Who doesn’t know Boeing? Even if you don’t, Boeing knows you. Almost half of the world’s flights are on their aircraft. And now it seems, the mega giant is finally done riding the high of its zenith. From their fatal crashes, quality problems, and the impact of COVID-19 on the airline industry, some might say this was a long time coming.
My full statement following @IAM751‘s vote to reject Boeing’s proposed contract: pic.twitter.com/9mQgiGdGA8
— Rep. Pramila Jayapal (@RepJayapal) October 24, 2024
As of right now, hours after Boeing reports a monumental $6.1 billion loss, their manufacturing remains halted due to a month-long strike, which began on September 13. For decades, Boeing had been the very definition of American industrial power, a symbol of technical prowess and reliability. But recent years have been unkind to this aviation behemoth, and now the question arises: is this the beginning of Boeing’s decline? To understand how the company reached this precarious position, we must examine the crises that have defined its last few years.
The 737 MAX Crisis
Boeing’s troubles can be traced back to one of the darkest chapters in its history—the 737 MAX crisis. In 2018 and 2019, two 737 MAX planes crashed within months of each other, killing 346 people and plunging the company into chaos. Investigations revealed that a software system, the Maneuvering Characteristics Augmentation System (MCAS), was partly responsible for the crashes. It was meant to make the new planes more fuel-efficient, but the system had flaws, and Boeing’s rush to compete with Airbus led to insufficient pilot training on this feature.
The result? Boeing’s reputation for safety, which had taken decades to build, crumbled in an instant. The 737 MAX was grounded worldwide, and Boeing faced billions in settlements, compensation claims, and legal battles. Worse yet, its bond with airlines and aviation authorities was severely damaged. While the 737 MAX was eventually re-certified and returned to service, the lingering distrust from this disaster remains a stain on Boeing’s name—another sign of Boeing’s potential decline.
COVID-19 and Its Aftermath
The airline industry was one of the hardest-hit sectors during the COVID-19 pandemic. With global travel nearly coming to a halt, airlines slashed orders for new planes, and Boeing’s production lines slowed to a crawl. As airlines canceled or deferred orders, Boeing’s cash flow dried up. The company struggled to adjust to the demand shock, and its dependence on the commercial aviation market made it particularly vulnerable.
The pandemic also exposed weaknesses in Boeing’s broader business strategy. While its rival Airbus diversified into smaller aircraft and a broader portfolio, Boeing remained heavily invested in larger planes, which became a liability as travel demand shifted toward smaller, more fuel-efficient jets. Post-COVID, the recovery has been slow, and Boeing’s revenues have yet to return to pre-pandemic levels. This ongoing financial instability is another factor contributing to the broader conversation about Boeing’s decline.
Quality Control Issues
In addition to the 737 MAX debacle and the economic shock from COVID-19, Boeing has faced persistent quality control problems that have tarnished its brand further. One of the most glaring examples is the ongoing production issues with its 787 Dreamliner. Airlines that had ordered the Dreamliner have faced multiple delays due to manufacturing defects, such as issues with the plane’s fuselage. Boeing had to halt deliveries several times, costing the company even more in lost revenue and customer trust.
These quality issues seem to be a symptom of a deeper problem. Critics argue that Boeing’s relentless focus on cost-cutting and shareholder value, which began after its 1997 merger with McDonnell Douglas, has compromised its engineering-driven culture. The drive to increase production speed and cut expenses led to shortcuts in quality control. These shortcuts have only worsened Boeing’s decline.
Labor Unrest
BREAKING: Striking Boeing workers have voted to reject the company’s latest offer.
64% voted down the deal.
33,000 workers in the @MachinistsUnion remain on strike.
— More Perfect Union (@MorePerfectUS) October 24, 2024
Adding to Boeing’s mounting struggles is the recent labor unrest that has paralyzed its production lines. On September 13, 2023, approximately 6,000 unionized workers at Spirit AeroSystems—one of Boeing’s largest suppliers—walked off the job. These workers are represented by the International Association of Machinists and Aerospace Workers (IAM), and they play a critical role in producing fuselages for Boeing’s 737 MAX, among other key parts. The strike has disrupted operations at several Boeing facilities, with ripple effects across its supply chain.
Boeing machinists reject latest proposal, and a bruising six-week strike continues
The key issues driving the strike revolve around wages, healthcare benefits, and job security. Workers have expressed frustration over stagnant wages that have failed to keep pace with inflation, along with rising healthcare costs that continue to erode their earnings. Boeing’s recent cost-cutting measures, including the outsourcing of production to lower-cost suppliers, have only exacerbated tensions. Employees fear further job cuts and a lack of long-term stability.
Boeing workers reject ‘best and final’ offer amid ongoing strike
A central sticking point in the negotiations has been Boeing’s push for changes to the company’s healthcare plans, which workers argue will significantly increase their out-of-pocket expenses. Employees also demand that Boeing address safety concerns in the workplace, citing increased pressure to speed up production despite known quality control issues. For workers, the company’s cost-cutting, driven by shareholder interests, has come at the cost of both safety and job satisfaction.
Failed Deals and Tense Negotiations
This isn’t the first time Boeing has faced labor unrest. The IAM has clashed with Boeing over several issues in the past, but this strike comes at a particularly sensitive time, given Boeing’s financial struggles and production delays. In the lead-up to the strike, the IAM and Boeing engaged in several rounds of negotiations. Two previous contract proposals were rejected by union members, reflecting deep dissatisfaction with the company’s offers.
Boeing is making a new offer to the union in hopes of ending a strike now in its second month
The first offer was rejected in late August, primarily because it failed to provide the wage increases that workers were seeking, despite record inflation. The company’s second offer, which included some adjustments to wages and healthcare, also failed to meet the workers’ demands, particularly around job security guarantees. After the second rejection, the IAM declared a strike, bringing production to a halt.
In late September, another round of negotiations collapsed, with both sides failing to come to an agreement on critical issues, particularly healthcare costs and pension benefits. The strike has now entered its second month, with no resolution in sight. Each day the strike continues, Boeing loses millions of dollars in potential revenue, deepening its financial woes.
Boeing’s Decline: A Perfect Storm?
This labor action couldn’t have come at a worse time for Boeing. The strike has already delayed the production of the 737 MAX, a crucial revenue stream for the company. With Boeing’s order book filled with backlogged requests from airlines trying to meet rising post-pandemic travel demand, any production delays risk not only hurting Boeing’s bottom line but also damaging its already strained relationships with airline customers.
The broader implications of the strike are also significant. It highlights the growing discontent within Boeing’s workforce, where many employees feel the company has prioritized profits and shareholders over the well-being of its workers. This tension is part of a larger trend in the U.S. labor market, where workers across various industries are pushing back against stagnant wages and deteriorating working conditions.
The Road Ahead
As the strike drags on, the pressure on Boeing to find a resolution mounts. Analysts warn that if Boeing fails to negotiate a fair deal with its workers soon, it could face even greater financial repercussions, further delaying its recovery. Workers remain firm in their demands, signaling that they are unwilling to back down without meaningful concessions from Boeing.
The stakes in these negotiations are incredibly high. Boeing must weigh the costs of prolonged labor disruption against the risks of alienating its workforce by holding out on critical issues. The outcome will be key to determining whether Boeing can pull itself out of this period of crisis—or whether the ongoing troubles signal the beginning of Boeing’s decline.