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Will Sweetheart Deal For Boeing Turn Sour?

Will Sweetheart Deal For Boeing Turn Sour?

The world is certainly bitter with Boeing’s latest consensus to plead guilty to a criminal fraud conspiracy charge after the US found the company violated a deal meant to reform it after two fatal crashes by its 737 Max plane, plus the planemaker’s agreeing to pay a criminal fine of $243.6million (£190m).


Surviving families of the perished criticised the arrangement, claiming it to allow Boeing to get out of taking full responsibility. However, this is in the hand of a US judge who decides if the fine will be applied. Approval will mean many parties including the court would incur the wrath of the bereaved families pressing for criminal prosecution.

The BBC reported Boeing has been in crisis over its safety record since two near-identical crashes involving 737 Max aircraft in 2018 and 2019. It led to the global grounding of the plane for more than a year. Boeing is neck-deep in its public relations department.

In 2021, prosecutors charged Boeing with one count of conspiracy to defraud regulators, alleging it had deceived the Federal Aviation Administration (FAA) about its MCAS flight control system, which was implicated in both crashes. It agreed not to prosecute Boeing if the company paid a penalty and successfully completed a three-year period of increased monitoring and reporting. 

In January, shortly before that period was due to end, a door panel in a Boeing plane operated by Alaska Airlines blew out soon after take-off and forced the jet to land. No-one was injured during the incident but it intensified scrutiny over how much progress Boeing had made on improving its safety and quality record.

In February, another Boeing aircraft (United Airlines) had one damaged wing discovered by a passenger (again in midair) en-route to Boston. It resulted in the plane diverting to Denver. Viral photos of the damaged wing also appeared on Reddit. 

It is extremely tempting to speculate Ed Clark, Head of 737 Max program was probably scapegoated over the Alaskan Airline incident. His 18 years of service were not enough to mitigate the damage or redeem for his loyalty to the aircraft maker.

Clark was shown the door on 21 February 2024 with immediate notice, according to a memo from CEO Stan Deal. Deal said the leadership changes are emblematic of the company’s “enhanced focus on ensuring that every airplane we deliver meets or exceeds all quality and safety requirements. Our customers demand, and deserve, nothing less.”

Nonetheless, global media which discussed Clark’s departure had mixed thoughts. Some commented it would be unrealistic to watch every stage of manufacturing closely like plugging bolts, hence the exit had some deemed too harsh. This is in spite of the corporate principle that the leader is held responsible for the shortcomings of the team.

Shortly after, a new report for the US government raised serious concerns about safety management systems at Boeing, adding to the scrutiny facing the US plane maker. The panel of experts, which was convened after the earlier crashes, said Boeing had taken steps to improve, but that it saw indications of “gaps in Boeing’s safety journey”. 

It said some Boeing staff were hesitant to report problems and worried about retaliation because of how the reporting process was set up. Boeing also did not have a clear system for reporting problems and tracking how those concerns were resolved, it added. The Federal Aviation Administration (FAA) said it would also review the findings.

Maintenance, Repair And Overhaul’s Relevance

According to a report by Allied Market Research, “Southeast Asia Air Transport MRO Market by Aircraft Type, End-Use, Organization Type, and Service Type: Southeast Asia Opportunity Analysis and Industry Forecast, 2021–2032,” the Southeast Asian air transport MRO market was valued at US$5,259.1 million in 2021, and is projected to reach US$13,481.3 million by 2032, registering a CAGR of 7.8% from 2022 to 2032.

The Air Transport MRO sector plays a vital role in ensuring safe and efficient aircraft operation. It encompasses a range of services and activities necessary to maintain & repair aircraft, systems, and components throughout their operational lifespan.

MRO services cover various aspects, including routine inspections, scheduled maintenance, unscheduled repairs, component replacements, and overall management of aircraft maintenance programs. These services are conducted by specialised MRO companies, both in-house by airlines and outsourced to third-party providers, and adhere to strict regulatory standards and guidelines to ensure compliance with safety regulations.

However, the biggest challenge as seen in other industries — shortage of skilled labour and jammed supply chains are thwarting its momentum. Allied Market Research added supportive government policies by the government of the Southeast Asian countries and technological advancement by the market players are expected to provide lucrative opportunities for the expansion of the Southeast Asian air .

Boeing is said to be currently producing significantly fewer than the 38 737 MAXs per month it is permitted to by the FAA. The latest development may be viewed as a setback by airlines which are awaiting deliveries of new planes. They include Ryanair, which previously complained that Boeing’s delays were a threat to its growth.

What Does This Mean For Boeing Moving Forward?

Boeing’s decision to plead guilty is still a significant black mark for the firm because it means that the company — which is a prominent military contractor for the US government – now has a criminal record. It is also one of the world’s two biggest manufacturers of commercial jets.

It is not immediately clear how the criminal record will affect the firm’s contracting business. The government typically bars or suspends firms with records from participating in bids, but can grant waivers.

Paul Cassell, a lawyer representing some families of people killed on the 2018 and 2019 flights, reportedly said:

“This sweetheart deal fails to recognise that because of Boeing’s conspiracy, 346 people died. Through crafty lawyering between Boeing and DoJ, the deadly consequences of Boeing’s crime are being hidden.”

He called on the judge assessing the deal to “reject this inappropriate plea and simply set the matter for a public trial, so that all the facts surrounding the case will be aired in a fair and open forum before a jury”. In a letter to the government in June, Mr Cassell had urged the DoJ to fine Boeing more than US$24 billion.

 

 

 

 

 

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