Opinion | Boeing’s extraordinary ‘sweetheart deal’ is a slap in face to the victims

Earlier this week, the Boeing Company pleaded guilty in federal court to defrauding federal regulators about its role in two fatal crashes, in 2018 and 2019, of 737 MAX aircraft in which 346 people were killed. Three years ago, Boeing agreed to enforce “compliance and ethics,” saying it would commit to prioritizing safety over profits. This plea deal and an accompanying $243 million fine came about because Boeing failed to do that. It’s an extraordinary turn of events for one of America’s largest companies, once the crown jewel of its aerospace industry.

Frankly, the stipulated fine — less than 0.5% of Boeing’s 2023 revenue — and the company’s acknowledgment of guilt are far from enough. The victims’ families have certainly made clear — often speaking through tears — that this plea agreement is a “sweetheart deal” and woefully insufficient for the lives lost due to Boeing’s irresponsibility.

Given Boeing’s longstanding problems, a more significant fine — not to mention pursuing jail time for senior executives — was appropriate. Today, the company is still being investigated by an alphabet soup of federal agencies, including the Federal Aviation Administration, the National Transportation Safety Board and the Securities and Exchange Commission. The company’s issues go far beyond two fatal crashes and encompass a systemic failure to enforce safety protocols during design and production, and repeated refusals to respond when in-house whistleblowers voiced their concerns.

Boeing, to date, shows little sign of having learned any lessons. After a door plug blew out on an Alaska Airlines 737 MAX 9 high over Portland in January (miraculously not killing anyone), 2024 has seen endless headlines chronicling shoddy workmanship, rampant outsourcing, frequent stonewalling and overall tone deafness from the company.

What went wrong? Once, there were multiple major aircraft manufacturers competing against Boeing for airline contracts, both domestically and overseas. But over the years, nearly all exited airline manufacturing and competition dwindled. In 1993, the Clinton administration even called a post-Cold War “Last Supper” at the White House, forcing Boeing and other Pentagon suppliers to consolidate. Today, just three companies — Boeing, Airbus and Embraer — control nearly 98% of the global airline market.

Boeing’s merger with McDonnell Douglas in 1997 sowed the seeds of the former’s downfall. The engineers with decades of experience in Boeing’s executive ranks were replaced with MBAs with a fanatical focus on slashing costs. Boeing’s headquarters — embedded near Seattle since 1914 — was twice moved eastward recently, first to Chicago and then Virginia, in part to reduce commuting time for its army of Washington lobbyists.

Unsurprisingly, the shift from building safe and reliable metal tubes that hurtle through the troposphere to prioritizing quarterly profits, stock buybacks, union busting and creating new forms of executive compensation wasn’t feasible in the long term. This mix of cost-cutting and a “shoot the messenger” approach to safety warnings from employees bred endless production delays, manufacturing defects and scandals.

Even casual readers of the door plug saga have learned the name Spirit AeroSystems, a former Boeing subsidiary spun off in 2005 to build aircraft fuselages. The result was a shocking lack of support and oversight from Boeing itself for such a crucial portion of the manufacturing process. Boeing recently agreed to reacquire Spirit, but its outsourcing difficulties remain. Thousands of employees work for more than 50 outsourced contractors suppling 70% of Boeing’s design, engineering and manufacturing. 

And it’s no coincidence that Boeing’s 787 is built in “right to work” South Carolina as an end run against unionized employees in Seattle. Recent congressional hearings with chilling whistleblower testimony have demonstrated Boeing senior management’s cluelessness about the quality of such work — and the retaliation against workers who speak out.

You may be wondering at this point where the government was in all this. The aviation consolidation in the 1990s — among aircraft manufacturers and airlines alike — came at the worst time, because the Federal Aviation Administration has been notoriously understaffed and underfunded since the Reagan administration. The FAA’s fallback solution was to launch the office of Organization Designation Authorization, which allows industry employees (such as Boeing’s) to oversee and inspect work on its behalf. In other words, under ODA, Boeing employees are expected to tell their bosses to shut down assembly when there are problems, even though those same bosses again and again ignored those problems and even retaliated against employees who raised them.

Boeing’s impact not only on aviation but on America itself cannot be overstated. The company had revenues of $77.8 billion in 2023 and directly employs 145,000 workers in more than 65 countries. It is among the United States’ largest exporters. Boeing remains one of the largest defense contractors; last year it ranked fifth among Pentagon suppliers.

Whatever is in store next for this once-titan of the American industry, one conclusion is clear: self-policing is not enough. The victims of Boeing’s irresponsibility know it, lawmakers know it, and American passengers now anxious to step on a plane know it.

It’s crucial that we fully resource the FAA’s ability to provide thorough oversight and inspections. That means funding in-house FAA Safety Inspectors, sunsetting ODA and revamping ticket tax funding and FAA oversight procedures. But it’s also crucial that we once again insist on real punishments for wrongdoing. Only true accountability stands a chance of forcing Boeing to reject reckless “financialization” and return to making things that work. And even then, we’ll be talking about the Icarus-like fall of Boeing for decades to come.