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Boeing CEO faces heat from Senate panel

By HENG WEILI in New York | | Updated: 2024-06-19 10:25
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Boeing's CEO David Calhoun and chief engineer Howard McKenzie turn to face those who lost loved ones in fatal crashes as they testify before a Senate Homeland Security and Governmental Affairs Committee Investigations Subcommittee hearing on the safety culture at Boeing, on Capitol Hill in Washington, US, June 18, 2024. [Photo/Agencies]

CEO David Calhoun appeared before a Senate investigations subcommittee, chaired by Senator Richard Blumenthal, a Connecticut Democrat and Boeing critic.

He opened the hearing by recognizing the relatives of prior Boeing jet-crash victims and the family of a whistleblower, John Barnett, who died in March.

"This hearing is a moment of reckoning," the senator said. "It's about a company, a once iconic company, that somehow lost its way.

"Boeing needs to stop thinking about the next earnings call and start thinking about the next generation," Blumenthal said.

Calhoun's appearance was the first before Congress by a high-ranking Boeing official since a door plug blew out of a 737 MAX plane during an Alaska Airlines flight in January.

Before giving his prepared opening statement, Calhoun stood and faced the people in the audience who held poster-sized photos of some of the 346 people who died in crashes of Boeing MAX jets in 2018 and 2019. He heard shouts of "Shame" as he entered the hearing room.

"I apologize for the grief that we have caused," he said.

Senators asked Calhoun — who faced more than two hours of questioning — if Boeing retaliated against employees who reported concerns and if he had ever spoken with any whistleblowers. He replied that he hadn't but said he would.

Senator Josh Hawley, a Missouri Republican, repeatedly asked the chief executive about what he did to deserve his salary.

Calhoun, 67, who took over as CEO in 2020, has said he plans to retire at the end of the year. He had compensation of $32.8 million last year, a 45 percent increase over the $22.6 million he received the previous year.

"You are eliminating safety procedures. You are sticking it to your employees," Hawley said. "You are cutting back jobs because you're trying to squeeze every piece of profit you can out of this company."

Asked by Hawley why he had not resigned, among the CEO's replies were: "I'm proud of our safety record. And I am very proud of our Boeing people."

"You're proud of the safety record?" Hawley asked.

Calhoun said he was "proud of every action we've taken".

Hawley replied: "Frankly sir, I think it's a travesty that you're still in your job."

Before Calhoun arrived on Capitol Hill, the Senate panel released a 204-page report with new allegations from another whistleblower who said he worries that "nonconforming" parts — ones that could be defective or aren't properly documented — are going into 737 MAX jets.

Sam Mohawk, a quality assurance investigator at the 737-assembly plant near Seattle, claims Boeing hid evidence of the situation after the Federal Aviation Administration (FAA) informed the company a year ago that it would inspect the plant.

"Once Boeing received such a notice, it ordered the majority of the [nonconforming] parts that were being stored outside to be moved to another location," Mohawk said. "Approximately 80 percent of the parts were moved to avoid the watchful eyes of the FAA inspectors."

The parts, which included rudders, wing flaps and tail fins — all crucial in controlling a plane — were later moved back or lost, Mohawk said.

After the MAX jet crashes in 2018 in Indonesia and 2019 in Ethiopia, the FAA grounded the aircraft for more than a year and a half.

Mohawk told the Senate subcommittee that the number of unacceptable parts has jumped since production of the MAX resumed. He said the increase led supervisors to tell him and other workers to "cancel" records that indicated the parts were not suitable to be installed.

Boeing says it has slowed production, encouraged employees to report safety concerns, stopped assembly lines for a day to let workers talk about safety, and appointed a retired Navy admiral to lead a quality review. Late last month, it delivered an improvement plan ordered by the FAA.

In the past week, the FAA said it was investigating how falsely documented titanium parts got into Boeing's supply chain, and federal officials examined "substantial" damage to a Southwest Airlines 737 MAX after an unusual midflight control issue.

FAA Administrator Mike Whitaker said last week in testimony on Capitol Hill that the federal agency was partly responsible for the safety issues at Boeing, saying it had been "too hands off" in its oversight.

"Let me also acknowledge the FAA should have had much better visibility into what was happening at Boeing before January 5," he said in reference to the Alaska Airlines incident, in his opening remarks to the Senate commerce committee on Thursday.

Boeing disclosed that it hasn't received a single order for a new MAX — previously its best-selling plane — in two months.

The Justice Department decided last month that Boeing violated a 2021 settlement that shielded the company from prosecution for fraud for allegedly misleading regulators who approved the 737 MAX.

Prosecutors have until July 7 to decide what to do next.

Blumenthal said at the start of the hearing that he believes the Justice Department should prosecute the company.

Survivors of those who died in the crash in Ethiopia have urged the Justice Department to prosecute.

"We will not rest until we see justice," said Zipporah Kuria, whose father died in the crash. She said the US government should "hold Boeing and its corporate executives criminally responsible for the deaths of 346 people".

"Where is accountability when the CEOs of Boeing, management of Boeing, are walking free with millions?" asked Clariss Moore, whose daughter died in one of the MAX crashes, reported The Wall Street Journal.

Shares of Boeing closed 1.9 percent lower to $174.99 in New York Stock Exchange trading on Tuesday. The company, which is now headquartered in Crystal City, Virginia, is a component of the Dow Jones Industrial Average, the S&P 100 and the S&P 500.

Agencies contributed to this story.

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