https://www.cnn.com/2019/04/29/investing/boeing-annual-meeting/index.html
about the 737 Max crisis at the company's annual meeting in Chicago on Monday.
Shareholders had a lot to gripe about. The company's stock has lost about 10% of
its value since the March 10 crash of an Ethiopian Airlines jet, the second
fatal crash of the company's bestselling plane. A Lion Air 737 Max crashed under
similar circumstances in October. The second crash prompted a worldwide
grounding of the 737 Max last month.
Boeing last week announced earnings fell 21% in the first quarter because of the
crisis. Boeing suspended its share repurchase plans to conserve cash.
CEO Dennis Muilenburg started his remarks Monday with a moment of silence for
the 346 people killed in the two crashes, according to his prepared remarks
reviewed by CNN Business. He insisted that Boeing makes safety its top priority,
and he said the company has been doing everything it can to find a solution. And
he vowed the 737 Max will become the safest plane in the air once Boeing
develops a fix to the automatic safety feature that is the focus of the two
crash investigations.
"These enduring values are at the core of everything we do," Muilenburg said in
his prepared remarks. "Yet, we know we can always be better. We have a
responsibility to design, build and support the safest airplanes in the sky. The
recent accidents have only intensified our dedication to it."
Shareholders voted on one proposal that would have separated the positions of
chairman and CEO, both of which are now held by Muilenburg. A preliminary vote
of support a similar measure received last year, but still far short of a
majority.
The resolution predated the current 737 Max crisis. Two shareholder advisory
firms recommended votes in favor of the resolution this time.
"Shareholders would benefit from the most robust form of independent oversight
to ensure that the company's management is able to regain the confidence of
regulators, customers and other key stakeholders," said one of those services,
ISS, in a note urging support for the measure.
Muilenburg also said a preliminary vote showed that 92% of the shares supported
the company's executive compensation package.
A small group of protestors braved pouring rain and cold outside the annual
meeting. Most held large photos of some of the people killed on the two flights.
One held signs reading "Boeing's arrogance kills," and "Prosecute Boeing & execs
for manslaughter."
Questions remain as to whether Boeing (BA) did everything it could to ensure the
planes were as safe as possible. For example, four Boeing employees called an
Federal Aviation Administration whistleblower hotline to report damage to the
wiring of sensors, CNN has reported. And Boeing made airlines pay extra if they
wanted an alert that lets pilots know if two sensors are contradicting each
other. After the crashes, the company said in congressional testimony it would
make that feature standard on planes in the future.
Muilenburg defended that earlier decision to include the alert as an option in
his prepared remarks.
"We don't make safety features optional," he said. "Every one of our airplanes
includes all of the safety features necessary for safe flight."
Muilenburg said again that the company is getting close to a software fix. It
has completed 146 flights of the 737 Max, totaling roughly 246 hours of air time
with the updated software. He said he personally has flown on two of those test
flights.
And in response to a shareholder's question, Muilenburg said Boeing executives
would be on some of the early commercial flights once the planes return to
service.
"It will include me and many others," he said. "This is a really important part
in showing our confidence in our product. Our Boeing employees are very
supportive of doing that."
Muilenburg faced several questions from shareholders about how the problem with
the 737 Max was able to happen.
"You seem to have rushed the 737 [Max] into production and lost sight of some
basic fail-safe things that go on," said one shareholder. "It never should have
happened that you had one easily damaged sensor control a new, critically
designed safety feature."
Muilenburg insisted that the 737 Max was not rushed. He said the plane took six
years to develop and that the equipment had been deemed safe.
"I want to assure you safety is our top priority," Muilenburg said. "That said,
we can always improve."
The safety feature forces down the plane's nose if a sensor detects it is
climbing too fast and at risk of a stall. Apparently the sensor on the two
flights gave a false reading. Two weeks after the Ethiopian crash, Boeing
announced the software fix would add data from a second sensor that measures the
horizontal tilt of the plane.
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