Latest / Boardroom Conversations with Fexingo: CEOs, Strategy, and Corporate Leadership Explained / How the Boeing Board Handled the 737 Max Crisis
Transcript
- Lucas: So it's June 21, 2026, and Boeing is still flying under the shadow of the 737 Max crisis. But the question I want to dig into today isn't about the engineering — it's about the board. How did a board at one of America's most iconic manufacturers let a fatal design flaw slip through, and what have they actually done to fix the governance? Luna: Right, because the crashes were in 2018 and 2019 — we're now seven years out. Has the board changed enough? Lucas: That's exactly the question. Before the Lion Air crash in October 2018 and the Ethiopian Airlines crash in March 2019, Boeing's board was what you'd expect from a legacy industrial giant: heavy on retired military brass, former airline executives, and financial heavyweights. But there was almost nobody with direct experience in aircraft certification or safety engineering. Luna: So the classic 'groupthink' problem — a board that reinforces the company's existing culture rather than challenging it. Lucas: Precisely. And the 737 Max was the perfect storm. Boeing was racing to compete with Airbus's A320neo, and the board was briefed on the schedule pressure. But according to the House Transportation Committee report, the board was not informed about the MCAS system — that's the Maneuvering Characteristics Augmentation System — until after the Lion Air crash. The system that ultimately played a role in both accidents. Luna: Wait — the board didn't know about MCAS? That's a fundamental failure of information flow. Lucas: It gets worse. The board's safety committee, which existed on paper, met only once in the two years before the crashes. And when it did meet, the agenda was dominated by financial performance and production rates, not risk assessment. The culture was: 'We certify our own planes, the FAA trusts us, move fast.' Luna: So the board was structurally aligned with management's profit motive. There was no independent voice saying 'slow down and check this.' Lucas: Exactly. And the consequences came fast. After the Ethiopian crash, the board had to act. They fired CEO Dennis Muilenburg in December 2019 — but not before giving him a $62 million exit package, which infuriated lawmakers and the public. Then they brought in David Calhoun, a board member since 2009, as the new CEO. Luna: So they promoted an insider who was on the board during the very period when the problems were brewing. That's not exactly a clean break. Lucas: No, it wasn't. And it took more pressure — from the Department of Justice, from institutional investors, from the families of crash victims — before the board started making real structural changes. In 2020, they separated the CEO and chairman roles, which had been combined under Muilenburg. Calhoun remained CEO, but a new independent chairman was appointed: Lawrence Kellner, former CEO of Continental Airlines. Luna: But Kellner was also an airline executive. Does that bring the right perspective, or just more of the same? Lucas: It's a fair point. The board also added new directors with specific safety expertise: for example, Admiral John Richardson, former Chief of Naval Operations, who brought experience with nuclear submarine safety — one of the most stringent safety cultures in the world. And David Gitlin, CEO of Carrier Global, who had deep manufacturing and supply chain knowledge. Luna: So they're trying to inject external rigor. But has that translated into real oversight? Lucas: Let's look at the board-level safety committee. It was revamped to meet quarterly, with direct access to the company's safety management system. They now review every significant safety incident, and the committee chair reports to the full board. That's a big shift from the pre-crisis era when the committee was essentially ceremonial. Luna: I've also read that the board now has a formal process for escalating safety concerns from engineers up to the board level — bypassing middle management if necessary. That's something the original culture lacked. Lucas: Right, that's the 'Safety Management System' that Boeing implemented as part of its settlement with the FAA. But here's the tension: despite all these structural changes, Boeing's financial performance has been under immense pressure. The company lost over $20 billion between 2019 and 2022. The board has to balance safety investment with cost-cutting, and that's where the rubber meets the road. Luna: So the real test isn't whether they have a safety committee — it's whether they're willing to delay a production target or kill a project when the safety data says something is off. Lucas: Exactly. And there have been concerning signs. In 2024, a whistleblower raised issues about quality control at Boeing's 787 plant in South Carolina. The board's response was to commission an independent review, but the whistleblower's allegations were later partially corroborated by an FAA audit. So the board is still playing catch-up. Luna: It sounds like the board is structurally better, but culturally the transformation is incomplete. And culture change at a 100-year-old company takes a decade, not a few years. Lucas: That's the key insight. You can change committee charters and director bios, but the underlying engineering culture — where speaking up about a problem might slow down production and hurt your career — that's much harder to shift. The board has started to address it by linking executive compensation to safety metrics, not just financial ones. But we won't know if it's working until another near-miss happens. Luna: And that's the uncomfortable reality for investors and the flying public. You're essentially betting that the board is now asking the right questions. Lucas: If these kinds of boardroom dynamics matter to your work or investing decisions, this show is made possible by listeners like you. A couple of dollars a month at buy me a coffee dot com slash fexingo genuinely keeps these conversations ad-free and independent. That's buy me a coffee dot com slash fexingo. Luna: Yeah, we've had listeners say it helps them think more clearly about the companies they invest in or work for. So it's a small way to keep the content coming. Lucas: So back to Boeing: the board now has a more robust structure, but the ultimate test will be the next generation of aircraft. Boeing is developing a new mid-market airplane, and the board's willingness to let engineers take the time to get it right — even if it means missing a production deadline — that will define whether the governance changes are real. Luna: And whether the company can ever fully restore trust with regulators and the public. Lucas: Exactly. Thanks for listening.