Archive for month: October, 2021

Boeing is facing two new challenges this week to its image, reputation and
credibility.

Federal Grand Jury Indictment

Yesterday CNN reported that a federal grand jury indicted a former key
executive of Boeing for fraud. They alleged “he deceived the Federal Aviation
Administration while it was first certifying the 737 Max jet that would go on to
have two fatal crashes caused by design flaws.”

“The charges were not against a top executive. Instead, they were against
Mark Forkner, 49, who was the chief technical pilot for Boeing during the
certification process for the jet and is accused of deceiving the FAA during that
process in 2016 and 2017.”

“Forkner’s attorney did not respond to a request for comment, and Boeing
declined to comment,” CNN said.

Improperly Made Dreamliner Parts

Boeing is confronting a different issue that involves another one of their
planes.

According to Reuters, the airplane manufacturer said that “some titanium 787
Dreamliner parts were improperly manufactured over the past three years,
the latest in a series of problems to plague the wide-body aircraft.”

The company said the quality issue does not affect the immediate safety of
flights, adding it had notified the Federal Aviation Administration. Boeing is
working to determine how many planes contain the defective part, Reuters
reported.

Boeing did not immediately respond to a request to comment for this article,
and there was no mention of the fraud charges or Dreamliner parts issue on
the company’s website.

Expect Increased Scrutiny

Dennis E. Sawan is a personal injury and insurance lawyer at Sawan & Sawan.
He observed that, “Given the callousness allegedly exhibited by Boeing with
respect to the [737 Max] we can expect that the company will face increasing
scrutiny from regulators, who will no doubt bring out the fine-tooth combs
when reviewing Boeing’s safety representations in the future.

“Moreover, companies that place profit over consumer safety have repeatedly
faced multi-million dollar punitive damage verdicts—and Boeing is unlikely to
escape this fate if the allegations in the fraud case prove to be true,” he
predicted.

“While Boeing remains a dominant force in commercial flight, airlines may be
increasingly wary of conducting business in the future —especially if it leads
them to incur additional and unexpected liability for the operation of certain
types of aircraft,” Sawan concluded.

Power To Damage

Jonathan Hemus is managing director of crisis management consultancy
Insignia. He said, “There are so many crisis management [lessons] from this
tragic [737 Max] case, not least the enormous power of crises to damage lives,
livelihoods, reputations and businesses.

Importance Of Culture

“These latest developments highlight the critical importance of leaders
instilling a culture that facilitates crisis prevention or swift resolution. Three
years [since] the first 737 Max crash, this latest attention on Boeing shows
how much easier it is to enter the spotlight due to a mishandled crisis than to
exit it. Mishandled crises are not ‘here today, gone tomorrow’ events; their
impact on an organization like Boeing can linger for years, sometime
decades,” he observed.

‘Massive Systemic Issues’

Joey Smith is the director of aviation services at investment bank Cassel
Salpeter & Co. He said, “Apart from Boeing’s lingering reputational issues and
its mismanagement of the 737 Max crisis, it’s also apparent that there are
massive and systemic issues within Boeing’s culture…”

Smith cited, “… the lack of checks and balances, transparency and
communication between senior management and the rank and file personnel
to do the right thing with safety as the first consideration. These company
culture issues allow for an environment where so many additional crises
develop with additional platforms and their supply chain. Boeing needs more
than just a tweak. It needs an overhaul.

“Additionally, the overhaul needs to address what appears to be
fear, intimidation and compensation issues related to pushing projects
forward, which can open the door to negative results and catastrophic
events,” he concluded.

Other Recent Boeing Crisis Situations

Boeing has had a lot of experience dealing with crisis situations over the past
several years.

Impact 737 Max Crashes

In November, the FAA lifted its ban against the 737 Max. Caroline Sapriel,
managing partner of crisis management firm CS&A International, told me at
the time that, “It will take time and this black mark on their history may never
be completely erased.”

Billions In Fines

Reuters reported that in January, “Boeing agreed to pay more than $2.5 billion
in fines and compensation after reaching a deferred prosecution agreement
with the U.S. Justice Department over the MAX crashes, which cost Boeing
more than $20 billion.”

Engine Explodes

Last February, three months after the company returned the 737 Max to
service, an engine on a United 777 exploded over Denver, raining debris on a
neighborhood below. Airlines in the U.S., Japan, and South
Korea grounded dozens of the Boeing 777s, and the Federal Aviation
Administration ordered United to increase their inspections of the aircraft.

Potential Electrical Issue

In April, Boeing faced another crisis involving its 737 Max. As reported
by Forbes, the airline manufacturer recommended that a potential electrical
issue in a specific group of 737 Max airplanes be addressed before they fly
again.

 

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At the start of the month, pharmaceutical company Merck dropped big news: it has developed a COVID antiviral drug that would cut hospitalization and mortality risks by 50%. In the drug’s study, patients taking the placebo pill saw 14% hospitalization rate and eight deaths, the trial group with Merck’s drug had only 7% hospitalized, and zero deaths.

But this appears to be just the tip of the iceberg: Kaiser Health News reports at least three COVID antiviral candidates, including Merck’s, going through latestage clinical trials, meaning a variety of COVID drugs could be on patient’s prescriptions here soon. What’ll be some of the positive domino effects to come from approval of COVID antivirals, not only on the pharmaceutical production pipeline, but on the general population’s health? Ira Leiderman, managing director of the healthcare practice at Cassel Salpeter & Co., gave MarketScale his take on the coming treatment

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