Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The head of Emirates Airline has warned Boeing was in the “last chance saloon” as he prepared to send his own engineers to oversee the plane maker’s production lines after witnessing a long decline in its manufacturing performance.
Sir Tim Clark told the Financial Times he had seen a “progressive decline” in Boeing’s standards, which he put down to long-running management and governance mis-steps, including prioritising financial performance over engineering excellence.
Clark, who has held senior roles at Emirates since the 1980s and has been president since 2003, is one of the most high-profile figures in aviation. His comments add to the mounting problems for the US plane maker following the mid-flight blowout of a section of the fuselage on a Boeing 737 Max 9 aircraft last month.
Emirates is one of Boeing’s biggest customers, and in November placed an order for 95 wide-body Boeing 777 and 787 jets, used for long-haul flights, valued at $52bn at list prices.
“They have got to instil this safety culture which is second to none. They’ve got to get their manufacturing processes under review so there are no corners cut etc. I’m sure [chief executive] Dave Calhoun and [commercial head] Stan Deal are on that . . . this is the last chance saloon,” he said.
Clark said that the airline would for the first time send its own engineers to observe the production process of the 777 at Boeing and its supplier Spirit AeroSystems.
“The fact that we’re having to do that is testament to what has happened. This would not have been sanctioned in the old days. You know, we trusted these people implicitly to get it done,” he said.
Clark has regularly criticised manufacturers for delays in deliveries or poor reliability, but his comments represent his most pointed criticism yet of Boeing.
The 737 Max 9 incident, which is being probed by federal regulators, has dealt a heavy blow to Boeing’s reputation and sharpened scrutiny of its manufacturing and quality assurance processes.
Boeing declined to comment on Clark’s remarks but pointed to Calhoun’s message to employees earlier in the week in which he said “now is not the time” to share financial or operational objectives. The company, which reported results for the fourth quarter on Wednesday, withheld its usual financial guidance for the year. It has vowed to earn back the trust of stakeholders.
Clark said Boeing’s previous management had made repeated mis-steps, including outsourcing parts of its manufacturing and moving parts of its 787 production to South Carolina to cut costs following battles with unions at its primary base north of Seattle, Washington.
Boeing eventually moved all of its 787 production to South Carolina in 2021 but the site has struggled with manufacturing challenges. Clark said Boeing had lost “skills and competencies” through the move.
The company’s manufacturing processes needed a thorough review, said Clark, adding that its management should put aside concerns about financial performance.
“It needs a root and branch look at how it goes about producing aeroplanes and where it produces aeroplanes . . . that’s just good management, good governance and it should be the priority of everybody on the board.
“Not: ‘what is the return on investment? What is the bottom line? What is the free cash flow? What is the shareholder value? What is the share value? What is my bonus?’ No, that will come if you do it right in the first place.”
Clark said Calhoun and Deal had the opportunity to put Boeing’s “house in order”, but added “only time will tell” if they are the right people for the job.
“Will Boeing restore itself to its former glory? Of course it will. Will Boeing continue to produce and design great aeroplanes well put together reliable for the customer base? I’m sure they will. But they’ve got to put the house in order at the moment. And this is a major shift in the priorities,” he said.
Clark’s comments echoed those of other airline customers in recent weeks. Aengus Kelly, chief executive of AerCap, the world’s biggest aircraft lessor, told the Financial Times last month that Boeing needed to put aside financial targets and focus solely on the safety and quality of its aeroplanes.
Read the full article here
