American Scandal - Boeing | What Went Wrong? | 5

Episode Date: September 10, 2024

Launched in 1916, Boeing grew into the world’s leading manufacturer of commercial aircraft. Then Airbus came along, and Boeing had serious competition. In response, Boeing released a new plane, the 737 MAX, but design flaws led to two crashes and 346 deaths. Today, aviation industry consultant Scott Hamilton joins Lindsay to try to answer the question: how did Boeing get here? Hamilton is the author of Air Wars: The Global Combat Between Airbus and Boeing. Need more American Scandal? With Wondery+, enjoy exclusive seasons, binge new seasons first, and listen completely ad-free. Start your free trial in the Wondery App, Apple Podcasts, Spotify or visit wondery.app.link/IM5aogASNNb now.  See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Hi, this is Lindsey Graham, host of American Scandal. Our back catalog has moved behind a paywall. Recent episodes remain free, but older ones will require a Wondery Plus subscription. With Wondery Plus, you get access to the full American Scandal archive, ad-free, plus early access to new seasons and more. Join Wondery Plus in the Wondery, I'm Lindsey Graham, and this is American Scandal. On July 7, 2024, Boeing agreed to plead guilty to a felony charge of conspiring to defraud the federal government over the two fatal 737 MAX crashes in 2018 and 2019. The company has also agreed to pay a nearly half-billion-dollar fine and spend

roughly another $450 million more to upgrade its safety programs. But whatever the final outcome, it's a far cry from the old slogan, if it's not Boeing, I'm not going. The tragic loss of life and ongoing safety concerns raised the question, how did we get here? Boeing was once the pride and joy of American aviation. Its B-17 and B-29 bomber planes helped win World War II. In 1958, Boeing's 707 series ushered in the age of commercial jet travel, when Pan American World Airways began flying from New York to London. And for decades, the Seattle-based company dominated commercial aircraft manufacturer with little competition. But then Airbus came onto the scene. Aviation companies from France, Germany, Spain, and later Britain joined together to compete against Boeing. It took a while for

Airbus to become a serious rival, but in 1992, the company secured a deal with United Airlines to lease 50 A320 planes. And forever after, it was game on between Boeing and Airbus. My guest today is Scott Hamilton. He's been tracking the Boeing-Airbus rivalry for years, as well as the change in Boeing's corporate culture. He's an aviation industry consultant for Leeham Company, based in Wheaton, Illinois. He's an aviation industry consultant for Leham Company based in Wheaton, Illinois. He's also the author of Air Wars, the global combat between Airbus and Boeing. Our conversation is next. In the past decade, Boeing has been involved in a series of scandals and deadly crashes that have dented its once sterling reputation.

At the center of it all, the 737 MAX. The latest season of Business Wars explores how Boeing allowed things to turn deadly and what, if anything, can save the company's reputation. Make sure to listen to Business Wars wherever you get your podcasts. Scott Hamilton, thanks for speaking with me today on American Scandal. Happy to be with you. Thank you for having me. Boeing is a quintessentially American company. So why don't we start at the beginning, and could you tell us a bit about Boeing's origins? Well, Boeing was founded in 1916 in Seattle, Washington by Bill Boeing, hence the name. Bill Boeing earned his fortune logging, and Boeing was part of a consortium that included Pratt &

Whitney, the engine maker, and United Airlines. Boeing developed the 247 airliner with United as part of the family. And the 247 was the first low-wing mono airplane. And it was a twin-engine airplane. It was faster. It was more comfortable. It was quieter, although back in those days, that's a subjective term. In its day, 1933, it was characterized as the first modern airliner of its era. And the first 60 airplanes of that 247 had to go to United. Boeing couldn't sell them to anybody else. And TWA, an airline which doesn't exist anymore, Transworld Airlines, TWA was placed at a competitive disadvantage because it had tri-motors and it wanted to order the 247.

TWA sent letters out to a number of manufacturers, among them Douglas Aircraft Company, which created the DC-1 prototype. The DC-2 became the competitor to the Boeing 247. And the DC-3 followed that, which was just a global success. Before World War II, Douglas airplanes were carrying 85% of the world's commercial traffic. And in World War II, the DC-3 was renamed the C-47 by the military. Just a phenomenal airplane. And as in those early days of aviation, there were just a whole number of competing airplane companies and just so many of them went out of business. Very few companies, I think, in the end were really going after the strong military business to survive and then ultimately the commercial business. So you've kind of described how Boeing built a great airplane, the Model 247, and started out in the early commercial market, but then got pushed out by its competitor, Douglas Aircraft. How did Boeing respond?

What happened after the war? they won the contract against Douglas and the B-17 and later the B-29, the airplane that dropped the atomic bombs on Japan, were the backbone of Boeing during the war. There just wasn't really much in the way of commercial traffic during the war. After the war, Boeing's engineers were among the first to go into Germany. And Germany, of course, in the last year of the war had developed jet fighters, and Boeing was able to get that jet technology as part of the investigations by the Allies to see what kind of technologies the Germans were creating. And they brought that jet technology home and created the Boeing B-47 and B-52 bombers, and aerial refueling was a key part of the strategic air command of the post-war era. The only refueling tankers at the time was a four-engine

piston airliner that was a derivative of the B-29 bomber of World War II that was called the KC-97, but it was a piston airliner, and it was too slow to fly in formation with the jet bombers that were developed. So Boeing created a jet tanker and it was off of that design that Boeing developed the commercial airliner that became known as the 707. And the range of the very first model of the 707 required a refueling stop. But within the year, Boeing had the longer range airplane with more fuel, and then they could start consistently going nonstop between New York and London, New York and Paris. And that really opened up the world to long range jet travel. And it's what caused Boeing to leapfrog Douglas Aircraft Company as the number one supplier of airplanes globally,

and that's what put Boeing on the path to being the dominant powerhouse that it was to become. Boeing has now, today, pretty much one competitor, Airbus. How did this company come about? After World War II, the European commercial aerospace industry was set up in Britain and France, eventually actually even Germany. Spain even had a very small commercial aerospace industry. But it was so fragmented and so parochial in its purpose that the European airplanes really could not compete effectively with the long-range and capacity-driven airliners that the U.S. companies were creating. So through the 50s and the 60s, you had a number of these companies in Europe all competing with each other, all producing planes that were what I would characterize as OK airplanes, designed for the European market rather than a global market. So in 1970, all these various aerospace interests got together and decided to consolidate, and they all came together under the name of Airbus.

And their first airplane was the A300 twin-aisle, twin-engine airplane that entered service in 1974. So the Europeans pretty much created Airbus to be a Boeing competitor, but how did Boeing and the rest of the U.S. aviation market view Airbus at first? So you had three American manufacturers versus this new upstart Airbus, and none of the three American manufacturers really took Airbus seriously because of this decades-long history of this fragmentation of these European aerospace companies. And the Americans really viewed the Europeans' aerospace efforts as a jobs program more than anything else. And they looked at the previous decades of European airplanes that were

okay airplanes for what they did, mediocre airplanes for what the Americans would have needed, and completely uncompetitive and trans-ocean type of flying. And they just thought that Airbus would fail because it was just another European jobs program that would design an airplane that wouldn't be competitive. So in your book, Air Wars, you mention a pivotal figure, an American who gave Airbus a bit of an edge. Who was John Leahy, and why was he so important to Airbus' success? John Leahy is a very interesting character from Queens, New York. He had zero commercial aviation experience. He was a marketing guy for Piper Aircraft, which was a private airplane company.

Piper Aircraft, which was a private airplane company. And he had reached a point over the number of years that he had been at Piper where he was offered the opportunity to go to Europe to sell airplanes for Piper. And a headhunter that was retained by Airbus persuaded John that don't go to Europe and work for Piper. Come to Airbus and you can eventually go to Europe. But instead of selling these little private airplanes, now you can sell commercial airliners. And what John really brought to Airbus and the European-dominated mentality was an understanding not only of just the American market, but also of what international airlines needed to fly trans-ocean. And John is an extremely bright guy.

I think you could call him the cliché brash New Yorker. And I've known John for over 30 years and think the world of him. But he brought an American mentality to Airbus, which was headquartered in Toulouse, France, that said, look, you have to build airplanes for the world market. You need to build airplanes that will be able to fly across the oceans. You need to have certain features in the airplanes that the passengers want. You need to have certain features in the airplane that the airlines want. You can't build airplanes just for the European market. So Leahy brings this American vision to Airbus, but he also brings an opportunity to lure a large American customer. How did Airbus and Leahy get a deal with United Airlines?

Leahy went to Airbus Americas in 1984, and Airbus globally had about a 15% market share with Boeing at 60% and McDonnell Douglas with the other. Leahy was able to make inroads at Eastern Airlines and at Northwest Airlines, but Eastern was even then a financially distressed airline, and American Airlines, the actual company, American Airlines, the actual company, United, Delta, Continental, and all those carriers, felt that it was a kind of a desperation deal that Airbus had just to penetrate the U.S. market. But in 1992, Airbus Americas under Leahy and his sales team made a deal with United Airlines, which up to that point was an exclusive Boeing customer, to buy the A320 single-aisle airplane family. Boeing lost that competition with the 737, and that transaction

was the wake-up call to Boeing that they had to take Leahy seriously and they had to take Airbus seriously. And it was that one that really started the whole international bitter rivalry that we would later see. He was hip-hop's biggest mogul, the man who redefined fame, fortune, and the music industry. The first male rapper to be honored on the Hollywood Walk of Fame, Sean Diddy built an empire and lived a life most people only dream about. But just as quickly as his empire rose, it came crashing down. Today I'm announcing the unsealing of a three-count indictment, charging Sean Combs with racketeering conspiracy, sex trafficking, interstate transportation for prostitution. I was f***ed up. I hit rock bottom, but I made no excuses. I'm disgusted. I'm so sorry.

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finding. And this time, if all goes to plan, we'll be finding Andy. You can listen to Finding Andy and Finding Natasha exclusively and ad-free on Wondery+. Join Wondery in the Wondery app, Apple Podcasts, or Spotify. In 1997, Boeing merged with McDonnell Douglas, and a new president, and later CEO, came to Boeing. His name was Harry Stonecipher. Who was he, and what did he bring to Boeing? employer of GE under Jack Welch, who was the CEO of GE for, I think, 20-something years. He became known as Neutron Jack because he would just ruthlessly lay off people. And it was Jack Welch who had this whole idea about shareholder value for stockholders and investors. And he would gear every financial decision toward shareholder value.

And Stonecipher came up through much of his career in that environment. When Harry Stonecipher became president and COO of Boeing, he brought this GE culture, what I like to call the gentrification of Boeing, and I make that capital G, capital E, where it shifted from its legacy heritage of being an engineering company to one being more focused on the shareholder value stuff that Jack Welch taught StoneCypher. He taught StoneCypher successor Jim McNerney, who was a lifer at GE as well, and of course, David Calhoun, the most recent CEO before the resignation in July. And Harry became public enemy number one within Boeing. Stone Cipher didn't appreciate

the engineering legacy. He was all about shareholder value. And to legacy Boeing employees, it was that gentrification that destroyed Boeing as we knew it. Particularly after these two MAX accidents, the families in particular and Boeing made a conscious decision to sacrifice safety for shareholder value. That just does nobody any good. in order to benefit shareholder value meant that some of the research and development and protocols that went into safety had cost cutting as well. But I do not agree that there was a conscious decision to sacrifice safety for profits. Shareholder value is a term that's probably most are familiar with, but maybe we don't understand what it actually means.

Give us a quick lesson in this business philosophy. Shareholder value is all about generating your profits and cash flow. And profits and cash flow are different. You take your cash flow and return a portion of that to shareholders through stock repurchases, which boosts the stock price on Wall Street, or you pay dividends to your investors. And that's what Jack Welch really began to emphasize during his long tenure as CEO of GE. That's what Harry Stonecipher really began to emphasize when he came over from McDonnell Douglas to become Boeing president. So through the 80s and the 90s and the 2000s, Jack Welch's influence, even after he left GE, was all about shareholder value. And it remains

in many companies, even today, shareholder value, stock buybacks, free cash flow dividends. And I have a very strong opinion about you should try to balance that for the good of the company, the long-term future of the company. But too many CEOs and CFOs are more focused on Wall Street and the stock price. And quite frankly, their compensation is now focused or attached to what the stock price is. So I think in many respects, the executive suites have lost track of what's good for the company as opposed to what's good for them. So we have this switch in philosophy in the executive suite and a change in strategy, but what did this change mean for Boeing in terms of its everyday operations? If you invest in a development of a new airplane

that is a fresh design, that's called a clean sheet airplane, you're talking about investing billions of dollars, which hits into that free cash flow and therefore reduces the shareholder buyback and the dividends. Instead, you can do derivative airplanes, which are not cheap, but they are a fraction of the cost of what it is to develop and produce a brand new airplane. So Boeing began to really focus on derivative airplane designs as opposed to brand new airplane designs. By 2003, Boeing had been looking at developing a new airplane for a number of years. But with Stonecipher's history of emphasis on shareholder value, pretty much everybody thought that Stone-Cypher would never agree to developing a new airplane. And he fooled everybody by agreeing to develop what is now called the 787. He told executives of Boeing commercial airplanes that if you want to move forward with the 787, you need to make sure that the development cost of Boeing is no more than what

turned out to be a $5 billion target. The 777 in 1994 had cost Boeing about $12 billion. So the only way to reduce that cost to Boeing would be to outsource it and spread the risk. And the work would come into Everett, and flaws would be identified, design problems would be identified, and Boeing would have to spend its time, its resources, and its money to rework the engineering, rework the production, rework the quality. And it cost them billions and billions of dollars. It was so screwed up. You had an Italian company called Alenia. You had Japanese heavy industry companies, Kawasaki, Mitsubishi, Subaru, believe it or not. But the trouble was the work that they had done for Boeing in the past and other aerospace companies was not on this level of magnitude.

this level of magnitude. And the mistake that Boeing made, among others, was they did not embed their own employees in these other companies to be sure that the work they were doing met the requirements, the standards, the quality that Boeing was used to doing pre-merger with McDonnell Douglas in 1997. And it's really what happened with the development of the 787 that started Boeing on its long downfall, in my view. So the 787, the Dreamliner as it's called, was announced in 2003 and took years to come to market. Can you give us a sense of its design? The 787 is a twin-aisle, twin-engine airplane. In the smallest version, the 787, it carries 250 passengers. The largest version, 330 passengers.

But what was different about it was that it was the first all-composite airliner. The wings and the fuselage are all composite. It was supposed to be what I like to call the prefabricated airplane or an erector set airplane where a nose section or a center fuselage and a tail section would be built in different locations. They would be airlifted to Everett, Washington, where Boeing's wide-body plant is. And each of these sections would be already stuffed with all the components, the wiring, the interiors. And the theory was you'd be able to do this with 800 people on the assembly line. You'd be able to do the final assembly in three days. The plane would be out the door and all that.

Well, that was the theory. In fact, it was one of the greatest industrial screw-ups of all time. Basically, still hasn't made money to this day except for some accounting shenanigans that Boeing does. And it was three and a half years late entering service. And on top of that, it had a flaw from one of its suppliers that two years after it entered service, it was grounded for four months. So Boeing is in trouble in the 2000s. The Dreamliner is not doing well. They are facing delays and cost overruns. And then comes the idea of the redesign of the 737.

Where does that originate? They had all of this going on, but at the same time, they recognized that the 737 was 40 years old, basically. The 777 was also beginning to age. So Boeing had this strategy where once we deliver the 787, we'll replace the 737, and then we'll replace the 777 with new airplane designs. And at the same time, Airbus is talking to airlines about a major upgrade for its competing A320 airplane, but Airbus is deciding to go down the route of re-engineering the airplane with more modern engines, Boeing is looking at re-engineering the 737 or coming out with a brand new design. And through a number of very interesting maneuvers, Airbus basically backed Boeing into a corner to go with a re-engined 737 instead of a new design.

How did Airbus force Boeing to take this path? So once again, Leahy, John Leahy, turned to the American market to force Boeing's hand. Leahy turned back to the U.S. market as he did with that 1990s deal with United Airlines and said, gee, if I got a U.S. carrier that bought nothing but Boeing airplanes and got them to order the A320, that would force Boeing's hand into re-engineering the 737 to be competitive on a timeliness basis because developing a new airplane takes a long time. So there were three or four airlines at that time that were exclusive Boeing customers. And American was the one that had the oldest fleet of any U.S. carrier at the time.

It needed new airplanes. It was financially distressed because of the 2008 global recession. And Airbus went into American and got their agreement to a contract for more than 400 A320s, including these re-engined airplanes. The CEO of American called the CEO of Boeing, Jim McNerney, by now, and says, we're going to sign this contract with Airbus. Do you want a part of this deal? And within 48 hours, McNerney directed his executives over at Boeing Commercial Airplanes, make him an offer for a re-engine 737.

That's the only way we can get part of this deal and get it to him on a timely basis. And that's how Airbus and Leahy forced Boeing's hand. On January 5th, 2024, an Alaska Airlines door plug tore away mid-flight, leaving a gaping hole in the side of a plane that carried 171 passengers. This heart-stopping incident was just the latest in a string of crises surrounding the aviation manufacturing giant giant Boeing. In the past decade, Boeing has been involved in a series of damning scandals and deadly crashes that have chipped away at its once sterling reputation. At the center of it all, the 737 MAX, the latest season of business wars, explores how Boeing, once the gold standard of aviation engineering, descended into a nightmare

of safety concerns and public mistrust. The decisions, denials, and devastating consequences bringing the Titan to its knees. And what, if anything, can save the company's reputation? Now, follow Business Wars on the Wondery app or wherever you get your podcasts. You can binge Business Wars, The Unraveling of Boeing, early and ad-free right now on Wondery Plus. We know from our series that on October 29th, 2018, Lion Air Flight 610 crashed into the Java Sea only 12 minutes after takeoff. Everyone on board was killed.

What did Boeing look to as potential causes? When Boeing made the decision to re-engine the 737, the size of the engines on there to match the fuel economy of the A320 changed the aerodynamics of the 737 to an extent that Boeing was concerned about the engines pushing the nose of the airplane up into a stall. Boeing's solution was to create a system called the Maneuvering Characteristics Augmentation System, or MCAS. And MCAS is an automated system that senses when the nose comes up to a dangerous level and automatically pushes the nose down. There are two fatal flaws of this MCAS system. One, getting its sensors off of one angle of attack indicator on the right-hand side of the airplane.

The airplane had two, one on either side of the airplane, but the MCAS was only associated with one sensor. That was the first fatal flaw. An angle of attack sensor is like a little wing that is off the nose of the airplane. It's just a tiny little thing. And during takeoff or in flight, the wind goes over this little wing and it goes up or down or it stays stable. And that's associated with instrumentation that tells you whether the nose is starting to go up or starting to go down. And, you know, that sounds to a layman like, well, you just look out the window. Well, sometimes you're in instrument conditions and you can't look out the window to tell you if your nose is going up or going down or whether it's in stable flight. That's what an

AOA sensor does. The second fatal flaw is that after the initial design, Boeing created a stronger MCAS that had more strength in pushing the nose down, and it was also a repetitive action instead of just a single action. They didn't tell the pilots about it. So the pilots didn't even know this MCAS system existed. And when Lion Air took off and this AOA sensor, this angle of attack sensor, malfunctioned, MCAS detected that the nose of the airplane was going up when it really wasn't, and it pushed the nose of the airplane down. The pilots of this Lion Air flight tried to pull the nose back up, and then the MCAS pushed the nose back down, and the pilots pulled it up, and MCAS pushed it back down. And this went on for 12 minutes. While the senior pilot, the captain, is flying the airplane, the co-pilot is going through what's called the quick reference manual, the QRH, trying to figure out what's going on here and how do I fix this. And the co-pilot couldn't figure it out after these 12 minutes. So the captain said, you take over the controls. I'll look in the QRH.

And that's when it nosed over and crashed into the sea. Within a week, Boeing understood that the MCAS was involved here. And the Federal Aviation Administration, the FAA, issued what's called an airworthiness directive that said, okay, treat this like what's called a runaway trim. And because pilots are used to dealing with this runaway trim, the Boeing engineers figured that they would recognize this MCAS failure as being like a runaway trim and push a button here and another button there and disconnect the trim tab and fly the airplane. That's what Boeing thought would happen here. Boeing engineers figured that the pilots would be the ultimate backup, so that would be the fail-safe of this. Boeing figured that the pilots needed to recognize and take corrective actions in four seconds. And somewhere along the line in all this calculating and engineering simulations and so on, they determined that if the pilots didn't take the corrective action within 10 seconds,

they would lose the airplane. So then, tragically, four months later, on March 10, 2019, Ethiopian Airlines Flight ET302 crashed six minutes after takeoff, again killing everyone on board. How did aviation authorities around the world, including the FAA, handle this second crash? Well, there were immediate calls for the airplane to be grounded or for Boeing to tell the airlines to ground the airplanes. tell the airlines to ground the airplanes. The Chinese regulator, CAC, Civil Aviation, that's the equivalent to the Federal Aviation Administration, grounded the airplane the same day, within hours of the Ethiopian accident. The European regulator, they grounded it shortly after the CAC did. Transport Canada, again, the equivalent of the Federal Aviation Administration,

grounded it within a day or two. But the CEO of Boeing at the time, Dennis Muhlenberg, called then-President Trump and said, don't let the FAA ground my airplane. Well, it took three days for the FAA to ground the airplane. And during this three-day period, the FAA said, well, these other guys are acting hastily. We don't have enough data to justify grounding the airplane. well, these other guys are acting hastily. We don't have enough data to justify grounding the airplane. Yet there's an internet company called Flight Radar available to anybody with a computer.

They had tracked the flight profiles of Lion Air and of Ethiopia, and the flight profiles were very similar. And I could see just by looking at these Flight Radar profiles that this airplane did the same kind of maneuvers that the Lion Air airplane did, and Boeing should ground the airplane. Well, it took the FAA three days to do that, which I think was unconscionable. And it was in contrast to 2013 when the FAA grounded the 787 for four months within hours of a second fire that happened within a week on board an airplane. So eventually the plane is grounded and a long period of investigations and lawsuits follows. Boeing pleaded guilty just this summer to a felony charge of conspiring to defraud the government

for misleading federal authorities into approving the 737 MAX in the first place. It's agreed to pay more fines in the hopes of avoiding a trial. What is your take on the potential consequences or the consequences so far for Boeing? Well, the guilty plea this summer is actually the second related to the MAX. Back in January 2021, in the final weeks of the Trump administration, the Department of Justice and Boeing entered into a virtually identical, what's called Deferred Prosecution Agreement, a DPA. for compensation to the airlines and $243 million criminal penalty, which the victim families said was woefully inadequate. And this more recent DPA, Boeing elected to plead guilty so they didn't have to go to trial. And the penalty again was $243 million, another batch of $243 million, and a commitment to spend $455 million for safety protocols

and appoint an independent outside overseer to make sure that Boeing actually follows through this time. So you take a look at the $243 million penalty of the first Deferred Prosecution Agreement and the $243 million penalty for the second deferred prosecution agreement, you're now looking at under $500 million, which the victim families say that is not enough. That doesn't hurt Boeing enough. And for a company that had $77 billion in revenue in 2023, $500 million, while it's not chump change, certainly does not hurt Boeing. while it's not chump change, certainly does not hurt Boeing. I compare that with penalties that Airbus paid in a bribery scandal that, in the end, they paid over $4 billion in penalties,

but as part of that was $500 million went to the United States government for violations that did not kill anybody and no safety was involved. Boeing is paying less than $500 million, where 346 people died, and safety violations were found all over the place. And the families think that's wholly inadequate. I do too. But it turns out that this is the maximum penalty allowed for these particular violations under the law. I think it's peanuts in terms of a $77 billion company. Now, just a few weeks ago, I took a flight and found myself sitting in front of a Boeing 737 MAX information card. This is right in the midst of doing this series, so I guess I was attuned to which plane I was on. Knowing you're an aviation consultant, would you be comfortable flying on a Boeing 737 MAX?

I am confident that the fixes that Boeing did with MCAS have been successful. What I am not confident about is the production quality of the Boeing company. What has come out, especially since 2019 in the wake of that Ethiopian accident, is that Boeing's quality control on the production line, not only of the 737 production line, but the 787 production line, leaves so much to be desired. And that's part of what's involved in the second DPA agreement that the Department of Justice just entered into with Boeing. There's supposed to be no retaliation, no retribution for line workers saying, hey, there's a problem here. I am not at all convinced

that those problems have been solved. I would have no problem getting on a MAX or 787 that has been in service with an airline for several years because these airplanes would have gone through the maintenance systems of these airlines. A plane coming fresh out of the factory door, I am still skeptical about those. And we need look no further than January 5th, 2024, when an airplane, a MAX 9, had been in service for 10 weeks with Alaska Airlines, and a door plug blew out at 16,000 feet, creating an explosive decompression. Fortunately, nobody died. The airplanes landed safely. But coming out of the factory, there was some maintenance work before delivery that had to be done on that door.

And four retaining bolts were not reinstalled, and that's why that door came off. And Boeing couldn't find the records of who worked on that door. That is as sloppy as you can possibly get. And finally, in a June Senate hearing, Boeing's CEO at the time, David Calhoun, said he was proud of the company's safety record and he also apologized to families who lost loved ones in the two 737 MAX crashes.

Boeing has a new CEO, Kelly Ortberg. Do you think this is a move in the right direction to restoring public trust? And what can Ortberg do to further that mission? Yeah, it is a move in the right direction. One of the first things that Ortberg said, even on the same day that the announcement was made, but a week before he took office,

was that he's going to be locating his office back in Seattle near the Boeing factory, which the Boeing headquarters removed out of Seattle in 2001. And over the ensuing decades, many had said Boeing needs to return their headquarters to Seattle to be near where all this trouble is. It's going to take Boeing years and years to regain confidence of its customers, of the traveling public, of its own union that's been crying for a decade or more about production issues. Every incident that happens to a Boeing airplane, whether it's safety-related or not, the headline is going to say, another incident happened with a Boeing airplane, whether it's safety-related or not. The headline is going to say, another incident happened with a Boeing airplane, and it's going to take a long time to erase that.

With the customers, Boeing has to start delivering its airplanes on time and with quality control so that there's not rework, and you don't have to worry that 10 weeks into the delivery, you're going to have a door fall off. Can they get back there? We're years away from that. I think it's going to take at least a decade. Well, Scott Hamilton, thank you so much for talking with me today on American Scandal. Happy to help. That was my conversation with Scott Hamilton, an aviation industry consultant for the Leham Company based in Wheaton, Illinois. He's the author of Air Wars, the global combat between Airbus and Boeing. From Wondery, this is Episode 5 of Boeing for American Skin. In our next series,

we're airing an encore presentation of our story on Theranos. It was one of the hottest companies in Silicon Valley in the mid-2010s. Its young founder, Elizabeth Holmes, wanted to transform medicine and become a billionaire celebrity herself. But when a reporter began digging around, he uncovered a series of lies that would threaten Holmes and her budding empire. If you're enjoying American Scandal, you can unlock exclusive seasons on Wondery Plus. Binge new seasons first and listen completely ad-free when you join Wondery Plus in the Wondery app, Apple Podcasts, or Spotify. And before you go, tell us about yourself by filling out a survey at wondery.com slash survey. American Scandal is hosted, edited, and executive produced by me, Lindsey Graham, for Airship.

This episode was produced by Polly Streiner. Our senior interview producer is Peter Arcuni. Sound design by Gabriel Gould. Music by Lindsey Graham. Produced by John Reed. Managing producer, Olivia Fonte. Senior producer, Andy Herman. Development by Stephanie Jens. And executive producers are Jenny Lauer Beckman, Marshall Louis, and Erin O'Flaherty for Wondery.