It was never a question as to whether a Boeing 737 MAX 9 would have a disastrous calamity but rather when.
That’s not my layman’s assessment of the Alaska Airlines 737 MAX 9 jet that was forced to make an emergency landing in Portland last week after a chunk of the plane’s body broke off in midair, leaving a door-size hole in the side of the aircraft. An employee who worked at the Spirit AeroSystems plant that manufactures the 737 Max 9’s fuselages repeatedly warned management about an “excessive amount of defects” and cautioned “it was only a matter of time until a major defect escaped to a customer.”
Not only were the employee’s warnings allegedly not heeded, but he was also demoted for a period.
The revelation was contained in a federal securities lawsuit and corresponding internal documents obtained and reviewed by The Lever, an independent investigative publication whose mission is to hold accountable “the people and corporations manipulating the levers of power.” It was founded by David Sirota, a former presidential campaign speech writer for Sen. Bernie Sanders.
It is to the discredit of the mainstream media that the Lever’s report, which can be found here, and the lawsuit it linked to, has not been widely covered. What makes the Lever’s report so compelling is that it identifies the executives responsible for allegedly ignoring known safety and quality control issues.
It’s a wonder to me how anyone could read the Lever’s report and the lawsuit it’s based on and not be immediately clamoring for the criminal prosecution of the executives allegedly responsible.
The latest disaster reflects poorly on the FAA’s regulatory oversight, and the Department of Justice’s lax prosecution of corporate wrongdoing. Adding insult to taxpayer injury, Pete Buttigieg’s Transportation Department gave Spirit a $75 million public subsidy in 2021.
Boeing CEO David Calhoun, an accountant formerly of the private equity world, should be immediately fired. Calhoun was an influential Boeing board member for some 10 years before being named CEO of the company. He’s pocketed more than $40 million in compensation these past two years, and reportedly spends little time at Boeing’s Arlington headquarters or its plants.
Calhoun rarely, if ever, flies commercial, meaning he doesn’t often risk sampling his company’s cooking. The Wall Street Journal revealed last September that Calhoun made 400 trips to and from airports near his luxury homes in New Hampshire and South Carolina in the past three years, exclusively on private jets.
Hard as it might be to believe, Boeing doesn’t manufacture the fuselages for the 737 MAX 9, which is a bigger variant of the two MAX planes that crashed several years ago. They are manufactured by a Wichita-based company called Spirit AeroSystems, which was spun off from Boeing in 2005 and acquired by two private equity firms with no previous experience in the aerospace industry. After some add-on acquisitions, the private equity firms took Spirit public the following year.
Details of Spirit’s alleged lax quality control issues are outlined in a class-action lawsuit originally filed in May 2023 and amended last month. The lawsuit alleges that Spirit misled investors about production troubles and quality control issues, which caused the company’s stock to drop when the media got wind of them.
The lawsuit alleges that company executives concealed from investors that Spirit “suffered from widespread and sustained quality failures,” including “defects such as the routine presence of foreign object debris in Spirit products, missing fasteners, peeling paint, and poor skin quality.”
The lawsuit alleges that quality failures “resulted in part from Spirit’s culture which prioritized production numbers and short-term financial outcomes over product quality, and Spirit’s related failure to hire sufficient personnel to deliver quality products at the rates demanded by Spirit and its customers including Boeing.”
As summarized by The Lever:
The court documents allege that on Feb. 22, 2022, one Spirit inspection worker explicitly told company management that he was being instructed to misrepresent the number of defects he was working on.
“You are asking us to record in a inaccurately [sic] way the number of defects,” he wrote in an email to a company official. “This make [sic] us and put us in a very uncomfortable situation.”
The worker, who is unnamed in the federal court case, submitted an ethics complaint to the company detailing what had occurred, writing in it that the inspection team had “been put on [sic] a very unethical place,” and emphasizing the “excessive amount of defects” workers were encountering.
“We are being asked to purposely record inaccurate information,” the inspection worker wrote in the ethics complaint.
He then sent an email to Spirit’s then-CEO, Tom Gentile, attaching the ethics complaint and detailing his concerns, saying it was his “last resort.”
Spirit acknowledged last August that it incorrectly manufactured key fuselage equipment, but the lawsuit alleges the company knew about the issue months earlier.
As summarized by the Lever:
The court documents claim that a former quality auditor with Spirit, Joshua Dean, identified the manufacturing defects — bulkhead holes that were improperly drilled — in October 2022, nearly a year before Boeing first said that the defect had been discovered. Dean identified the issue and sent his findings to supervisors on multiple occasions, telling management at one point that it was “the worst finding” he had encountered during his time as an auditor.
“The aft pressure bulkhead is a critical part of an airplane, which is necessary to maintain cabin pressure during flight,” the complaint says. “Dean reported this defect to multiple Spirit employees over a period of several months, including submitting formal written findings to his manager. However, Spirit concealed the defect.”
In April 2023, after Dean continued to raise concerns about the defects, Spirit fired him, the complaint says.
In October 2023, Boeing and Spirit announced they were expanding the scope of their inspections. The FAA has said it is monitoring the inspections but said in October there was “no immediate safety concern” as a result of the bulkhead defects.
The Lever reports that Boeing and Spirit are practically joined at the hip. Spirit’s new CEO Patrick Shanahan was a Trump administration Pentagon official who previously worked at Boeing for more than 30 years, serving as the company’s VP of various programs, including supply chain and operations, all while the company reported lobbying federal officials on airline safety issues. Spirit’s senior vice president Terry George, in charge of operations engineering, tooling, and facilities, also previously served as Boeing’s manager on the 737 program.
What’s clear is that the FAA has failed the public in its oversight of airliner manufacturing.
“The FAA’s chronic, systemic, and longtime funding gap is a key problem in having the staffing, resources, and travel budgets to provide proper oversight,” William McGee, a senior fellow for aviation and travel at the American Economic Liberties Project, who has served on a panel advising the U.S. Transportation Department, told the Lever. “Ultimately, the FAA has failed to provide adequate policing of outsourced work, both at aircraft manufacturing facilities and at airline maintenance facilities.”
Bloomberg reported today that last week’s 737 MAX 9 accident could complicate a deferred prosecution agreement that Boeing struck with the Justice Department in 2021 that was set to expire over the weekend.
That deal resolved a probe into Boeing following the crashes of Lion Air Flight 610 in October 2018 and Ethiopian Airlines Flight 302 in March of 2019. The agreement allowed the DOJ to dismiss a criminal charge against Boeing if the company demonstrated that it had bolstered its compliance programs.
As reported by Bloomberg, John Coffee, a Columbia Law School professor, in 2022 published a paper entitled, “Nosedive: Boeing and the Corruption of the Deferred Prosecution Agreement,” arguing that prosecutors and Boeing went to great lengths to strike a lenient deal.
“DPAs are manipulated so that both the prosecution and the defendant gain goals important to them—at the cost of denying transparency to the public,” Coffee said in the paper. “In the Boeing case, the prosecution won a symbolic victory with an illusory $2.5 billion settlement.”
“The recurrent problem is that major corporations, using major well-connected law firms, can now flank the normal standards of the criminal justice system,” Coffee wrote.
It was a miracle that the fuselage blowout of the Alaska Airlines jet last week happened at 16,000 ft. From what I’ve read, had the incident happened at a higher altitude, the outcome would have been catastrophic.
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