Boeing CEO heads to Senate hearing over safety and manufacturing crises

Dave Calhoun, CEO of Boeing, leaves a meeting with Sen. Dan Sullivan, R-Alaska, in Hart Building, on Wednesday, January 24, 2024. Calhoun was meeting with senators about recent safety issues including the grounding of the 737 MAX 9 planes.Tom Williams | Cq-roll Call, Inc. | Getty Images

Boeing CEO Dave Calhoun will testify before a Senate panel on Tuesday about the company's safety and manufacturing crises after a door panel blew out of a nearly new 737 Max 9 jet in January.

Calhoun, who has said he will step down before the end of the year, faces questions from the Senate Permanent Subcommittee on Investigations as the company works to improve employee training and aircraft quality and to fix its tarnished safety reputation. The company has still not named a replacement for Calhoun, who took over after its previous leader was ousted for his handling of two fatal Boeing crashes.

"Much has been said about Boeing's culture. We've heard those concerns loud and clear. Our culture is far from perfect, but we are taking action and making progress," Calhoun plans to tell the committee, according to written testimony ahead of the hearing.

The hearing comes as Boeing faces potential U.S. prosecution after the Justice Department said last month that the plane-maker violated a 2021 settlement tied to 737 Max crashes in 2018 and 2019 that claimed 346 lives. That agreement, which protected the company and its executives from facing criminal charges tied to the crashes, would have expired just days after the blowout of the Alaska Airlines door panel in January. The Justice Department has until July 7 to decide whether to prosecute.

Several victims' family members are expected to attend the hearing. Relatives of Max crash victims met with Justice Department officials late last month to urge the U.S. to prosecute.

"Boeing made a promise to overhaul its safety practices and culture. That promise proved empty, and the American people deserve an explanation," said Sen. Richard Blumenthal, D-Conn., the subcommittee's chairman, upon announcing the hearing earlier this month.

Calhoun will appear before the committee at 2 p.m. ET Tuesday.

The Federal Aviation Administration has taken a hard line against Boeing, with FAA Administrator Mike Whitaker saying the regulator will keep inspectors on the ground at the company's facilities until the agency is satisfied with safety improvements.

The FAA had already halted Boeing's ability to increase production of the Max, its bestselling plane. Whitaker last month said it would likely be several months before lifting that restriction.

Boeing's aircraft output has suffered from the resulting crisis, forcing big customers such as Southwest Airlines and United Airlines to adjust their growth and hiring plans.

Boeing's lower production and deliveries have hurt its cash flow, and the company warned investors last month that it would burn instead of generate cash this year.

Boeing's shares are down more than 30% so far this year as of Monday's close, compared with a nearly 15% gain in the S&P 500.

The company is trying to stamp out quality flaws on jets and reduce so-called traveled work in which production steps are completed out of order, something it has done to address defects. Last month Boeing pointed to a host of other changes to encourage workers to speak up about problems in its factories after several whistleblowers raised concerns about quality issues and retaliation.

Separately, Boeing is facing supply chain issues. Spirit AeroSystems, a major supplier for both Boeing and Airbus, said last week that titanium entered the supply chain with falsified documents. The supplier said that despite the falsified documentation, more than 1,000 tests confirmed that the material is "airplane-grade titanium."

Boeing has been trying to purchase fuselage supplier Spirit, a deal Calhoun said is "more than likely" to be finalized in the first half of the year.