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Can Boeing Ever Recover From Its Reputational Crisis? | Observer
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ad-leaderboard ad-has-disclaimer htlad-observer_leaderboard_atf" id="observer_leaderboard_atf"></div> <!--a wrapper to include the content + sidebar--> <div id="single-post-wrapper"> <div id="primary" class="content-area"> <main id="main" class="site-main" role="main"> <div class="article-wrap"> <article id="post-1497626" class="post-1497626 post type-post status-publish format-standard has-post-thumbnail tag-aviation observer_company-airbus observer_company-boeing channel-business channel-technology nyo_person-aswath-damodoran nyo_person-joseph-clayton nyo_person-kelly-ortberg" data-post="" data-title="Can Boeing Ever Recover From Its Reputational Crisis?" data-url="" data-page-url="/2024/11/boeing-aircraft-reputational-crisis/" data-date="2024-11-22 18:39:38" data-date-iso="2024-11-22T18:39:38-05:00" data-author="Shreyas Sinha" data-coauthors="Shreyas Sinha" data-channels="Business, Technology" data-piped-channels="Business|Technology" > <header class="entry-header"> <div class="entry-teaser"> <a href="https://observer.com/business/" aria-label="Read more articles on Business">Business</a><span> • </span><a href="https://observer.com/technology/" aria-label="Read more articles on Technology">Technology</a> </div> <h1 class="entry-title" itemprop="headline">Can Boeing Ever Recover From Its Reputational Crisis?</h1> <h2 class="dek">Boeing is in the middle of a crisis that could threaten the legacy of the iconic American company.</h2> <div class="entry-meta nyo-social-comments nyo-social-comments-above"> By <span class="author" itemprop="author"><a rel="author" class="url fn n" href="https://observer.com/author/shreyas-sinha/" title="View All Posts by Shreyas Sinha">Shreyas Sinha</a></span> • <span class="entry-date"><time itemprop="datePublished" datetime="2024-11-22">11/22/24 6:39pm</time></span> <svg aria-hidden="true" style="position: absolute; width: 0; height: 0; overflow: hidden;" version="1.1" xmlns="http://www.w3.org/2000/svg" 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aria-describedby="caption-attachment-1499194" style="width: 970px" class="wp-caption aligncenter"><img fetchpriority="high" decoding="async" class="size-full-width wp-image-1499194" src="https://observer.com/wp-content/uploads/sites/2/2024/11/GettyImages-1986207730.jpg?quality=80&w=970" alt="A white Boeing airplane" width="970" height="647" srcset="https://observer.com/wp-content/uploads/sites/2/2024/11/GettyImages-1986207730.jpg 1024w, https://observer.com/wp-content/uploads/sites/2/2024/11/GettyImages-1986207730.jpg?resize=300,200 300w, https://observer.com/wp-content/uploads/sites/2/2024/11/GettyImages-1986207730.jpg?resize=768,512 768w, https://observer.com/wp-content/uploads/sites/2/2024/11/GettyImages-1986207730.jpg?resize=635,424 635w, https://observer.com/wp-content/uploads/sites/2/2024/11/GettyImages-1986207730.jpg?resize=970,647 970w, https://observer.com/wp-content/uploads/sites/2/2024/11/GettyImages-1986207730.jpg?resize=320,213 320w, https://observer.com/wp-content/uploads/sites/2/2024/11/GettyImages-1986207730.jpg?resize=50,33 50w" sizes="(max-width: 600px) 300px, 620px" /><figcaption id="caption-attachment-1499194" class="wp-caption-text">Boeing stock is down more than 40 percent so far. <span class="media-credit">AFP via Getty Images</span></figcaption></figure> <p dir="ltr">On Monday (Nov. 18), <a href="https://observer.com/company/boeing/" title="Boeing" class="company-link">Boeing (BA)</a> announced it would <a target="_blank" target="_blank" href="https://www.reuters.com/business/aerospace-defense/boeing-lay-off-nearly-2200-workers-washington-state-warn-notice-shows-2024-11-18/" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://www.reuters.com/business/aerospace-defense/boeing-lay-off-nearly-2200-workers-washington-state-warn-notice-shows-2024-11-18/&source=gmail&ust=1732394671942000&usg=AOvVaw3oJSARBYlUkh2SmqxGUobH" data-lasso-id="2645639">cut 2,500</a> workers in Washington State, Oregon, South Carolina, and Missouri as part of a plan to trim 10 percent of its global workforce, affecting 17,000 jobs. Boeing shares climbed 2.6 percent following the announcement and has gained more than 6 percent as of Friday’s close.The small bump was likely a relief to Boeing executives who have seen the company’s share price plummet 40 percent this year.</p> <section class="wp-block-observer-newsletters observer-newsletters--in-content"> <form class="newsletters-block__container" method="post" action="#" id="newsletter-6742bc727959c1.82055363" data-form="subscribe-newsletter" data-recaptcha-key="6LexvRggAAAAAF1HvCWrHtG4UAa7m0WIdyIgstAo" data-form-action="https://observer.com/newsletter-subscribe.json"> <div class="observer-newsletters__in-content-icon"> <svg fill="none" xmlns="http://www.w3.org/2000/svg" viewBox="0 0 51 51" width="50" height="50"><path d="M18.124 15.961C23.25 8.783 30.096 4.967 33.682 7.305a4.04 4.04 0 0 1 1.013.97c0 .028 8.3 16.017 8.3 16.017l4.634 2.989a6.39 6.39 0 0 1 1.793 1.732c.472.684.798 1.45.96 2.253.161.804.154 1.63-.02 2.432a6.075 6.075 0 0 1-.995 2.24l-.209.291c-.977 1.355-2.475 2.288-4.17 2.598a6.827 6.827 0 0 1-4.883-.943L32.662 48.32c-1.095 1.285-3.197 2.564-5.792 1.059a3.834 3.834 0 0 1-1.15-1.093 3.63 3.63 0 0 1-.587-1.444 3.763 3.763 0 0 1 .008-1.55 3.85 3.85 0 0 1 .635-1.427l6.556-9.208s-15.5-1.174-15.557-1.196a3.812 3.812 0 0 1-1.35-.552c-1.842-1.19-2.502-3.688-1.865-7.035.573-3.082 2.2-6.572 4.564-9.914Zm29.349 19.182.208-.292c.334-.467.567-.992.687-1.545a4.09 4.09 0 0 0 .012-1.678 4.18 4.18 0 0 0-.665-1.555 4.407 4.407 0 0 0-1.239-1.193l-4.002-2.592-5.282 7.405 4.002 2.592a4.64 4.64 0 0 0 1.624.655c.581.114 1.18.119 1.764.013a4.65 4.65 0 0 0 1.634-.631 4.42 4.42 0 0 0 1.257-1.179Zm-20.03 9.809a1.96 1.96 0 0 0-.324 1.528c.108.53.433.998.904 1.3.472.302 1.05.413 1.608.31A2.158 2.158 0 0 0 31 47.23l7.42-10.405-2.983-1.93-.788-.06-7.205 10.117Zm7.832-12.009 5.757-8.072-5.491-10.657c-.533 2.993-2.091 6.55-4.582 10.04-2.49 3.49-5.386 6.18-8.108 7.758l12.424.931ZM18.188 31.66c2.768-.171 7.275-3.143 11.092-8.497s5.056-10.42 4.205-12.94a2.354 2.354 0 0 0-.877-1.185 2.55 2.55 0 0 0-1.44-.47c-2.746 0-7.42 2.989-11.347 8.497-2.212 3.099-3.823 6.34-4.263 9.175-.863 5.42 2.63 5.42 2.63 5.42Z" fill="#000"/><path d="M25.364 16.165a5.726 5.726 0 0 1 2.148.01c.708.14 1.38.412 1.976.8.11.073.204.166.276.272a.941.941 0 0 1 .14.73.947.947 0 0 1-.158.347.998.998 0 0 1-.285.263 1.047 1.047 0 0 1-.767.133 1.046 1.046 0 0 1-.364-.15 3.572 3.572 0 0 0-1.25-.503 3.648 3.648 0 0 0-1.355-.01 3.574 3.574 0 0 0-1.257.486c-.381.238-.71.546-.966.906s-.436.763-.528 1.189a3.152 3.152 0 0 0-.01 1.29c.086.427.26.834.51 1.197.25.363.574.675.952.92a.972.972 0 0 1 .382.48c.07.194.074.405.01.602a.969.969 0 0 1-.37.49 1.048 1.048 0 0 1-.601.186 1.026 1.026 0 0 1-.58-.165 5.305 5.305 0 0 1-2.01-2.363 4.999 4.999 0 0 1-.29-3.028 5.165 5.165 0 0 1 1.527-2.67 5.592 5.592 0 0 1 2.83-1.412h.04Zm-8.491-6.914h-.098c-.25 0-.493-.088-.679-.248a.95.95 0 0 1-.329-.617l-.782-7.234a.919.919 0 0 1 .21-.725c.083-.1.188-.185.306-.247a1.05 1.05 0 0 1 1.14.105.974.974 0 0 1 .36.668l.776 7.24a.933.933 0 0 1-.222.707c-.17.199-.414.325-.682.351ZM3.771 7.763c.149-.214.38-.363.644-.414.264-.052.538-.002.764.138l7.06 4.41a.974.974 0 0 1 .396.482.922.922 0 0 1 .014.611.969.969 0 0 1-.376.496 1.05 1.05 0 0 1-.613.182 1.07 1.07 0 0 1-.58-.155l-7.06-4.41a.961.961 0 0 1-.415-.622.928.928 0 0 1 .166-.718ZM1.61 19.54l8.214-1.406c.265-.045.538.011.759.158.221.146.372.37.42.622a.93.93 0 0 1-.166.723c-.154.21-.389.354-.654.4l-8.207 1.405h-.18c-.258.007-.51-.08-.703-.243A.933.933 0 0 1 .97 19.88a1.03 1.03 0 0 1 .646-.358l-.005.017Z" fill="#000"/></svg> </div> <div class="observer-newsletters__in-content-inner"> <header class="newsletters-block__header"> <h2 class="newsletters-block__title"> Sign Up For Our Daily Newsletter </h2> </header> <div class="newsletters-block__form"> <input type="hidden" name="action" value="subscribe_newsletter"> <input type="hidden" name="newsletters[]" value="newsletter-daily" id="newsletter-daily"> <div class="newsletters-block__fields wp-block-button"> <input class="newsletters-block__input" aria-label="Email Address" placeholder="Email Address" type="email" name="email" required=""> <button class="wp-block-button__link in_article_single_newsletter_button" type="submit"> Sign Up </button> </div> <p class="newsletter-block__success"> Thank you for signing up! </p> <p class="newsletter-block__error"></p> <p class="newsletters-block__disclaimer"> By clicking submit, you agree to our <a href="http://observermedia.com/terms">terms of service</a> and acknowledge we may use your information to send you emails, product samples, and promotions on this website and other properties. You can opt out anytime. </p> </div> <a href="https://observer.com/subscribe/" class="newsletters-block__see-all in_article_single_newsletter_see_all_link"> See all of our newsletters </a> </div> </form> </section> <p dir="ltr">Boeing is in the middle of a financial and reputational crisis that could threaten the legacy of the iconic American company. “<a target="_blank" target="_blank" rel="noopener" href="https://open.spotify.com/episode/7EvO1NSP4rmCJyn2xpGMJy?si=360783e32d7748bc" data-lasso-id="2645640">I would not buy [Boeing stock] at any price</a>. The company is in serious, serious trouble,” <a href="https://observer.com/person/aswath-damodoran/" title="Aswath Damodoran" class="company-link">Aswath Damodoran</a>, a finance professor at New York University and a renowned valuation expert, said on the Prof G Markets podcast recently. “I’ve never seen a company blow up its reputation as thoroughly and as completely as Boeing has done over the last 20 years.”</p><div data-ad="1" class="ad-wrapper ad-top-margin ad-has-disclaimer ad-incontent ad-mobile htlad-observer_article_instream_mobile_1" id="observer_article_instream_mobile_1"></div><div class="ad-wrapper ad-top-margin ad-desktop ad-has-disclaimer ad-incontent htlad-observer_article_instream_dsk_1" id="observer_article_instream_dsk_1"></div> <p dir="ltr">The Seattle-headquarter aerospace and defense giant has been struggling with a decade of reputational decline, which came to a boiling point in January when a large panel blew off a two-month-old 737 Max airplane during a flight. While the pilot was able to safely land the plane, the incident revealed Boeing’s poor quality control during the manufacturing process.</p> <p dir="ltr">A subsequent six-week investigation led by the Federal Aviation Administration (FAA) uncovered several instances where Boeing fell short of meeting manufacturing quality control standards. In May, the FAA implemented a corrective action plan requiring the company to submit a comprehensive proposal detailing completed and ongoing measures to enhance safety, streamline operations, improve supplier oversight, and bolster employee training and internal audits. Boeing’s work in adhering to the plan is still ongoing.</p> <p dir="ltr">Even before the January incident, Boeing’s public image was already hanging by a thread. Two crashes involving Max 8 planes in 2018 and 2019 claimed 346 lives, prompting a global grounding of the aircraft that lasted approximately 20 months. In 2019, a New York Times investigation of hundreds of pages of internal Boeing emails suggested that the company repeatedly prioritized speed over safety in order to stay competitive against rival <a href="https://observer.com/company/airbus/" title="Airbus" class="company-link">Airbus</a>. “I’ve told my wife that <a target="_blank" target="_blank" href="https://www.anytimes.com/2019/04/20/business/boeing-dreamliner-production-problems.html" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://www.anytimes.com/2019/04/20/business/boeing-dreamliner-production-problems.html&source=gmail&ust=1732394671942000&usg=AOvVaw2ajmV_OqxF18r6HK0XIE4z" data-lasso-id="2645641">I never plan to fly on [Boeing planes],</a>” <a href="https://observer.com/person/joseph-clayton/" title="Joseph Clayton" class="company-link">Joseph Clayton</a>, a Boeing technician, told the Times in 2019.</p> <p dir="ltr">A second New York Times <a target="_blank" target="_blank" href="https://www.nytimes.com/2024/03/28/business/boeing-quality-problems-speed.html" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://www.nytimes.com/2024/03/28/business/boeing-quality-problems-speed.html&source=gmail&ust=1732394671942000&usg=AOvVaw3Frgamky3Rq7f0SNmKXD9d" data-lasso-id="2645642">investigation</a>, published in May, suggested that Boeing continued to ignore safety red flags, citing anonymous employees who said the culture of speed-over-quality had been ongoing for years and had worsened despite the 346 lives lost due to Boeing aircraft malfunctions.</p><div data-ad="1" class="ad-wrapper ad-top-margin ad-has-disclaimer ad-incontent ad-mobile htlad-observer_article_instream_mobile_2" id="observer_article_instream_mobile_2"></div><div class="ad-wrapper ad-top-margin ad-desktop ad-has-disclaimer ad-incontent htlad-observer_article_instream_dsk_2" id="observer_article_instream_dsk_2"></div> </div> <p dir="ltr">Boeing and Airbus together own 100 percent of the global commercial aircraft market. But Boeing executives face growing pressure from investors to catch up with Airbus, which owns about 60 percent of the market. Since 2019, Airbus has delivered <a target="_blank" target="_blank" href="https://www.nytimes.com/2024/08/14/business/boeing-airbus.html" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://www.nytimes.com/2024/08/14/business/boeing-airbus.html&source=gmail&ust=1732394671942000&usg=AOvVaw1rUjJdiVJ1pb_Bhlt0AW7j" data-lasso-id="2645643">3,800 planes</a>, while Boeing has delivered only 2,100.</p> <h3 dir="ltr">The new CEO’s turnaround plan</h3> <div class="gmail_default"> <p dir="ltr">Boeing’s new CEO, <a href="https://observer.com/person/kelly-ortberg/" title="Kelly Ortberg" class="company-link">Kelly Ortberg</a>, who took the job in August, is trying to clean up an impossible mess. His first challenge was negotiating an agreement with labor unions, putting an end to a seven-week strike. The strike paused nearly all of Boeing’s production at a crucial point for the company, further digging the company’s financial grave.</p> <p dir="ltr">In October, Boeing sold shares to raise <a target="_blank" target="_blank" href="https://www.seattletimes.com/business/boeing-raises-21-billion-in-capital-to-repair-balance-sheet/" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://www.seattletimes.com/business/boeing-raises-21-billion-in-capital-to-repair-balance-sheet/&source=gmail&ust=1732394671942000&usg=AOvVaw11m25cw3BHn7BVy6qtQSzb" data-lasso-id="2645644">$21 billion</a>, which Ortberg said will be used to save the company’s balance sheet. Ortberg is also reportedly considering selling Boeing’s <a target="_blank" target="_blank" href="https://www.space.com/boeing-exploring-sale-space-business-starliner" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://www.space.com/boeing-exploring-sale-space-business-starliner&source=gmail&ust=1732394671942000&usg=AOvVaw2HEnAwUKdhiBUOv0CmQPpq" data-lasso-id="2645645">space unit—</a>a major NASA contractor that has played a crucial role in building and maintaining the International Space Station.</p> <p>Despite these warning signs, several investment banks give Boeing a consensus “buy” rating, signaling they believe the company will be able to recover. The most bullish, UBS, has a stock price target for Boeing of $315, more than double its current price of $148.</p><div data-ad="1" class="ad-wrapper ad-top-margin ad-has-disclaimer ad-incontent ad-mobile htlad-observer_article_instream_mobile_3" id="observer_article_instream_mobile_3"></div><div class="ad-wrapper ad-top-margin ad-desktop ad-has-disclaimer ad-incontent htlad-observer_article_instream_dsk_3" id="observer_article_instream_dsk_3"></div> <p>There are some signs of resilience for the company: Boeing brought in $17.84 billion in revenue during the July-September quarter, a small 1.5 percent dip from the same period last year. The company’s yearly revenue has grown steadily: in 2023, it pulled in $77.80 billion, a <a target="_blank" target="_blank" href="https://www.macrotrends.net/stocks/charts/BA/boeing/revenue" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://www.macrotrends.net/stocks/charts/BA/boeing/revenue&source=gmail&ust=1732394671942000&usg=AOvVaw1_Gxa6Zf6YNZU08GoIQAgO" data-lasso-id="2645646">16.8 percent increase</a> from the year prior.</p> <p>And, despite its reputational crisis, Boeing continues to receive new orders. Earlier this month, Avia Solutions Group, a global aircraft, crew, maintenance, insurance (ACMI) provider, ordered <a target="_blank" target="_blank" href="https://investors.boeing.com/investors/news/press-release-details/2024/Avia-Solutions-Group-Orders-up-to-80-Boeing-737-MAX-Jets-to-Gear-Up-Expansion/default.aspx#:~:text=SEATTLE%2C%20Nov.%2012%2C%202024,to%20order%2040%20more%20later." target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=https://investors.boeing.com/investors/news/press-release-details/2024/Avia-Solutions-Group-Orders-up-to-80-Boeing-737-MAX-Jets-to-Gear-Up-Expansion/default.aspx%23:~:text%3DSEATTLE%252C%2520Nov.%252012%252C%25202024,to%2520order%252040%2520more%2520later.&source=gmail&ust=1732394671942000&usg=AOvVaw0lAsZVPNmuZ-JyIOoxmCyF" data-lasso-id="2645647">40 new</a> 737-8 aircraft models with the potential to order an additional 40 in the future.</p> </div> </div> </p> <img itemprop="image" src="https://observer.com/wp-content/uploads/sites/2/2024/11/GettyImages-1986207730.jpg?quality=80&w=970" alt="Can Boeing Ever Recover From Its Reputational Crisis?" style="display:none;width:0;"> </div><!-- .entry-content --> <footer class="entry-meta"> </footer><!-- .entry-meta --> </article><!-- #post-## --> <div class="breadcrumbs"> <span class="before-text"> Filed Under:</span> <a href="https://observer.com/business/" aria-label="Read articles filed under Business">Business</a>, <a href="https://observer.com/technology/" aria-label="Read articles filed under Technology">Technology</a>, <a href="https://observer.com/person/aswath-damodoran/" aria-label="Read articles filed under Aswath Damodoran">Aswath Damodoran</a>, <a href="https://observer.com/person/joseph-clayton/" aria-label="Read articles filed under Joseph Clayton">Joseph Clayton</a>, <a href="https://observer.com/person/kelly-ortberg/" aria-label="Read articles filed under Kelly Ortberg">Kelly Ortberg</a>, <a 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