Boeing, America’s largest civilian and military aircraft manufacturer, is in full-blown crisis mode. 2023 ended with airlines looking for loose bolts in 737 MAX rudder control systems; then, on January 5th, a cabin panel on an Alaska Airlines 737 MAX blew out mid-flight, and more recently a 747 caught fire over Miami with a softball size hole above the plane’s engine.
That’s on top of at least two airlines finding other issues after inspecting their MAX purchases.
So, it’s no surprise everybody is jumping on Boeing. The stock price has crashed, the media coverage is brutal, and the FAA is grounding planes left and right for safety checks. Politico reported earlier this week that lawmakers and other stakeholders are grilling the company over its continued MAX challenges, correctly tying current challenges to the 2019 and 2020 crashes that killed hundreds of people and grounded the planes worldwide.
It’s easy to think that Boeing can’t recover from yet another crisis that almost killed passengers. But observers and stakeholders can expect Boeing will be just fine in the long-run. Here’s why.
Right or wrong, statistically, major brands beat major crises all the time. What can seem like a company-ending disaster at the time often fades into the rear-view mirror as the public moves on, regulators see the changes they want, and investors are satisfied that risk down and reward is up.
For example, Boeing’s top business rival, Airbus, paid the largest bribery fine in world history in 2020 – a hefty four billion dollars – after it was busted distributing hundreds of millions of dollars to global intermediaries in order to secure civil and military sales contracts. The timing couldn’t have been worse – Airbus had just shuttered its prized A380 program in 2019 after sinking tens of billions into development costs they couldn’t recoup. Yet, by 2023, the company was reporting a record number of orders with a massive delivery backlog because of the spike in demand following the COVID-19 pandemic.
In 2010, Congress hauled in Toyota CEO Akio Toyoda to answer for the “sticky” pedal crises that led to dozens of deaths. Toyota eventually paid a $1.2 billion fine for covering up the safety defects, but consumers haven’t exactly punished the company. It has held the title of world’s largest automaker for 3 straight years.
And Boeing itself is no stranger to crises. The fines, settlements, and lost business stemming from 2019/2020 MAX crashes cost the company an estimated $20 billion. The hemorrhaging continued as COVID-19 imploded the industry in 2020, leading to a $12 billion loss on the year. And then there’s the KC-46 USAF refueling tanker boondoggle, which has been a $7 billion drag for over a decade.
But despite all these headwinds, Boeing reported record orders in 2023 and the most deliveries since the MAX crisis. And the KC-46 appears to be on its way to a new contract with the Air Force after a number of technological improvements. Just like with Airbus and Toyota, inertia will keep a core of business going. And the fact that the company survived the deadly MAX crashes plus the COVID-19 pandemic means the company’s overall brand trust is likely to remain strong with key stakeholders.
The other reason Boeing will get back to cruising altitude again is that it has the resources and experience to effectively manage crises like the recent incidents.
A rookie in navigating crises might have made the tone-deaf argument that the Alaska Airlines incident was only one door and a few bolts out of hundreds or thousands the company has installed. That may be accurate, but it would have made the situation worse with lives at stake and regulators making clear they want accountability.
Here’s how Boeing is using standard crisis communications tactics to ensure long-term survival.
- Acknowledge the problem. When a MAX customer found a missing bolt in the rudder control system, Boeing urged all operators of the plane to conduct their own inspections for missing and/or loose bolts.
- Take prompt actions. Boeing immediately implemented changes after the door incident, such as more inspections of both itself and the door supplier and giving airline customers more access to planes as they are made. These are changes that will increase trust with all its stakeholders.
- Develop and announce concrete next steps. In addition to the enhanced inspections, Boeing tabbed Retired Navy Admiral Kirkland Donald to lead an independent review of the company’s quality control systems.
- Share relevant data and good news if possible. Investigations will continue to unfold, but 11 days after the Alaska Airlines incident, Boeing did announce a new deal to supply India’s Akasa Air with 150 new MAX airplanes. That’s a huge way of signaling to investors and other stakeholders that buyers have not been completely scared off by the crises.
Short-term pain, long-term survival
The good news doesn’t mean the immediate future is pretty. Investors will remain skittish with each negative headline until the MAX can establish a satisfactory track record. More importantly, stakeholders will carefully watch earnings reports – the 2023 orders and deliveries numbers were a good sign, but the previous year’s reported revenue of $66 billion was far below the 2018 peak of $101 billion. Additionally, in a highly regulated industry like air travel, every error will be heavily scrutinized by all stakeholders.
However, as Toyota, Airbus, and even Boeing itself have shown, even the worst of crises can eventually become artifacts of the past, slowly getting smaller in the rear-view mirror.
Dustin Siggins originally published a version of this piece with The Messenger.