Is it good financially for an airline company when airlines don’t want to buy your planes because they don’t work? Views differ

The idea that this question is “thorny” to Boeing executives is a pure distillation of what’s gone wrong with the company over the last 25 years:

Less than four weeks after a hole blew open on a Boeing 737 Max 9 jet during a flight, company executives face a thorny question: Should they emphasize safety or financial performance?

The issue is looming as Boeing prepares to report its fourth-quarter earnings on Wednesday amid its most significant safety crisis in years. With the Jan. 5 incident on a Max 9 flight still under investigation, executives are grappling with how much to discuss quality control while also reassuring shareholders that the company is protecting their investment, according to two people with knowledge of the matter.

[…]

The subject has taken on new significance after news accounts, including a report in The New York Times, that Boeing workers opened and then reinstalled the panel, known as a door plug. The plug tore away from the Alaska plane shortly after takeoff. That revelation suggests that the incident — which terrified passengers and forced the pilots to make an emergency landing — may have been caused by lapses at a Boeing factory in Renton, Wash.

Some aviation experts and executives have long said that Boeing’s safety problems and its financial performance are intertwined. The company, these people say, has for many years put too much emphasis on increasing profits and enriching shareholders with dividends and share buybacks, and not enough on investing in engineering and safety.

To state the obvious, no matter how many people you fire and how much you squeeze subcontractors, if your planes keep crashing or have stuff fall of them midair it is not going to be good for shareholders! The idea that “protecting the investment” of shareholders always means cutting everything (except, naturally, executive compensation) rather than investing in your product and workforce has never made any sense.

As David Roth says, what’s maddening about McDonnell Douglas’s financial bullshit culture swallowing Boeing’s safety-and-engineering culture is that Boeing was the more successful and profitable company:

There’s a bit in Maureen Tkacik’s comprehensively damning 2019 feature about Boeing in The New Republic that I keep coming back to, both here and in general. The central tension of that story is about how, as a former Boeing physicist told Tkacik, “a long and proud ‘safety culture’ was rapidly being replaced… with ‘a culture of financial bullshit.'” The supplanting of that purpose—of any purpose, really, at just about any business in just about any industry you can think of—with the blank nihilism of financial capitalism’s profit-driven imperatives is familiar by now; management’s quest to see how much more cheaply an increasingly poor product can be sold at the same price and under the same name as what came before is, at bottom, the story of basically every industry or institution currently in decline or collapse.

If it was always foolish to expect the free market to make things better, it feels more fanciful by the day to imagine a future in which the cynics and sociopaths in charge of that market do anything but continue to make it worse; they’ve evinced no capacity for that, but also no interest in it. Whether this deterioration is the result of buccaneering libertarian delusion or just a bloodless calculation that concepts like “safety” and “quality” are more nice-to-have’s than need-to-have’s, it appears to be the only idea that any of these people have. As this slips further into abstraction—if those mishaps-at-altitude don’t really ding the stock price enough to bother any of the parties capable of doing something about them—the problem compounds and compounds. In the case of my industry, there is the sense that the business dipshits smashing up various institutions and lives simply care more about their divine right to smash things up than they do about anything else; something new can be built around the ruins they make, but the needless, ugly, colossal waste of it all is offensive all the same. Also none of us know how to make airplanes.

The erosion of Boeing’s former, engineer-driven culture and the rise of its ravening and reckless financial-capitalism one can be traced, in Tkacik’s story, in part to Boeing’s 1997 purchase of the failing aerospace company McDonnell Douglass. The merger was more or less the corporate equivalent of inviting a vampire to cross your threshold. The heedless, shortsighted cost-cutting and contingency of the smaller and more dysfunctional company took hold at the larger and more effective one; little by little, and then all at once, Boeing got to work on making its products worse—as much worse as they could be without tanking the stock price, and occasionally, tragically, even worse than that.

If Boeing executives remain conflicted over whether “ensuring that our planes are safe” should be their top priority I would recommend investing in AirBus stock.