The Unraveling of Boeing | Landing the Plane | 5

Summary

Business Wars: The Unraveling of Boeing | Landing the Plane | Episode 5

Business Wars delves deep into the tumultuous journey of Boeing in the 2020s, exploring how a once-revered aviation giant spiraled into a crisis of safety, culture, and financial instability. Hosted by David Brown, this episode features compelling interviews with Ed Pearson, a former Boeing senior manager and whistleblower, and Sharon Turlep, an aerospace reporter for the Wall Street Journal. Their insights shed light on the internal failings and external pressures that have crippled Boeing’s standing in the aerospace industry.

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1. The Downfall Begins: Flawed Systems and Fatal Crashes

By the end of the 2010s, Boeing found itself in the midst of a severe crisis. A dysfunctional computer system in the 737 Max led to two catastrophic crashes, resulting in 346 fatalities. These tragedies ignited federal investigations that unearthed a deteriorating company culture, revealing Boeing’s shift in priority from safety to shareholder interests. The following year only exacerbated the situation with additional incidents, including a plane door failure and strikes by factory workers, highlighting the pervasive turmoil within the company.

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2. Inside Boeing: Ed Pearson’s Whistleblower Journey

Ed Pearson, a former senior manager at Boeing who worked on the 737 Max project, provides an insider’s perspective on the unfolding crisis. Joining Boeing in 2015, Pearson managed two critical teams responsible for planning and troubleshooting production issues. By 2018, the immense pressure to outperform Airbus’s A321neo led to overworked teams and compromised safety standards.

Quote:

“I was hesitant about putting my family on a Boeing plane for the first time in my life.”
(10:19) – Ed Pearson

Pearson recounts how the company’s aggressive push to accelerate production resulted in communication breakdowns and a toxic work environment. He vividly describes a pivotal moment when he confronted a senior general manager about his safety concerns, only to be dismissed without any meaningful action.

Quote:

“We are taking really unnecessary chances and risking the safety of the public.”
(10:19) – Ed Pearson

Despite his warnings, Pearson’s concerns were largely ignored, culminating in the tragic Lion Air crash shortly after his resignation. This event underscored the severe implications of Boeing’s compromised safety protocols.

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3. Technical Failures: Beyond the MCAS Controversy

While the MCAS (Maneuvering Characteristics Augmentation System) received widespread attention for its role in the crashes, Pearson reveals deeper technical flaws within Boeing’s aircraft. He highlights critical issues with the Electrical Wiring Interconnect System (EWI), which led to faulty data that compromised the MCAS functionality.

Quote:

“Both of those airplanes had electrical defects. It's called Electrical Wiring Interconnect System, or EWI, which is like the electrical infrastructure of the plane.”
(14:42) – Ed Pearson

Pearson presents evidence from recent investigations, including production records that indicate persistent electrical installation issues and FAA findings that validated whistleblower claims of defective wiring harnesses. These revelations point to systemic manufacturing defects that went undetected and unaddressed, further endangering passengers and crew.

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4. Leadership Failure and Cultural Decay at Boeing

The core of Boeing’s downfall lies in its leadership and corporate culture. Pearson emphasizes that the pressure to meet production targets emanated directly from Boeing’s headquarters, prioritizing rapid output over rigorous safety standards.

Quote:

“The pressure was very clearly coming from headquarters... they were focusing on how many planes they're going to make.”
(09:24) – Ed Pearson

Under the leadership of CEO Kelly Ortberg, who took over in August 2024, Boeing has acknowledged the need for a profound cultural shift. Ortberg has publicly committed to transforming Boeing’s internal dynamics, emphasizing accountability and prioritizing safety over speed and profits.

Quote:

“We need to just focus on the job and do it right the first time.”
(35:58) – Sharon Turlep

Sharon Turlep notes that many current and former Boeing employees agree that the company culture must fundamentally change to restore trust and ensure safety. Suggestions range from returning control to engineers, implementing standardized quality checks, to slowing down production to focus on excellence.

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5. Financial Struggles and Production Backlogs

Boeing’s financial health has been severely impacted, with the company incurring billions in losses and accumulating a staggering $500 billion backlog by October 2024. These backlogs are a consequence of production delays caused by strikes, the fallout from the MAX grounding, and a surge in demand post-pandemic.

Sharon Turlep explains that the backlog is exacerbated by Airbus’s own production bottlenecks and labor shortages, creating a duopoly where airlines have limited options, but both major players are struggling to meet demand.

Quote:

“They are losing billions of dollars. They haven't turned a Profit.”
(30:14) – Sharon Turlep

The recent Alaska Airlines incident, where a door blew off a 737 Max 9 plane, further tarnished Boeing’s reputation. Pearson criticizes Boeing’s response, highlighting the removal of essential quality control inspections in a bid to ramp up production, which he asserts compromises safety.

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6. The Road to Recovery: What Needs to Change

Rebuilding Boeing’s reputation and ensuring long-term success demands comprehensive reforms. Pearson advocates for legal accountability to hold responsible individuals accountable, while also emphasizing the need for enhanced leadership within regulatory bodies like the FAA.

Quote:

“There needs to be legal accountability, because until individuals are held accountable, they'll just keep doing it.”
(26:19) – Ed Pearson

Ortberg’s strategy focuses on refining production processes, increasing training, and reinstating stringent quality inspections. However, recovery is uncertain, and industry observers remain skeptical about Boeing’s ability to return to its former glory amidst ongoing challenges.

Sharon Turlep draws a parallel to the automotive industry, noting that overcoming such deep-seated issues can take decades, but Boeing’s essential role in global aviation provides a foundation for potential resurgence.

Quote:

“Somebody else can't just come in and do it.”
(41:29) – Sharon Turlep

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7. Conclusion: A Cautionary Tale for the Aerospace Industry

Business Wars paints a vivid picture of Boeing’s struggle to navigate through a maze of safety lapses, cultural decay, and financial woes. The insights from Ed Pearson and Sharon Turlep highlight the complexities of restoring trust in a company synonymous with aviation excellence. The episode serves as a cautionary tale about the perils of prioritizing profit over safety and the critical importance of fostering a transparent and accountable corporate culture.

As Boeing grapples with its internal and external challenges, the aerospace industry watches closely to see if the titan can truly land its plane and reclaim its position as a leader in aviation.

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Notable Quotes:

• Ed Pearson: “I was hesitant about putting my family on a Boeing plane for the first time in my life.” (10:19)

• Ed Pearson: “We are taking really unnecessary chances and risking the safety of the public.” (10:19)

• Ed Pearson: “Both of those airplanes had electrical defects. It's called Electrical Wiring Interconnect System...” (14:42)

• Sharon Turlep: “We need to just focus on the job and do it right the first time.” (35:58)

• Sharon Turlep: “They are losing billions of dollars. They haven't turned a Profit.” (30:14)

• Ed Pearson: “There needs to be legal accountability, because until individuals are held accountable, they'll just keep doing it.” (26:19)

• Sharon Turlep: “Somebody else can't just come in and do it.” (41:29)

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Business Wars continues to explore the intricate battles within the business world, offering listeners an unfiltered lens into the struggles and triumphs that shape our economic landscape.

Transcript

[David Brown]

Wondery subscribers can binge all four episodes of Business the Unraveling of Boeing early and ad free right now. Join Wondery plus in the Wondery app or on Apple Podcasts. I'm David Brown and this is Business Wars. By the end of the 2000 and tens, Boeing was in a tailspin. A flawed computer system in their new 737 Max plane caused not one but two fatal crashes. 346 people died. The tragedy spurred federal investigations that revealed a problematic company culture that was years in the making. It proved that Boeing had shifted its focus from safety to shareholders. 2024 wasn't much better for the company. A door blew off an Alaska Airlines 737 Max 9 plane. Factory workers went on strike, and two astronauts got stranded by the Boeing Starliner spacecraft. You could say the aerospace industry is experiencing some heavy turbulence right now. We're speaking with journalist Sharon Turlep to hear more about what the future could hold. She covers Boeing and global aerospace for the Wal Street Journal. Her recent reporting shines a light on how current and former Boeing employees see a way forward following the corroded company culture and unsafe manufacturing strategies. But first, we're speaking with Ed Pearson. In 2015, Ed was a senior manager at Boeing working on the 737 Max project. By 2018, he says, he and his team were extremely overworked. Ed even recommended that leadership shut down production, saying that for the first time in his life, he was hesitant about putting his family on a Boeing plane. Business continued as usual, and ed resigned in August 2018. In the months that followed, Boeing 737 Max planes were responsible for two fatal crashes. Now Ed is a self identified whistleblower who has dedicated his life to aviation safety. He's also the executive director at the foundation for Aviation Safety and today he's sharing more from his time at Boeing and what needs to happen to create a safer aviation industry. All that's coming up. You know your team spends over half their time writing and we all know how that happens. One confusing email turns into 12 confused replies and a meeting to get all lined up again. Well, Grammarly is a trusted AI writing partner that saves your company from miscommunication and all the wasted time and money that goes with it. It what I love about Grammarly is that it doesn't just correct grammar, it helps you strike the right tone for your audience so you can improve both the substance and the style of your writing. And you know, four out of five professionals say Grammarly helps them get buy in and action through their Communication. Plus, it integrates seamlessly across 500,000 apps and websites. So there's no cutting, no pasting, no context switching. Join over 70,000 teams and 30 million people who trust Grammarly to get results on the first try. Go to Grammarly.com enterprise and learn more. Grammarly Enterprise Ready AI. When it comes to finding the best financial products, have you ever wished someone would do the heavy lifting for you? You know, take all that research off your plate? I sure have. And with NerdWallet's 2025 Best of Awards, well, that wish has just come true. The nerds already did the work for you, reviewing over 1,100 financial products like credit cards, savings accounts, and a whole lot more to bring you only the best of the best. You gotta check out the 2025 Best of Awards today at NerdWallet.com awards. Ed Pearson, welcome to Business Wars.

[Ed Pearson]

Hey, thanks for having me. I really appreciate the invitation, Dave.

[David Brown]

Ed, before joining Boeing, you had 30 years of service with the U.S. navy under your belt. What pulled you toward Boeing? How did you get involved over there?

[Ed Pearson]

Well, you know, I actually have family that worked at Boeing. My wife's dad worked at Boeing. He also got out of the Navy active duty and then went right into Boeing. And I've always thought highly of the company. You know, I live in the Seattle area, so you know about Boeing. And there's a lot of pride in the region. You know, I would equate it to kind of like if you imagine a small steel mill town where everybody knows somebody that works at the steel mill, and. And there's a lot of pride in what they do. And it's like that on kind of a large, grand scale.

[David Brown]

Well, what was your role with the 737 Max project? What part of the project did you oversee?

[Ed Pearson]

Well, I was a senior manager. I had two teams that I had responsibility for. And so really I had one team that was responsible for kind of planning how the build should work and another team that would kind of responsible when things went bad and what needed to get done. So I had a kind of a unique position and really professional individuals that I had a chance to work with. I was very proud to work with them.

[David Brown]

Yeah, yeah, it sounds like a real dynamic position since you're moving from what we want to see to what's actually happening and then trying to address those things in real time. You joined the Max team around, what, 2015, at a time when Boeing was really laser focused on outperforming the newest plane from its rival, Airbus. Could you say a little bit more about the goal of the 737 Max in terms of competing with Airbus.

[Ed Pearson]

So the 737 Max was the result of years of experience and analysis in trying to determine how the company could best compete against the A321neo. A lot of people, including myself, had hoped for a new plane, a brand new plane, but the decision was made to basically take these next generation model and try to improve upon it. And, you know, obviously there's been some real downsides to that decision. As we look back now, everything was rushed. The design and development was rushed, the certification and the production of the planes, all of it. And it's. And it's unfortunately still being rushed.

[David Brown]

Did you feel at the time, did you feel the pressure on. I'm wondering if you could say something more about the company culture at the time.

[Ed Pearson]

A lot of people ask about, you know, kind of my perspective on the culture. So again, I'm just one person. But I think that when I got to the factory, I just come out of the flight test organization and then I got to the factory and it's such a gigantic complex. It's so. It's such a big, gigantic, complicated site that, you know, people there been there 20 years are still learning. And so I came in that first year, it was just kind of how to get to meeting, you know, one, to meeting two without getting lost on the factory floor. And then.

[David Brown]

Incredible.

[Ed Pearson]

Yeah. But then in my second year, which would have been like 2016, 17, we started to see a lot of pressure as the Max plane was being beginning to be produced. And it was as that was ramping up that you were seeing signs of communication breakdowns happening. And then it just became really a chaotic mess in 2018.

[David Brown]

Really, really. When you say chaotic mess, could you feel it while you could feel it that chaotic?

[Ed Pearson]

Well, let me just give you an example. So in a factory, in a modern factory, they put a lot of effort in lean management, you know, try to be as efficient as you can with your resources. And we did it at the factory in Renton, Washington, where the 737 Max is made. And we had small teams that would come together. We had three shifts of people, you know, a day shift, a swing shift, and a graveyard shift. And you had thousands of people rolling in and out of the factory. And these small teams would work together that would meet and talk and, hey, this is what's wrong and we got to fix this and what happened last shift, et cetera. And then in 2018, a decision was made to cancel the small team meetings and have this one big giant meeting where you had, you know, over a hundred people. You had the first line managers all the way up to the, you know, to the head of the program. And it ended up becoming really a pressure cooker because people would stand up and say, hey, you know, my team is 100 jobs behind schedule. I need these parts, I need this, I need that. Tomorrow I'll be lucky If I'm only 200 jobs behind schedule. And this went on and it became this really uncomfortable and awkward leadership communication effort. And people were feeling berated and pressured. And what happens when people feel publicly humiliated and pressured? They stop talking. They stopped talking.

[David Brown]

You talk about this pressure from a meta standpoint, where was that pressure coming from? The sales office or from the very top? The fact that you'd be standing there and sort of having to call yourself out and face all of your co workers?

[Ed Pearson]

Yeah, the pressure was very clearly coming from headquarters. So at the time, Boeing's headquarters was in Chicago. Now it's in Arlington, Virginia, but the new CEO has moved back to Seattle. But at the time, it was clearly coming from the CEO all the way down the company. So all you saw in the CEO and the board of directors and all the senior executives were talking about is how many planes they're going to make. And all the discussion was, how many are we going to produce? You know, and how that affected our Wall street, you know, the stock, et cetera.

[David Brown]

You had an email exchange with your manager in June 2018 describing your warning bells from the 737 Max project. I think you even said something like, for the first time in my life, I'm sorry to say that I'm hesitant about putting my family on a Boeing airplane. What were you flagging in those emails? And by the way, where did that leave you with your manager?

[Ed Pearson]

Well, at that time, it was at kind of the peak of what I would consider just dysfunctional manufacturing and chaos. We would go to these meetings, these large meetings I was describing, and you just listen to people and it was just miscommunication after miscommunication. And actually that day I wrote that email was a Saturday, I believe. And I had gone into work on Saturday and, you know, managers don't get overtime, obviously. But I went in because I had some employees, a large number of my employees were working. And I went in to kind of just check on things, and I drove right past the main exit to the factory and I, when I realized where I was at, it was in Bellevue which was this next city up Route 405. And I realized, wow, I'm really tired. And I'm nowhere near as tired as the employees. Like, I'm getting a lot more rest than they are because they're being mandatory overtime. And, you know, what would happen is at the end of their shift, they'd go, you know, I still have these jobs to complete. Their managers will say, well, I'm going to designate you. You're going to have to stay late now for a couple hours. Can you imagine what chaos that plays on people's families, right, with their schedules, with their kids and picking them up to school? And, you know, and so I went back to my office, and it just came to a head in my mind that, like, oh, my God, we are. We are taking really unnecessary chances and risking the safety of the public. And people are so tired, they're fatigued. Every possible thing you can imagine was going wrong. And I'm like, I've got to express this. And so I jumped people in the chain. I wanted to go right to the senior person. Oh, yeah, I was very concerned.

[David Brown]

So what happened?

[Ed Pearson]

Well, we met myself and the senior general manager of the program, and before I even sat down, we kind of got in an argument. And I always respected this guy. He always seemed like he was really genuine. And as I'm standing there, before we sat down, he said, why are you here? And I said, well, I'm here because of what I said in my email. I'm really worried about the safety of these airplanes and the police also. I'm worried about them getting hurt as they're building it, because we had a bunch of safety incidents, occupational safety incidents, But I was primarily concerned about the safety of the planes. And he's like, well, Ed, you know, I can't really do anything about it. And I said, my opinion is you really need to shut down. And he said, we can't shut down. And that's when I said, well, look, I've seen operations in the military shut down for lesser concerns. And this was how the meeting started. Like, this was. And we sat down. After we kind of calmed down for a second, we sat down and he listened. And I did my best. I gave him example after example. I'm like, we're seeing these kinds of failures in our functional systems testing, like electrical and flight control testing, and the quality data was all messed up. And I lost a lot of respect for this man at this meeting in that hour, hour and a half, because clearly he had the authority. He could have just said, okay, we're stopping right now. Let's stop everything. Let's give everybody a chance to get, you know, get caught up on their rest and let's do this right.

[David Brown]

But instead, what did happen?

[Ed Pearson]

Well, the meeting ended. He asked me at the end of the meeting. He said, ed, you know, can you, you know, pay close attention and let me know in about, you know, a month? How's it going? I said, well, first of all, you shouldn't wait a month to figure out what's going on. It's bad right now. But I said I couldn't do it because I'm actually retiring. And I said I'd already made a decision to retire, so I won't be here in a month. But I want you to know this is really serious. And I share that information with my colleagues that I had the meeting with him and he promised that he was going to look at the quality data. I said, you really need to let the customers know if any planes have left this factory, if you find any, because I think there was plenty of evidence that we had a lot of manufacturing defects going on, a wide range of stuff. And I expected him to do that and look at the information and talk to the engineering and quality people. And as I understand, really nothing happened. And I retired. And then a month later, the Lion Air crash occurred.

[David Brown]

I have to ask about McCast, which we focused on earlier in our series. This was the feature that would ultimately cause the plane to fail while in flight. And I know there were a lot of attempts to try to work around it, but it was later revealed that the team working on this feature knew it was flawed, but felt that they had to charge ahead regardless to make deadlines, to meet demands. Were you aware of that at the time?

[Ed Pearson]

No, actually, we didn't know anything about MCAS in the factory. But I want to say that everybody, the world has heard about the MCAS software and the lack of pilot training, both of which were major contributing factors to the crashes. But what people don't know, and what I've been spending the last five or six years trying to point out, is that the reason that those systems failed was because of electrical manufacturing defects in the airplanes. The angle of attack sensors fed faulty data to the computer where the MCAS software resided. And what I always wondered is, why did those sensors fail? And it's been about a five or six year kind of ongoing investigation. And over the last five or six years, what I've been able to piece together with the help of some other people is that both of Those airplanes had electrical defects. It's called Electrical Wiring Interconnect System, or ewis, which is like the electrical infrastructure of the plane. And as recently, just to give you an example, as recently as this summer, after I testified to the Senate in April, right after that, I received some documents and I hand delivered these to the NTSB on July 29th. And these documents that I have are actual production records for the Ethiopian plane to crash. These were the records, one of many production records that I know that are produced for every single plane. My team used to manage that, that record. They were the administrator for those. And so I knew they existed, but I had never seen them. So I get this file with like eight or nine of these records, and it clearly shows that while they were building that plane, they were having electrical installation issues. They had parts that were mislabeled, parts that were not working. And then the second set of documents that I found was the same week that the plane was being built in Renton, Washington. Up north at the Everett site, we have electrical center up there that builds a lot of the electrical components for the planes, like junction boxes and power panels and wiring harnesses and, you know, wire bundles. And these wire bundles are like a big spaghetti network of wires. You don't see this when you're on an airplane. Well, the same week that the plane was having difficulty being built in Renton, Washington, at the factory, FAA conducts an investigation, a whistleblower investigation, of two whistleblowers who had separately reported that this electrical center was basically making defective parts and they lost control, their quality control, and employees were being told they had one minute to do inspections on these complicated parts. FAA goes in again the same week that the Ethiopian plane is being built, goes in and validates and substantiates every single complaint that these employees made. And the third set of document is probably the most damning of all. And when I testified to the Senate committee, I mentioned during the committee that we've seen recent reports of max airplanes flying along straight and level and has an uncommanded role. And the pilots have to react to it. And the FAA and the Boeing have determined that it has to do with electrical wire bundle that was improperly installed. Well, I get a report sent to me, and it's a copy. When the Ethiopian plane was one month old, the plane was coming in to land and it had an uncommanded roll at 1,000ft, which is not good at any altitude, much less down low. Ethiopian Airlines sent a request to Boeing and said, hey, we just had this, you know, this incident and we're, you know, concerned about it. Can you help us troubleshoot? And Boeing gives them some basic troubleshooting guidance and then finally tells them, hey, send us the flight data recorder information. Boeing analyzes the data and comes back and says, we suspect that this is an intermittent electrical fault in the wiring in the EWIs. And that information was never passed. None of those three documents, those three sets of documents that I just mentioned to you, that all came out in the last six months that we've seen, none of those were shared with the accident investigators. And I know this because we're in touch with the accident investigators in Ethiopia.

[David Brown]

We have to take a quick break. Our guest is Ed Pearson, former Boeing senior manager and current head of the foundation for Aviation Safety. We're going to be talking about what's being done to improve air travel safety both at Boeing and beyond. Stay with us. You know, peak performance in business often starts with personal confidence. BlueChew is an online service that provides medication to help boost your performance and confidence in the bedroom. They offer the same active ingredients as well known prescriptions, but at a fraction of the cost and in a chewable form. The best part? It's all done online. That means no visits to the doctor's office, no awkward conversations, no waiting in line at the pharmacy. Just visit bluechew.com, consult with a licensed medical provider and if approved, receive your prescription within days. Bluechew wants you to have the confidence to perform at your best. So discover your [e-mail] we got a special deal for business wars listeners. You can try BlueChew free when you visit bluechew.com that's bluechew.com to get your first month free. Visit bluechew.com for more details and important safety information. What makes a leader? It's a tough question, but one thing's for sure. A true leader leads by example. And a true leader takes risks too. They plunge into life with determination. For those who lead by example and approach life with a palpable passion, there's the Range Rover Sport. Sophisticated refinement meets visceral power in the Range Rover Sport, a new dimension of sporting luxury. With their adaptive off road cruise control, you can monitor ground conditions and acclimate to the present terrain. Plus, adaptive dynamics reduces unwanted body movements to deliver smooth and composed handling. Build your Range Rover [e-mail] Visit landroverusa.com to configure your Range Rover Sport. Explore the Range Rover [e-mail] hey, welcome back to Business Wars. Ed Pearson is a former Boeing senior manager and the host of the podcast Warning Bells where he covers the latest in safety related news in the aviation industry. Ed, you've said you intentionally avoid flights on a 737 Max. I understand you've even walked off a plane when you found out it was it was a Max. Tell us about that plan.

[Ed Pearson]

Yes. Myself and members of our foundation and people that we interact with don't feel like these planes are safe. We're confident in saying that and we'll back it up. But what happened was I, you know, I fly regularly, my family flies regularly, I schedule myself on a non max plane. And I think this has happened. We hear about this all the time from people and they got switched at the last minute and I didn't know until I got on it. When I sat down, I looked and saw the emergency card and I was like, what am I going to do? So I immediately got up and I couldn't fly. I started to walk off the plane and the flight attendant was closing the front door and I said, excuse me, I need to get off. And she's doing her job. She's like, why are you getting off? And I said, well, I wasn't supposed to fly a Max. And she said, well, why not? What do you know about the Max? And I said, well, I unfortunately don't have time to tell you, but I just, just want you to know I don't think the plane's safe and I need to get off. And so I spent the night at the USO for the next flight.

[David Brown]

Wow. We're talking in early 2025. Even after all of the attention that this has received, you're still concerned about flying on a Max?

[Ed Pearson]

Absolutely. In fact, I tell my friends and my family not to do it. We've been collecting this information for the last couple years and it's just this stunning list of known defects. These are all considered unsafe conditions by the faa. And what's really startling about it is there's this whole program just like when your car, you know, you get a recall notice to come in and get your car serviced if there's something serious. They have a similar process than this in the, in the airline industry and it's called the continued Operational Safety program. And basically the FAA is supposed to work with the manufacturer to get any kind of defect fixed as soon as possible. And what we're seeing is the FAA has given Boeing like years in some cases to fix these problems. And these are known defects that are hazardous. And this is supposed to be a new plane that shouldn't have these kinds of problems.

[David Brown]

And in January 2024, Boeing made headlines again when the door blew off an Alaska Airlines flight. This was also a 737 Max plane. I'm curious, what is the key to fixing this? Where does it stop?

[Ed Pearson]

I, I do, I do have fears and concerns about the safety of that airplane. The company has exasperated the. They've removed thousands of quality control inspections on individual airplanes. This was testified to at the Alaska hearing, at the NTSB hearing in August. Last August, the company is so determined to increase their production that they have removed long standing inspections. And these are, you know, and during that testimony, the individual mentioned that the Ethiopian plane had 3,200 less inspections. So the problem here is that the talk is not translating to like, what you would think is appropriate actual steps. And so what you ask, what needs to happen? From my vantage point, it's a leadership issue all the way from the top of the company, from the board of directors all the way down to the floor. Even that frontline, brand new mechanic sees something that's not right. Needs to be, you know, courageous enough to speak up. Shouldn't have to be courageous. It should be normal business. You know, you get these different individuals at different very key positions that, that push the pressure down. And then you get these employees at the front lines who, they're human, they make mistakes, they're tired, they're fatigued, they need proper training. So when you ask the question like, what is it going to take? And it's a reasonable question, my response is going to take ongoing improvements in leadership at all levels.

[David Brown]

You're currently working with a foundation for aviation safety. Can you say a little bit more about that and what you're working on there?

[Ed Pearson]

I had a group of friends that I either served with in the military or I crossed paths with. And we realized that nobody's really shining a light and informing the public about these issues, right? You don't hear the Boeing company put out press releases and say, hey, we have another defect on the max, right? But the guy who really kind of spurred this on, his name is Paul Juroge and Paul is a Toronto native. He grew up in Kenya and he lost his three kids and his wife and his mother in law on the Ethiopian plain. And so. And we had him on a podcast a while back and he just expressed how he was devastated and he felt responsible because he bought the tickets and he just wasn't informed. He said, had I known that that plane had problems, I never would have put my family on it. But when we decided to put the foundation together, we realized that there was a large number of people that had reached out to us who said, hey, I was uninformed. I didn't know either that this stuff was happening. And so we've made it our mission to try to put a light on some of the stuff that people don't know about the commercial aviation industry. And we wanted to do it to help improve it. We're not trying to tear it down, but we want to be honest about it. And you have to be honest with these issues.

[David Brown]

Ed Blue sky this for me. I mean, I think a lot of people want to believe that things are going to get better. And you wouldn't be doing this if you didn't think it was possible, I would imagine. Do you see the solution? And does Boeing fly through this?

[Ed Pearson]

So a couple things need to happen. There needs to be legal accountability is what I'm speaking to. There needs to really be legal accountability, because until individuals are held accountable, they'll just keep doing it. Another thing is I believe in the Boeing employees. I believe in the FAA employees and DOT and all those agencies. I've worked with those people before. I know they're great people, but they need and deserve much greater leadership. And so these individuals who are still applying undue pressure on people need to go, they need to be weeded out because we need high, high quality planes that last 30 years. We don't need just to hit a Wall street estimate, you know, and I, I believe that this can be turned around. I really do. I am an alt optimist at heart, but I think it's going to take a lot of pressure on our government agencies to do a much, much better job in overseeing Boeing. And it's going to put pressure on individuals at all different levels that need to do the right thing. And either we're going to figure this out or we're going to have another crash.

[David Brown]

Ed Pearson is a former senior manager at Boeing and the executive director at the foundation for Aviation Safety. You can hear his podcast Warning Bells wherever you get your podcasts. Ed, thanks so much for joining us on Business Wars.

[Ed Pearson]

Hey, thanks for having me, David. I appreciate it.

[David Brown]

Coming up, Wall Street Journal aerospace reporter Sharon Turlep joins us to answer the billion dollar question. Can Boeing really bounce back? Back? Stay with us. You know, everyone's path to wellness is different. But one thing's for sure, hydration is key. And the best way to stay hydrated is with Liquid iv, powered by Liv Hydro Science. See, Liquid IV has an optimized ratio of electrolytes, essential vitamins and clinically tested nutrients that turn ordinary water into extraordinary hydration. So you can break the mold and own your ritual. Just one stick plus 16 ounces of water hydrates better than water alone. Look, we tried Liquid IV last year when one of my kids was feeling dehydrated after a game, poured a packet of the lemon lime powder into some bottled water. Not only was that gone and a flash apparently tasted great, but in minutes, completely refreshed and feeling 100%. Yeah. Since then, we keep it on hand and it's a great go to after a workout. So what's your ritual? Well, embrace it. With extraordinary hydration from liquid IV, you can get 20% off your first order of Liquid IV when you go to LiquidIV.com and use code BW at checkout. That's LiquidIV.com don't forget the code BW at checkout.

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[David Brown]

Hey, welcome back to business. Business Wars Boeing's bumpy ride is far from over. In 2024, a door blew off a plane, workers went on strike, and their Starliner craft left two astronauts stranded in space. Meanwhile, Boeing's biggest competition, Airbus, has run into production bottlenecks that are delaying deliveries until at least 2031. Between safety and supply chain issues across the board, the industry has a long way to go before it can get back to its glory days of the 1990s. To find out what this means for Boeing and air travel as a whole, we're speaking with Sharon Turlep, a reporter aerospace for the Wall Street Journal. She joins us now to discuss Boeing's next steps and what it's going to take for the aviation giant to land this plane. Sharon Terlip, welcome to Business Wars.

[Sharon Turlep]

Thanks for having me.

[David Brown]

Give us a snapshot of how Boeing's doing financially right now.

[Sharon Turlep]

Sure. I mean, Boeing financially is not doing well. They're in a lot of pain in that regard. They are losing billions of dollars. They haven't turned a Profit. And the CEO, Kelly Ortberg, who took over in August, he told employees that the key to turning around is ramping up production of the 737, its most important plane. And so they have yet to do that.

[David Brown]

Well, By October of 2024, Boeing had already racked up a backlog of orders totaling something like $500 billion. I mean, that's a number so high it's hard to even comprehend it for a lot of people. How did it get to this point?

[Sharon Turlep]

Yeah, I mean, it's a huge number and backlogs are a reality to start with because planes are incredibly expensive and they take a long time to build.

[David Brown]

A long time to build.

[Sharon Turlep]

Both of understatements. So. But you know, unlike a company that makes food or, or even really cars, they, they can't make a bunch of planes and hope somebody buys them. So the nature of the business is they, you know, they have to have orders and they have to have commitments from customers from airlines and lessors. So there are always going to be backlogs. But, but in this case, two things happened. There were big production snarls and stoppages, both from COVID and the grounding of the MAX planes. So that slowed down production and then demand travel demand for flyers picked up much more quickly than the industry expected. So on the heels of this production slowdown came a lot of demand. And those things combined to create this just really bloated backlog.

[David Brown]

Of course, the 737 Max wouldn't be what it is were it not for what Airbus was doing, its main competitor in this space. And apparently they're not doing that much better. I gather their waiting lists have been pushed out to 2031 for their planes. Give us an update where they're at.

[Sharon Turlep]

A lot of the things Boeing is struggling with, Airbus is struggling, it's just not quite as pronounced. But Airbus is struggling with two of the big things that have hampered Boeing and that is a problematic supply chain. So a supply chain that has really struggled to get back on its feet after the pandemic and that has really struggled to keep up. Difficulty finding enough labor to build the planes. And then additionally, because Boeing is having so much trouble, there's a lot of demand for Airbus planes as well. And Airbus also is dealing with this big increase in demand.

[David Brown]

Well, another hit for Boeing in October they had something like a weeks long worker strike. Right. That stopped a lot of production. How did the strike affect the company overall, from what you can tell?

[Sharon Turlep]

Yeah, I mean, despite the strike costs, they haven't said, and they, they will say likely how much the strike cost as far as the balance sheet. But it halted production and not just for the duration of the strike, which was a couple months, but it took many weeks to then restart production. And they still have not returned to the production levels that they were at before the strike. So shutting down an airplane factory is a really big deal and two plus lost months of production is, is quite detrimental.

[David Brown]

How do you think these backlogs are going to affect airlines and air travelers? I mean, do you have any sense of what this means in terms of pricing and availability of flights? How does that trickle down to travelers?

[Sharon Turlep]

Yeah, I mean, airline executives have said, you know, it makes scheduling more complicated, it makes flights less available. So certainly it is having an impact and there's a lot of frustration and you know, it affects travelers as far as, you know, what flights are available, the cost. So there really is a big trickle down effect of these production problems.

[David Brown]

You know, there are obviously only so many players in this aerospace manufacturing world and it seems like from the sound of it, they're all struggling one way or another, especially in commercial aviation. Do the airlines purchasing these planes have any other options or does it really kind of come down to a duopoly here?

[Sharon Turlep]

It really is a duopoly for these kinds of mass transit, big commercial airliners. I mean, the major airlines operate smaller planes if you think about Embraers, but that's an entirely different class, it's different routes. So they really can choose between Boeing and Airbus right now.

[David Brown]

Yeah, yeah. Well, now I know Boeing CEO Kelly Ortberg took the reins in August of 2024. Why does Boeing seem to think he's the best person to turn the company around, do you think?

[Sharon Turlep]

Kelly Ortberg, he's a well known executive, he comes from a very big supplier. He worked with Boeing, he knows the industry, he knows factory work, he knows engine. So he really checked a lot of boxes for Boeing. And also there were people they hoped would be candidates that wouldn't take the jobs. They had talked to Larry Culp, who is the CEO of GE Aerospace and who has a phenomenal reputation. So, you know, it's a job that's really hard and they needed somebody they could feel would do it. And it's a job that is daunting and not the easiest job to fill.

[David Brown]

Not the easiest job to fill. That's an understatement. It sounds to me. Yes, you know, I know Ortberg has emphasized the need for an improved company. I believe we have a clip from A CNBC interview from last fall. Let's listen. We're reevaluating the values in the company and we really need to embark on a culture change that is something more than just a poster on the wall. It's really going to guide how the company behaves day in, day out. More than a poster on the wall. What does it mean to have a kind of culture change that Ortberg envisions? Have you been able to sort of glimpse what he's specifically referring to there?

[Sharon Turlep]

Yeah, I mean, I think we. He spoke recently to employees at an all employee meeting and was pretty blunt. And he talked a lot about, you know, this. Boeing is a culture of blaming. He said, you know, we blame each other instead of taking responsibility. That needs to stop. We need to just focus on the job. He talked about all the mistakes that are made and all the, you know, enormous time and resources Boeing spends fixing things that it didn't get right the first time. His goal is to get a lot of the personality issues and a lot of the accountability issues out of the way and focus on what the company needs to do and what each individual needs to do to do the job right and do it right the first time.

[David Brown]

Now, I know that you've spoken with a lot of current and former Boeing employees on what they thought could be done to turn the company around and also had a lot to say about this company culture aspects. You see him delivering on this pledge. What were they telling you?

[Sharon Turlep]

Yeah, I mean, a lot of them, you know, it's interesting because it. I think most people agree that the culture is the problem and is the thing that needs to be fixed and that the main thing that needs to be fixed is putting safety first over speed and profits. How to do that. I think people have, you know, just a wide range of views. Some people say you need to really come back to where the engineers are running things and running the company. Others, it's about slowing down. Others it's about the processes in place, whether it's standardized work or quality checks. And so I think there's a wide range of ideas of how to get there. And, you know, it's probably particularly because most of the factories were shut down for a couple months and he's only been there five months. It's way too soon to know whether it's happening. You.

[David Brown]

Yeah, yeah. We've talked a little bit about how Boeing is involved in the space race, but you've reported that Boeing is trying to get out. Why?

[Sharon Turlep]

Kelly Ortberg has talked about needing to really Focus Boeing and focus Boeing on the core things and the things that they're good at and the things that they do. Well, the time has passed for them to hold onto things for image reasons or emotional reasons, and they're really looking at getting to the core. And they've struggled with some of their space programs. So I think many people followed the ordeal of the astronauts who went to the International Space Station on the Starliner. NASA didn't feel confident returning them on the Starliner and instead is sending Elon Musk's SpaceX to retrieve them. So Boeing is considering, you know, do we, you know, does it make sense to be in the space business in this way? And then it remains to be seen whether they would find a buyer for those assets if they ultimately decide to sell them. But that's what they're looking at now.

[David Brown]

Based on your reporting, what are Boeing's next steps on this road to recovery?

[Sharon Turlep]

Yeah, I think they're really focused right now on getting commercial jet production back up and back up without glitches or problems or issues. So they've poured a lot of time and money into additional training. Things that sound kind of boring and pedestrian, but make a big difference. Simpler instructions for how to build the 787, new training protocols, more quality inspections of fuselages that are coming from a supplier that has. Has had a lot of problems. So they're laser focused on getting production back up, but getting it back up where they're not going to have problems. And I think that's the main thing. There's been some big executive departures, so one would have to imagine that Mr. Ortberg is working on filling in his executive team. And then we wrote a story where they're working on their Air Force One program, which is delayed for years and quite expensive. It's cost them billions of dollars, so trying to get that back on track.

[David Brown]

You know, it's one thing, though, to emerge as a survivor. It's quite another to reclaim past glory and perhaps its future and its prospects. Any new planes on the horizon, anything that sort of suggests that there will be blue skies for Boeing ahead?

[Sharon Turlep]

Well, new planes are most likely quite a long ways off. Kelly Ortberg, he said when he spoke to employees that it's not the time now, that they need to get their legs under them. They need to work out some things, and it's just not the time for a new plane program. And when they start down that path, it can be, you know, many years before you actually see even a prototype of something. So That's a ways off, you know, and in some ways, air travel, when you think about the glory days of Boeing, you know, in the 50s and the 60s, air travel itself was exciting. So I think just the nature of aerospace, a lot of the excitement has shifted to when you think of Blue Origin or SpaceX or some of these space companies or, you know, all these startups. And so the question is, can Boeing find something that really captures the imagination? It's probably not where their head is at right now. It's probably not the top priority. But do they get back to a point where they're doing new types of technologies and, you know, whether it's in sustainability or whether it's defense or space, where it's really, they come up with something new and exciting.

[David Brown]

Given all these changes in policies and procedures and personnel, is it your sense, based on your reporting, that Boeing can bounce back? I mean, I guess this is the multi billion dollar question. Literally.

[Sharon Turlep]

Yeah, it really is. And I think, you know, there's so much that people point to that say it's just, you know, irreversibly messed up and it's mired and it's best. You know, you hear that a lot. But at the same time, there aren't many companies that can say they provide something absolutely essential to their country, the world, the military, and they're only one of two companies in the world that can do it. So I mean, they certainly have that going for them that you can't just replace an aerospace giant. Somebody else can't just come in and do it. I mean, I used to cover the auto industry. It took decades for Toyota to come in and displace American automakers. So you just take that and multiply it by many factors. So they have this position and I think they really have that going for them.

[David Brown]

Sharon Turlep is a reporter for the Wall Street Journal covering the aerospace industry with a focus on Boeing. You can read her [e-mail] Sharon Turlip, thanks so much for joining us.

[Sharon Turlep]

Sure. Thank you.

[David Brown]

Coming up, TikTok faces off against the US government in our new series as we explore whether the social media giant is a legitimate national security threat or a political pawn in a new cold war. If you like business wars, you can binge all episodes early and ad free right now by joining Wondery plus in the Wondery app or on Apple podcasts. Prime members can listen ad free on Amazon Music. Before you go, tell us about yourself by filling out a short [e-mail] survey from Wondery this is episode 5 of the Unraveling of Boeing for Business Wars. I'm your host David Brown. Kelly Kyle produced this episode. Our producers are Tristan Donovan and Grant Rutter. Our audio engineers Sergio Enriquez. Fact checking by Gabrielle Jolay. Our Managing producer is Desi Blaylock. Our senior Managing producer is Callum Plews. Our senior producers are Emily Frost and Dave Schilling. Our Executive producer are Jenny Lauer, Beckman and Marshall Louie for wondering on January 5, 2024, an Alaska Airlines door plug tore away mid flight, leaving a gaping hole in the side of a plane that carried 171passengers. This heart stopping incident was just the latest in a string of crises surrounding the aviation manufacturing job giant Boeing. In the past decade, Boeing has been involved in a series of damning scandals and deadly crashes that have chipped away at its once sterling reputation. At the center of it all, the 737 Max, the latest season of Business wars explores how Boeing, once the gold standard of aviation engineering, descended into a nightmare of safety concerns and public mistrust. The decisions, denials and devastating consequences bringing the Titan to its knees. And what, if anything, can save the company's reputation now. Follow Business wars on the Wondery app or wherever you get your podcasts. You can binge business the Unraveling of Boeing early and ad free right now on Wondery plus.