Boeing CEO Dave Calhoun and Chief Engineer Howard McKenzie turn to confront those who have lost loved ones in fatal accidents while testifying before the Senate Homeland Security and Governmental Affairs Committee's Investigations Subcommittee hearing on Boeing's safety culture, on Capitol Hill in Washington, US. . June 18, 2024.
Kevin Lamarque | Reuters
Washington – Boeing CEO Dave Calhoun was harshly criticized by a Senate committee on Tuesday over safety and quality lapses at the company, a host of whistleblower allegations about cutting corners at the company and retaliation, and his own pay package.
Calhoun, who said last March that he would step down by the end of the year, defended actions taken by the plane manufacturer to try to improve manufacturing quality and repair its tarnished safety reputation in the wake of a mid-air door panel explosion on a plane. Alaska Airlines Trip in January.
The company has not yet named a replacement for Calhoun, who took over after its previous leader was ousted over his handling of two fatal Boeing crashes.
“Much has been said about Boeing's culture,” Calhoun told the subcommittee. “We have heard these concerns loud and clear. Our culture is far from perfect, but we are taking action and making progress.”
Hours before the hearing, a Senate subcommittee released whistleblower allegations Tuesday from Sam Mohawk, a quality assurance investigator for Boeing, alleging that the company lost track of which parts were damaged or did not meet specifications and that “these parts were likely to be installed On planes.” The parts marked Mohawk were located at Boeing's factory in Renton, Washington, where the company builds its best-selling 737 MAX aircraft.
Mohawk said he was retaliated against and that supervisors asked him to hide evidence from the FAA, according to a memo the committee shared Tuesday. Dozens of critical parts were stored offshore during the FAA inspection, including 42 rudders as well as ailerons and stabilizers, Mohawk alleged in claims filed with OSHA, the memo said.
Boeing issued a written warning against Mohawk, saying he had engaged in “unacceptable/disruptive conduct or communications,” according to Mohawk’s complaint, which was also made public by the subcommittee. She said he could be “outed” if the behavior continued. Mohawk also alleged that the company reduced staffing during his shift, making it difficult to complete tasks.
A Boeing spokeswoman said the company received the claims Monday night and employees are reviewing them.
“We continually encourage employees to report all concerns because our priority is ensuring the safety of our aircraft and passengers,” she said.
An attendee at a Senate hearing with Boeing CEO Dave Calhoun about the company's safety record on June 18, 2024.
Leslie Josephs | CNBC
The FAA said it has seen an increase in the number of reports from Boeing employees since the door plug exploded in January.
“We thoroughly investigate every report, including allegations revealed in Senate work,” the agency said Tuesday. The Federal Aviation Administration declined to comment on the details of the latest accusations.
Mohawk will not testify before the Senate subcommittee hearing.
Possible prosecution
The hearing and new whistleblower allegations further complicate matters for Boeing. The company already faces potential US prosecution after the Justice Department said last month that the planemaker violated a 2021 settlement linked to crashes of 737 MAX planes in 2018 and 2019 that killed 346 people. The flight control system that Boeing included in the Max, the latest generation of planes that have been flying since the late 1960s, was implicated in the crashes.
That agreement, which protects the company and its executives from facing criminal charges related to the incidents, was scheduled to expire just days after the Alaska Airlines incident in January. The Ministry of Justice has until July 7 to decide whether to prosecute or not.
Several family members of the victims attended Tuesday's hearing. Relatives of Max accident victims met with Justice Department officials late last month to urge the United States to prosecute him.
At the beginning of the hearing, Calhoun stood and apologized to the families of the victims, many of whom held photos of their missing loved ones.
“We're here because we want Boeing to succeed,” Sen. Richard Blumenthal, D-Conn., chairman of the subcommittee, said at the start of the hearing Tuesday, referring to the jobs Boeing creates and the products it provides to the United States. United States Army. “It is not enough for Boeing to shrug its shoulders and say: Mistakes happen.”
Blumenthal criticized Boeing's responses to the subcommittee's request for more information, uploading a document and calling it “complete nonsense.”
“I'll describe it exactly as you did,” Calhoun replied.
The company is trying to eliminate quality defects in aircraft and reduce so-called mobile work in which production steps are completed incorrectly, which is what it did to address the defects. Last month, Boeing signaled a raft of other changes to encourage workers to speak up about problems at its plants after several whistleblowers raised concerns about quality issues and retaliation.
Calhoun defended the company's handling of whistleblowers and said some employees had been fired due to retaliation, though he declined to provide names, citing the privacy of the individuals.
Sen. Josh Hawley, Republican of Missouri, accused Calhoun and Boeing of “divesting” the company by cutting costs and criticized his compensation package, which amounts to nearly $33 million, a 45% increase last year from 2022.
“Frankly, sir, I think it's a travesty that you still have your job,” Hawley said.
Production slowdown
The Federal Aviation Administration has taken a tough stance against Boeing, with Administrator Mike Whitaker saying the regulator will keep inspectors on the ground at the company's facilities until the agency is satisfied with the safety improvements.
The Federal Aviation Administration has already halted Boeing's ability to increase production of its MAX aircraft, its best-selling aircraft. Whittaker said last month that it could take several months before that restriction is lifted.
Boeing aircraft production suffered from the resulting crisis, forcing major customers to buyLike Southwest Airlines And United Airlines To adjust growth and recruitment plans.
Boeing's decline in production and deliveries has hurt its cash flow, and it warned investors last month that it would burn money this year rather than generate it, using about $8 billion in the first half of the year.
The company's shares were down about 33% this year through Tuesday's close, compared with a gain of about 15% last year. Standard & Poor's 500.
Separately, Boeing is facing supply chain issues. Air spirit systemsAmazon, a major supplier to both Boeing and Airbus, said last week that titanium had entered the supply chain with forged documents. Despite the forged documents, more than 1,000 tests confirmed the material was “aircraft-grade titanium,” the supplier said.
Boeing is trying to buy fuselage supplier Spirit, a deal that Calhoun said would likely be completed in the first half of the year. With less than two weeks remaining in that period, Calhoun declined to comment Tuesday on whether he still expected to reach an agreement in that time frame.
— CNBC's Ece Yildirim contributed to this report.
