Boeing CEO Dave Calhoun and chief engineer Howard McKenzie testify during a Senate Homeland Security and Governmental Affairs Committee’s Subcommittee on Investigations hearing on Boeing’s safety culture on Capitol Hill in Washington, U.S., June 18, 2024, as they confront those who lost loved ones in the fatal crash.
Kevin Lamarque | Reuters
Washington – Boeing Chief Executive Officer Dave Calhoun was grilled by a Senate committee on Tuesday about the company’s safety and quality failures, a series of whistle-blower allegations of internal cutting corners and retaliation, and his own compensation system.
Calhoun, who said in March he would step down by the end of the year, defended the company’s actions to improve manufacturing quality and repair its damaged safety reputation after an aircraft door panel exploded in mid-air. Alaska Airlines January flight.
The company has yet to name a successor to Calhoun, who took over as president after the previous president was fired for his handling of two deadly Boeing crashes.
“Much has been said about Boeing’s culture, and we have heard those concerns loud and clear. Our culture is far from perfect, but we are taking action and moving forward,” Calhoun told the subcommittee.
Hours before the hearing, a Senate subcommittee on Tuesday released a whistleblower complaint from Boeing quality assurance investigator Sam Mohawk, who claims the company has lost track of damaged or non-compliant parts and that “it is highly likely that those parts are on airplanes.” The parts Mohawk cited were located at a factory in Renton, Washington, where Boeing builds its best-selling 737 Max.
Mohawk said he was retaliated against and told by his superiors to hide evidence from the Federal Aviation Administration, according to a memo shared with the committee on Tuesday. In his complaint to the Occupational Safety and Health Administration, Mohawk alleged that dozens of critical parts, including 42 rudders, winglets and stabilizers, were stored outside during FAA inspections, according to the memo.
According to Mohawk’s complaint, which was also made public by the subcommittee, Boeing issued a written warning to Mohawk for his “unacceptable/disruptive behavior and/or communications.” The committee said he may be “terminated” if the behavior continues. Mohawk also claims the company made cuts to staffing during his shifts, making it difficult for him to do his job.
A Boeing spokesman said the company received the complaint Monday night and staff were reviewing it.
“Our number one priority is ensuring the safety of our aircraft and passengers, and we continue to encourage employees to report any concerns,” she said.
Participants at a Senate hearing on Boeing’s safety record with the company’s CEO, Dave Calhoun, on June 18, 2024.
Leslie Josephs | CNBC
The FAA said it has seen an increase in reports from Boeing staff since the door plug rupture in January.
“We are thoroughly investigating all reports, including the allegations uncovered by the Senate investigation,” the FAA said in a statement on Tuesday. The agency declined to comment on the details of the latest allegations.
Mohawk will not testify at the Senate subcommittee hearing.
Possible prosecution
The hearings and the new whistleblower allegations further complicate things for Boeing, which is already facing possible U.S. indictments after the Justice Department filed charges against the planemaker last month. The company breached a 2021 settlement related to the 737 Max crashes that killed 346 people in 2018 and 2019. A flight-control system that Boeing installed on the Max, the latest generation of jetliners that have been flying since the late 1960s, was allegedly involved in the crashes.
The agreement, which protected the airline and its executives from criminal prosecution related to the crash, was set to expire just days after the January Alaska Airlines crash. The Justice Department has until July 7 to decide whether to file charges.
Tuesday’s hearing was attended by several family members of the victims. Relatives of the Max victims met with Justice Department officials late last month to urge the U.S. to prosecute.
At the start of the hearing, Calhoun stood and apologized to the victims’ families, who held up photos of their dead loved ones.
“We’re here because we want Boeing to succeed,” Sen. Richard Blumenthal, D-Conn., who chairs the subcommittee, said at the start of Tuesday’s hearing, referring to the jobs the company provides and the products it supplies to the U.S. military. “It’s not enough for Boeing to shrug its shoulders and say, ‘Mistakes happen.'”
Blumenthal slammed Boeing’s response to the subcommittee’s requests for more information, holding up a document he called “complete gibberish.”
“I would explain it exactly as you said,” Calhoun replied.
The company is trying to root out quality defects in its jets and cut so-called moving jobs, which are manufacturing steps that are done out of sequence, something the company has done to address the defects. After several whistleblowers raised concerns last month about quality issues and retaliation, Boeing listed a number of other changes to encourage workers to speak up about problems in its factories.
Calhoun defended the company’s response to the whistleblower and said several employees had been fired in retaliation, but declined to name them, citing personal privacy.
Sen. Josh Hawley (R-Missouri) accused Calhoun and Boeing of “squeezing” the company by cutting corners and criticized his compensation package of about $33 million last year, a 45% increase over 2022.
“Frankly, I think it’s a tragedy that you still have a job,” Hawley said.
Production slowdown
The FAA has taken a tough stance against Boeing, with Administrator Mike Whitaker saying he would keep inspectors on-site at the company’s facilities until the agency is satisfied it has made safety improvements.
The FAA has already halted plans to ramp up production of Boeing’s best-selling MAX jet. Whitaker said last month It will be several months before that restriction is lifted.
Boeing’s aircraft production has been hit hard by the crisis, with major customersSouthwest Airlines, etc. and United Airlines To align growth and hiring plans.
Boeing’s production and deliveries have hurt the company’s cash flow, and the company warned investors last month that far from generating any cash this year, it will burn through about $8 billion in the first half of the year alone.
The company’s shares have fallen nearly 33% this year through Tuesday’s close, compared with a roughly 15% gain last year. S&P 500.
Meanwhile, Boeing is facing supply chain problems. Spirit AeroSystemsThe company, a major supplier to both Boeing and Airbus, said last week that titanium had entered its supply chain with false documentation. It said more than 1,000 tests had confirmed the material was “aircraft-grade titanium,” despite the false documentation.
Boeing is trying to buy airframe supplier Spirit, and Calhoun said the deal is “highly likely” to close in the first half of this year. With less than two weeks left in that window, Calhoun declined to comment Tuesday on whether he still expected the deal to close within that time frame.
— CNBC Ece Yildirim contributed to this report.