A year ago marked a significant downturn in Boeing's fortunes, as their circumstances deteriorated further.
As United Airlines Flight 345 ascended to 16,000 feet from its takeoff in Portland, Oregon, an emergency exit door exploded near the back of the plane, creating a massive gap in the cabin. Personal belongings and garments belonging to the passengers were propelled out into the night sky. Emergency oxygen masks deployed, and the strong wind force moved nearby seats closer to the opening.
Luckily, this incident resulted in only minor injuries, as it involved several vacant seats. The flight was safely brought down to the ground by the crew. However, the incident had the potential to be much more serious - even potentially leading to a catastrophic crash.
The disaster has added to Boeing's woes. The company has been plagued by a series of setbacks, from embarrassing mishaps to tragic incidents. Many of these problems have continued until 2025 and beyond.
The issues culminated in another tragic accident involving a Boeing plane in South Korea, on December 29, which caused the death of 179 passengers. The cause of the crash of the 15-year-old Boeing airliner operated by Korean budget airline Jeju Air is still under investigation. While it is uncertain if Boeing will be held responsible, they have faced criticism for their role in the tragedy.
However, the majority of the problems facing Boeing over the past year have been self-inflicted.
Interestingly, 2024 marked the sixth consecutive year of severe challenges for the once proud and now controversially-targeted company. The year began with the 24-month grounding of its best-selling aircraft, the 737 Max, following two fatal crashes in late 2018 and early 2019 that claimed 346 lives.
Despite this challenging outlook before the Alaska Air incident, the company had experienced a promising run. It had recorded its best-ever monthly sales in December 2023, concluding its best sales year since 2018. The company was on the brink of obtaining Federal Aviation Administration approval for two new models, the 737 Max 7 and Max 10, with airlines eager to receive their orders. Deliveries of the next-generation widebody, the 777X, were expected to soon follow. Production rates were climbing, and the company seemed to be on the verge of returning to profitability for the first time since 2018.
However, the year ahead looks difficult for the company as it faces uncertainty, losses, and potential downgrades in its credit rating. The FBI may also consider passengers on the flight as crime victims. The company's stock declined by about a third in 2024, following its closing down by more than 2% after the South Korean crash. Its previous CEO and other top executives were removed from their positions, and the company has been inundated with a series of unfavorable headlines, raising serious questions about its ability to address its safety and quality problems.
After the Alaska Air incident, the National Transportation Safety Board discovered that the plane had left the Boeing factory without the necessary four bolts to secure the emergency door plug. This led to numerous federal investigations, including those by the NTSB, Congress, the FAA, and the Department of Justice. The FBI also notified the passengers that they could be considered crime victims, and increased oversight of Boeing by the FAA was implemented, such as limiting the number of planes it could produce.
Around this time, Boeing faced several other issues.
Revisiting old mistakes
The Alaska Air incident prompted a new legal case against Boeing, as the company faced renewed prosecution in a case it had settled three years earlier. In July, Boeing agreed to plead guilty to federal charges of deceiving the FAA during the initial certification process for the 737 Max. The company was ordered to pay up to $487 million in fines, double the amount it had already agreed to pay under a 2021 deferred prosecution agreement.
However, in October, a federal judge rejected the plea due to doubts about the selection of a government-appointed monitor, leaving the ultimate punishment uncertain.
Space flight delays
In June, Boeing managed to launch a crewed mission with the Starliner spacecraft, carrying NASA astronauts Butch Wilmore and Suni Williams to the International Space Station. This was a significant achievement after years of development and test flight problems that had left it far behind competitive rival SpaceX.
However, the success was short-lived. Soon after the Starliner's arrival, NASA revealed that gas leaks and engine issues meant it was not safe to return the two astronauts to Earth, as originally planned. The Starliner eventually returned to Earth without passengers, and Wilmore and Williams are still waiting for a ride home on a SpaceX Dragon spacecraft, due in early 2025. It is unclear when Boeing's Starliner will be able to carry astronauts again.
Strike's impact
In September, 33,000 members of the International Association of Machinists went on strike, effectively stopping the production of the 737 Max and the company's freighter aircraft. Union members had voted almost unanimously to reject a tentative agreement that had been reached between the company and union leadership just over a week earlier.
Many union members were still furious about the demise of a conventional retirement plan decade prior, and they continued their strike for close to two months. They turned down a subsequent proposition before ultimately endorsing a third proposition that granted them an immediate 13% increase and subsequent increases of 9% for the next two years, followed by another 7% in the fourth and final year of the contract. Overall, this led to a 43% boost in hourly income over the contract's lifespan.
Beyond the expense of the new labor agreement, the work stoppage was the most expensive American strike in the 21st century, costing the company, its workers, and its suppliers over $11.5 billion, according to Anderson Economic Group, a Michigan research firm proficient in assessing the cost of work stoppages. Expert analysts. It took the company approximately a month to restart manufacturing once the strike concluded.
During the strike, the company declared it would need to trim 10% of its global workforce of 171,000 employees as part of a cost-saving measure to mitigate future losses.
Mounting deficits
In October, the company announced one of its worst financial quarters in years, with its core operating loss skyrocketing to $6 billion in the third quarter.
It is projected to record its largest annual loss since 2020, when it was grappling with both the Max grounding and the Covid-19 pandemic, which resulted in significant losses across the global airline sector.
Quarterly losses were not solely attributed to the strike, which only affected the last two weeks of the period. The loss included a $3 billion pre-tax charge for further delays in the 777X program.
Since the company did not restart the production of the 737 Max or freighters until early December, the fourth quarter is guaranteed to result in another massive loss.
Since early 2019, the company has incurred losses totaling $39.3 billion and has reported losses in nearly every quarter since then.
Jeju Air accident
Boeing's year came to an unfortunate end. The landing gear of the Jeju Air plane appeared to fail as it attempted to land. There were also reports of a bird strike, causing the plane's pilots to issue a distress call as it approached the airport in Muan, South Korea.
The plane, a 737-800, has an outstanding safety record, unlike its successor 737 Max model.
Data from Boeing indicates that the 737-800 has one of the lowest rates of fatal accidents in the industry when compared to the number of flights it has flown. A 15-year-old plane, like the one that crashed on Sunday, is unlikely to encounter issues resulting from design flaws or production issues attributed to Boeing. However, it is too early to determine why the Jeju Air plane crashed.
The Alaska Air incident could have potentially led to a catastrophic crash if it hadn't involved several vacant seats. This incident, along with other setbacks and tragic incidents, has negatively impacted Boeing's business, resulting in self-inflicted challenges and a declining stock price.
In order to address its safety and quality problems, Boeing has faced numerous federal investigations, increased oversight, and potential downgrades in its credit rating, following the discovery of missing bolts on the emergency door plug of the Alaska Air plane. Additionally, the company has been facing legal issues and work stoppages, further affecting its financial performance.
