the 737 MAX disasters) trace directly to that shift.

Here’s a breakdown of how and why that happened:

Before the shift: “Engineers Ran the Place.” For most of the 20th century, especially from the 30s through the 80s, Boeing was a pure engineering culture. The company was known for “designing airplanes pilots loved and competitors feared.” The 707, 747, 757, and 767 were all engineering-led projects, perhaps often over budget and late, but technologically brilliant and deeply respected.

Profit mattered, a company couldn’t continue without it, but engineering excellence and safety always came first. The culture was famously summed up in the words of a veteran engineer: “In the old Boeing, the finance people were there to count the money so we could build airplanes.”

The Inflection Point: 1997. The McDonnell Douglas Merger

This is the widely accepted “year zero” of Boeing’s cultural shift. Merged with McDonnell Douglas in 1997, on paper Boeing was the buyer. By most traditional measures; revenue, workforce, and commercial market share, Boeing was clearly the larger company, but the minnow swallowed the shark.

In practice McDonnell Douglas management took control. McDonnell Douglas had long focused on defense contracts and shareholder value rather than commercial innovation, a very different DNA from Boeing’s. Interestingly, after the merger, Harry Stonecipher (former McDonnell Douglas CEO) became Boeing president and later CEO. He explicitly said:

“When people say I changed the culture of Boeing, that was the intent. It’s now run like a business rather than a great engineering firm.”

An epitaph, rather than a statement of purpose for Boeing, and Harry Stonecipher will forever have that on his resumé.

Post-1997, Stonecipher began the era of financialization and cost-cutting, imposing practices aimed at short-term profitability and shareholder returns. Financial metrics became the yardstick for executive success, and stock buybacks exploded. Boeing spent tens of billions on share repurchases rather than on research and development. Wow, did that ever make a difference.

Management (if you can call grave-diggers managers) began outsourcing key engineering work to lower-cost suppliers. Such inconsequential stuff was increasingly designed around budget and schedule, not technological excellence. Engineers were outsourced to pink slips.

A great example is the 787 Dreamliner program, launched in 2003, which relied on unprecedented outsourcing to reduce capital cost. None the less, the program suffered major delays, quality issues, and cost overruns. Consequently, the 787 Dreamliner is still plagued 22 years later by significant quality, regulatory, and production issues. While many of its early problems, like battery fires, may be long behind it, the program never fully recovered its original promise — and Boeing continues to struggle with quality control, deliveries, and reputation.

So, now we come to the 737 MAX and the total erosion of safety culture. A textbook case of the new Boeing philosophy.

Rather than spend $10–15 billion on a clean-sheet airplane, like Bill Boeing might have, the company chose to retrofit a 50-year-old 737 design to save money and protect shareholder returns. Buying Granny a new wardrobe fit the bill.

Engineering decisions were (again) often subordinated (why not?) to marketing and sales pressures. MCAS software was added to avoid costly pilot retraining. MCAS stands for Boeing’s Maneuvering Characteristics Augmentation System. Why would Boeing think that might be important to new pilots? So, they explained it in a manual, rather than requiring training.

I am reminded of buying my first Saab automobile in the 1990s. Wonderful car. I drove it home from the dealer, and it would shut off, but the key couldn’t be removed from the keyhole. I called the dealer. Fortunately, I was not in a Saab aircraft and out of control, about to crash. Turns out, the gear lever must be in reverse to free the key. Why? Who knows, but they might have told me, instead of putting the detail in the manual.

At any rate, the now-infamous flight control software, that was central to the two Boeing 737 MAX crashes in 2018 and 2019, was not known to either pilot. Rather than requiring training, Boeing executives had pushed for certification shortcuts, and minimized FAA scrutiny to accelerate time-to-market. At that time, Boeing had conned the FAA into allowing them to certify many of their requirements themselves.

After the Lion Air 610 (2018) and Ethiopian 302 (2019) disasters, each the direct outcome of a culture that had flipped its priorities, those self certifications have been rescinded.

So, the question to Kelly Ortberg now is do you still feel pretty confident that Boeing will be in a position here pretty soon to sit down with the FAA and go through what we call a capstone review? Remember, that’s the process Boeing goes through not just for key performance indicators, but to look at your entire supply chain readiness, and your continued production readiness.

You prepared to move forward with that, Kelly?

You still pretty confident that Boeing will be in a position here pretty soon to sit down with the FAA and move forward?

Those shuffling past your boarding gate and up the ramp to a 737 (MAX or not) certainly hope so.