RUTH SUNDERLAND: The scandal over Boeing’s ‘flying coffin’ 737-Max jets could not have come at a worst time for the airline sector – or for Boris Johnson
- Boeing’s lack of real competition other than Airbus breeds arrogance
- CEO Dennis Muilenburg retires with £64m in shares, a pension and options
- There could also be an impact on the forward order book of Rolls-Royce
The crisis at Boeing, the US plane manufacturer, is reverberating around the world.
This frightening saga, which centres on safety problems with its 737 Max jets after two crashes in which 346 people died, is horribly familiar to watchers of the corporate scene.
We have seen variants of it in industries such as car manufacturing, with the VW diesel emissions scandal, and even white goods, when families had to flee their homes to escape incendiary Whirlpool appliances.
The Boeing situation is chilling as the firm has played Russian roulette with the safety
Each of these cases features a corporate culture riddled with executive greed, contempt for regulators and a callous disregard for the public.
At Boeing there is also a lack of real competition – since the only serious rival is Airbus – and that breeds arrogance.
But the Boeing situation is even more chilling because the firm has played Russian roulette with the safety of passengers who place their lives in its hands when they step on board one of its jets.
Yet one employee, in internal documents released last week, declared he wouldn’t put his family on the 737 Max and another described it as being ‘designed by clowns’ who are ‘supervised by monkeys’.
And the man who presided over this farrago, chief executive Dennis Muilenburg, is walking away with an estimated £64million in shares, pension benefits and share options.
Here in the UK we are perhaps not fully aware of the totemic status that Chicago-based Boeing occupies in American business and the hugely important role it plays in the US economy.
It is the country’s largest manufacturing exporter, the second largest defence contractor and one of the top private employers. A scandal at Boeing tarnishes the reputation of corporate America around the globe.
It is already threatening to become a major embarrassment for Donald Trump, who has used Boeing sites as the stage for major announcements, as he ramps up for the presidential election in the autumn.
Boeing does not look to be on the brink and, despite a fall in its shares, it still has a market value of $186 billion.
But the crisis is already reckoned to have cost it $7billion and the total bill could come to much more.
Its 737 Max planes, dubbed ‘flying coffins’ by US politicians, have been grounded since March and it is not inconceivable Boeing could be forced to scrap the entire project as the price of regaining public trust.
There is already speculation the firm could be brought under Government control. Certainly, plenty in the markets would take the view it is too big to fail. Having to bail out Boeing would be a nightmare for Trump.
Boeing’s 737-7 Max airliner on display at Farnborough Airshow a year and a half ago
Boris Johnson, who wants to bring more jobs to the North of England to keep his new Red Wall voters onside, will also be watching developments closely.
The US firm has 2,500 staff here, none of whose jobs have so far been threatened by the 737 Max affair.
However, it could have an impact on further investment. Boeing had been hoping to open a second factory in Sheffield following the success of a facility it launched there in 2018. That is now on ice.
Travel companies and airlines in the UK and Ireland, including Ryanair and Tui, have been caught in the backlash.
Others, including BA, which had planes on order, may be hit. There could also be an impact on the forward order book of FTSE 100 engineer Rolls-Royce.
The Boeing fiasco could not come at a worse time.
The aviation industry is under assault from environmental campaigners, coupled with fears of terrorism and conflict following the downing of the Ukraine International Airlines plane by Iran last week.
Statistically there is more chance of being killed by a lightning strike than in a plane crash.
Yet the public’s faith in safe flying, the bedrock on which the whole industry depends, is now at risk – and all because of the rapacity and cynicism at Boeing.