Boeing Plans 30,000 Reduction In Workers: Pandemic, Fatal Plane Crashes, Executive Compensation And Stock Buybacks To Blame

One of the hardest-hit industries impacted by Covid-19 is the airlines. At the onset of the virus outbreak, governments warned potential passengers of the health-related dangers associated with air travel, then ordered the cessation of all unnecessary flights. As people realized the dire consequences associated with the disease, they elected to avoid traveling. 

Boeing, the storied major American aircraft manufacturer, bore the brunt of the grounding of airplanes. Airliners didn’t need to purchase new planes due to the nearly nonexistent demand. The grounding of its previous best-selling 737 Max jet in March 2019, after two fatal crashes killed 346 people, hurt sales.  

The current and near-term climate is not conducive for air travel. Europe and other regions are enduring a second wave of the coronavirus outbreak and it seems that the United States will as well. Boeing anticipates that travel will be moribund for the next couple of years due to the pandemic. As the planemaker is hemorrhaging cash—Boeing reported a loss of $449 million for the third quarter, compared to the $1.2 billion it earned for the same period last year—it’s in cost-cutting mode and announced plans to lay off 7,000 more workers.  

Boeing CEO Dave Calhoun said, “The global pandemic continued to add pressure to our business this quarter, and we’re aligning to this new reality.” Calhoun informed workers that the company aims to have reduced headcount by about 30,000 by the end of 2021. The departures will include attrition, retirements and buyouts. It’s anticipated that roughly 19,000 employees are leaving Boeing this year.

Not everything can be blamed on the virus. Covid-19 may have been the last straw, but Boeing made some poor decisions, including CEO turnover, accusations of mis-selling its 737 Max jets, faulty software and spending over $11 billion to buy back stock. After the two plane crashes that killed over 300 passengers, an aborted mission to the International Space Station and a recalcitrant attitude, Boeing’s then-CEO Dennis Muilenburg was fired. It was reported that the former chief executive would still walk away with $62.2 million. Calhoun took over for Muilenburg, who resigned at the end of December. According to a regulatory filing, Calhoun gets a total annual compensation of about $11 million a year.

Boeing initially boasted that its 737 MAX jet plane was the fastest-selling airplane in its history— with about 5,000 orders from more than 100 customers worldwide. The hype did not live up to expectations and the reality was the loss of lives.   

The first crash occurred in 2018. Data collected from the plane’s black box revealed that the pilots struggled to wrest control back from the aircraft’s automatic safety system. There were reports about the first crash, which raised questions over the jet’s new and confusing software and the lack of adequate pilot training. The company’s rush to bring the plane to market and a regulatory agency that allowed Boeing too much leeway was questioned. The concerns were brushed aside and a second crash occurred, killing hundreds of passengers. Only then did the company consider grounding the planes.

Muilenburg was hauled before Congress, as part of its investigation into the circumstances surrounding the crashes. Senator Richard Blumenthal accused Boeing and Muilenburg of putting passengers in “flying coffins as a result of Boeing deciding to conceal MCAS [Maneuvering Characteristics Augmentation Systems] from pilots.” Senator Ted Cruz said, “How come your team didn’t come to you with their hair on fire, saying, ‘We’ve got a real problem here?’ What does that say about Boeing? Why did you not act before 346 people died?”

In response to their concerns, Muilenburg said, “We don’t ‘sell’ safety; that’s not our business model.” After the congressional hearing, he was stripped of his chairmanship title, but was allowed to remain the CEO of Boeing. 

To compound Boeing’s problems, emails were released from the company that show employees made some incendiary comments about the company, its management, aircraft and their lack of safety. They brazenly bragged about pulling the wool over the eyes of the FAA regulators and mocked the safety of the planes.  

This airplane is designed by clowns who in turn are supervised by monkeys.” 

 “I still haven’t been forgiven by God for the covering up I did last year.”  

“Would you put your family on a Mac simulator trained aircraft? I wouldn’t,” one employee emailed a colleague. “No,” the co-worker responded.

While complaining about safety flaws, an employee said that Boeing “created a culture of ‘good enough’ and that is an incredibly low bar.”

“This is a joke,” an employee wrote in September 2016, in a reference to the MAX.

“This airplane is ridiculous.”

“Piss poor design,” said another, in April 2017.

“All the messages are about meeting schedules, not delivering quality,” one employee said.

A colleague replied: “We put ourselves in this position by picking the lowest-cost supplier and signing up to impossible schedules.”

“Why did the lowest-ranking and most unproven supplier receive the contract? Solely because of the bottom dollar.”

“There is no confidence that the FAA is understanding what they are accepting,” an employee wrote in February 2016.

“Our arrogance is (our) pure demise.”

To be fair, engaging in trash-talking and complaining about one’s boss and the ineptitude of senior management is common in everyday corporate life, as a way of venting frustrations. In this case, the emails are harrowing.  

Boeing officials claim that the language and sentiments expressed by the employees “are inconsistent with Boeing values, and the company is taking appropriate action in response.”

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