Boeing Mismanagers Forfeit Your Pay and Resign: An Open Letter to Boeing CEO Dennis Muilenburg
April 26, 2019
Dennis A. Muilenburg
Chairman, President, and
Chief Executive Officer
The Boeing Company
100 North Riverside
Chicago, IL 60606
Dear Mr. Muilenburg:
On April 4, 2019 you somewhat belatedly released a statement that “We at Boeing are sorry for the lives lost in the recent 737 MAX accidents.” You added that a preliminary investigation made it “apparent that in both flights” the MCAS “activated in response to erroneous angle of attack information.”
Your acknowledgement of the problems with the 737 MAX somehow escaped inclusion in your messages to shareholders, the capital markets, and the Securities and Exchange Commission. It is now stunningly clear that your overly optimistic outlook on January 20, 2019 – after the Indonesian Lion Air crash – was misleading. Whatever the public learns, day after day about the troubles of your company, it is still far less than what Boeing knows will come out day by day, and not just about the deadly design of the 737 MAX.
Your narrow-body passenger aircraft – namely, the long series of 737’s that began in the nineteen sixties was past its prime. How long could Boeing avoid making the investment needed to produce a “clean-sheet” aircraft and, instead, in the words of Bloomberg Businessweek “push an aging design beyond its limits?” Answer: As long as Boeing could get away with it and keep necessary pilot training and other costs low for the airlines as a sales incentive.
To compete with the Airbus A320neo, Boeing equipped the 737 MAX with larger engines tilted more forward and upward on the wings than prior 737’s. Thus began the trail of criminal negligence that will implicate the company and its executives. The larger engines changed the center of gravity and the plane’s aerodynamics. Boeing management was on a fast track and ignored warnings by its own engineers, not to mention scores of other technical aerospace people outside the company.
The Maneuvering Characteristics Augmentation System (MCAS) software fix or patch with all its glitches and miscues is now a historic example of a grave failure of Boeing management. Yet, you insist the 737 MAX is still safe and some alteration of the MCAS and other pilot advisories will make the aircraft airworthy. Aircrafts should be stall-proof, not stall-prone. Trying to shift the burden onto the pilots for any vast numbers of failure modes beyond the software’s predictability is scurrilous. The Boeing 737 MAX must never be permitted to fly again – it has an inherent aerodynamic design defect. Sell your Boeing 737NG instead.
No matter your previous safety record of the 737 series, Boeing doesn’t get one, two, or more crashes that are preventable by adopting long-established aeronautical knowledge and practices. You are on the highest level of notice not to add to your already extraordinary record of criminally negligent decisions and inactions. Result – 346 innocent people lost their lives.
Boeing management’s behavior must be seen in the context of Boeing’s use of its earned capital. Did you use the $30 billion surplus from 2009 to 2017 to reinvest in R&D, in new narrow-body passenger aircraft? Or did you, instead, essentially burn this surplus with self-serving stock buybacks of $30 billion in that period? Boeing is one of the companies that MarketWatch labelled as “Five companies that spent lavishly on stock buybacks while pension funding lagged.”
Incredibly, your buybacks of $9.24 billion in 2017 comprised 109% of annual earnings. As you know, stock buybacks do not create any jobs. They improve the metrics for the executive compensation packages of top Boeing bosses.
To make your management recklessly worse, in December 2018 you arranged for your rubberstamp Board of Directors to approve $20 billion more in buybacks now placed on pause.
Then, after the Indonesian crash, came the second software-bomb that took away control from the pilots and brought down Ethiopian Airlines Flight 302 on March 10, taking the lives of 156 passengers and crew. At the time, you were way overdue with your new software allegedly addressing the avoidable risks associated with the notorious 737 MAX.
Don’t you see some inverted priorities here? Don’t you see how you should have invested in producing better aircraft? Instead, your top management was inebriated with the prospect of higher stock values, and higher profits by keeping your costs lower with that “aging design” of the Boeing 737s. You guessed wrong – big time for your passengers as well as for your company.
Boeing is in additional trouble that reflects poor management. On March 22, 2019, the Washington Post reported that NASA’s Administrator, Jim Bridenstine said “the agency is considering sidelining the massive rocket Boeing is building because of how far behind schedule it is.”
And now, the agency is about to announce another major delay in the high-profile spacecraft Boeing is building to fly astronauts to the International Space Station.
Then on April 21, 2019, the New York Times in a lengthy front-page story, based on “internal emails, corporate documents and federal records, as well as interviews with more than a dozen current and former employees,” reported that your South Carolina factory, which produces the 787 Dreamliner, “has been plagued by shoddy production and weak oversight that have threatened to compromise safety.”
It is not as if you are receiving anything but top dollar payments for these military (the Air Force tanker) and government contracts. You overpay yourself at over $23 million in 2018, which comes to about $12,000 an hour!
In the midst of these accusations, whistleblower lawsuits, alleged retaliations by management, the Times reports your pace of production “has quickened” and that you are eliminating “about a hundred quality control positions in North Charleston [South Carolina].” Why?
Big corporations are run like top-down dictatorships where the hired hands determine their own pay and strip their shareholder owners of necessary powers of governance. Your Board of Directors should disclose what you told them about the 737 MAX and when they knew it.
Already, corporate crime specialists are making the case for you and other top Boeing managers, having refused to listen to the warnings of your conscientious engineers, regarding the redesign of the 737 MAX, to face criminal prosecution. Note BP pleading guilty in the Deepwater Horizon oil spill, to eleven counts of manslaughter in 2013.
Glass Lewis urges removal of Boeing audit committee head Lawrence Kellner for “failing to foresee safety risks with the 737 MAX aircraft,” reported the Financial Times, on April 16, 2019.
Consider, in addition, the statement of two Harvard scholars—Leonard J. Marcus and Eric J. McNulty, (authors of the forthcoming book, You’re It: Crisis, Change, and How to Lead When it Matters Most).
“Of course, if Boeing did not act in good faith in deploying the 737 Max and the Justice Department’s investigation discovers Boeing cut corners or attempted to avoid proper regulatory reviews of the modifications to the aircraft, Muilenburg and any other executives involved should resign immediately. Too many families, indeed communities, depend on the continued viability of Boeing.”
These preconditions have already been disclosed and are evidentially based. Your mismanagement is replete with documentation. Management was criminally negligent, 346 lives of passengers and crew were lost. You and your team should forfeit your compensation and should resign forthwith.
All concerned with aviation safety should have your public response.