Boeing Faces More Pressure as United CEO Vents Frustrations

23/01/2024

(Bloomberg) — One of Boeing Co.’s biggest customers has lost confidence in the planemaker’s ability to overcome the ongoing quality lapses that climaxed this month with a mid-air emergency on an Alaska Airlines flight.

United Airlines Holdings Inc. Chief Executive Officer Scott Kirby has been venting his frustrations with management to colleagues and voicing his concerns over the handling of the Max grounding, according to people familiar with the matter.

Kirby has stopped short of a direct appeal for change to Boeing’s top brass, while seeking to enlist support to revamp management from a range of parties, the people said, asking not to be named discussing confidential conversations. He has also spoken to US Transportation Secretary Pete Buttigieg over the grounding, which is now heading into its third week.

Scott Kirby

While the White House is monitoring the discussions, there’s no indication yet of what steps the Biden administration would take in response to complaints about Boeing. Buttigieg has been in touch with the planemaker, in keeping with the hands-on approach he’s taken with US airline executives — including Kirby — following service breakdowns.

The fulminations targeting the planemaker by the often outspoken Kirby, who has been forced to ground dozens of 737 Max 9 aircraft following the Jan. 5 accident, underscore the pressure on Boeing CEO Dave Calhoun and the company’s directors. The Federal Aviation Administration, which grounded most of the Max 9 fleet and is investigating Boeing production, on Sunday doubled down on its scrutiny of the company, asking airlines to inspect door plugs on an older 737 model.

An Alaska Airlines Boeing 737 Max-9 aircraft grounded at Los Angeles International Airport (LAX) in Los Angeles, California, US, on Monday, Jan. 8, 2024. Boeing Co. took the first step toward returning its grounded 737 Max 9 jetliners to service, issuing guidance to airlines on the inspections required following a mid-air structural failure late last week.

The Transportation Department doesn’t have legal authority to dictate any changes to Boeing’s leadership, although it can take enforcement actions or other high-profile steps against the company.

Boeing’s shares ended regular trading hours Monday little changed at $214.93 and United’s fell about 1% to $38.45.

“I’ve conveyed to Boeing leadership the severity of our concerns,” Buttigieg told MSNBC on Jan. 19. While Boeing has pledged to do everything necessary to make sure that anything found is fixed, Buttigieg underscored that FAA intended to carry out a thorough review, adding “that’s not something where we just go off pledges.”

The White House deferred comment to the Transportation Department, which had no immediate response. United and Boeing also had no immediate comment.

United reported earnings after the close of regular trading in New York.

–With assistance from Alan Levin.

(Updates with closing shares in seventh paragraph.)

OTHER NEWS