Boeing and the six stumbling blocks

Aircraft manufacturer Boeing has announced that it will cut 10 per cent of its global workforce over the next few months – that's 17,000 jobs. The reduction is intended to help overcome financial problems.

But how did the world's largest aircraft manufacturer end up in such a low place? It is a combination of business mistakes, safety issues and external factors. Travelnews lists the main reasons that have led to Boeing's current situation.

1. Problems with the 737 MAX model

The primary factor behind Boeing's crisis is the controversy surrounding the 737 MAX model. Developed as the successor to the highly successful 737 series, the 737 MAX was designed to increase competition with Airbus, particularly with its A320neo. However, following two tragic crashes involving 737 MAX aircraft—in Indonesia in 2018 and Ethiopia in 2019—the model was grounded worldwide.

Both crashes were caused by problems with the so-called MCAS (Maneuvering Characteristics Augmentation System), an automatic stabilisation system designed to prevent the aircraft from entering dangerous flight attitudes. It turned out that Boeing had not tested this system sufficiently, and pilots were not sufficiently trained to react to system malfunction.

Furthermore, it came to light that Boeing, in an effort to keep development costs low and get to market faster than Airbus, had taken shortcuts in the certification and safety testing of the aircraft.

The grounding of the 737 MAX lasted over 20 months, resulting not only in significant financial losses but also in a massive loss of trust in the Boeing brand.

2. Flawed internal culture and safety standards

The 737 MAX crisis revealed profound problems within Boeing's corporate culture: Boeing was under great pressure to beat the Airbus A320neo. As a result, it seemed that the priority of reducing costs and meeting deadlines was more important than the safety and reliability of the products. This led to a rushed development of the 737 MAX and a lack of comprehensive training for pilots and technical personnel. Reports showed that employees and engineers at Boeing felt enormous pressure to complete projects quickly, sometimes even disregarding safety concerns.

3. Financial losses and rising costs

In addition to the direct costs of grounding the 737 MAX such as compensation to airlines, production halts, and legal fees – Boeing faced massive losses from a sharp drop in sales and new orders, alongside significant reputational damage. Customers such as airlines and leasing companies lost some of their trust in Boeing and withdrew or postponed orders. At the same time, Boeing was confronted with billions in compensation payments. The development costs for new projects and the retrofitting of the 737 MAX also rose significantly.

4. Covid-19 pandemic

The Covid-19 pandemic further exacerbated the situation for Boeing. During the pandemic, global air traffic collapsed dramatically and airlines faced an existential crisis. As a result, many customers cancelled or postponed their orders, and aircraft manufacturers such as Boeing and Airbus saw their order books shrink dramatically. This was particularly disastrous for the passenger aircraft business, as many airlines reduced the size of their fleets and no longer needed new aircraft for the time being.

5. Competition with Airbus

Boeing was and continues to be in fierce competition with Airbus, its biggest rival. While Boeing had to deal with the problems of the 737 MAX and the effects of the pandemic, Airbus was able to continue gaining market share in certain segments (such as the A320neo family). Airbus benefited from Boeing's loss of confidence, as many airlines increasingly turned to Airbus.

6. Supply chain and production problems

In addition to Boeing's internal problems, external factors such as interrupted supply chains, production difficulties and bottlenecks at suppliers led to further delays and cost increases. For example, there were quality problems in the production of the 787 Dreamliner long-haul aircraft, which led to further production stops and delivery delays.

Conclusion

Boeing is in the throes of a deep crisis caused by a combination of technical failures, an uncertain corporate culture, financial pressure, strong competition and external shocks such as the Covid-19 pandemic.

Facing multiple crises, Boeing has been forced to take drastic measures, including mass layoffs and restructuring. The company has reduced production capacity, closed or downsized several plants, and implemented changes to its management structure. These efforts aim to improve corporate culture and raise safety standards.