Over 30,000 machinists and aerospace workers at the company walked off the job Friday after a large majority rejected a tentative contract. A Bloomberg Intelligence analysis predicted Monday that Boeing could be out $3.5 billion in cash in the third quarter if the strike continues through September.

According to the Bloomberg report, the cash loss could reduce Boeing’s balances to $9 billion—near the minimum for the company. The largest driver of results in sales will be 737 deliveries, which Boeing will have made 78 of for Q3 versus 70 in Q2. The report stated that defense and Global Services are expected to perform similarly to Q2.

Boeing Cuts Costs

Boeing executive vice president and chief financial officer Brian West told employees in an emailed memo that the company would take actions to preserve its cash, including:

• Starting a hiring freeze across Boeing for all levels, and pausing any pay increases associated with internal executive and management promotions.
• Stopping any travel that is not for critical customer, program, regulatory or supply chain activity.
• Suspending nonessential capital expenditures and facilities spending.
• Suspending outside consultant spending and temporarily releasing nonessential contractors.

“… [W]e are planning to make significant reductions in supplier expenditures and will stop issuing the majority of supplier purchase orders on the 737, 767 and 777 programs,” West said in the memo. “We are also considering the difficult step of temporary furloughs for many employees, managers and executives in the coming weeks.”

Which Airlines Will Be Impacted?

Bloomberg Intelligence stated that airlines most affected by Boeing’s strike will be Ryanair, Southwest Airlines, United Airlines, and Alaska Airlines. While it’s not in the high-demand season, this is expected to predominantly affect U.S. air travel.

The report stated that the most-affected airlines in the near term appear to be Southwest, Alaska, Aeromexico, and Jin Air of Korea, all of which are expecting two deliveries in the remaining half of September. With vacation season waning in the U.S., Bloomberg estimates a minimized impact from delays.

Editor’s Note: This article first appeared on AirlineGeeks.com.

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“There’s changes that need to happen,” Brian West, Boeing’s chief financial officer, said Wednesday in addressing the Bank of America Global Industrials Conference in London. “There’s no doubt about it. But we’re going to do so diligently and expeditiously.”

In remarks, West acknowledged repercussions had followed a recent incident where a door plug dislodged from a Boeing 737 Max 9 passenger jet mid-flight, leading to rapid decompression.

“The events of January 5, and Alaska Airlines Flight 1282, and everything we’ve learned since, we acknowledge that we need to improve upon safety and quality and conformance,” West said.

• READ MORE: Boeing Changes Leadership of 737 Program

As a result of the event, which triggered a National Transportation Safety Board (NTSB) investigation and FAA audit, Boeing is taking a careful look at its processes, West told the forum.

“There are changes that need to happen,” he said. “[We’re] deliberately going too slow to get this right. We’re the ones who made the decision to constrain rates on the 737 program below 38 per month until we feel like we’re ready, and we’ll feel the impact of that over the next several months.”

No More Travel Work

In late February, the FAA said it was giving Boeing 90 days to identify ways to improve safety culture and address compliance issues. One of the first changes the company identified as necessary was putting an end to “traveled work,” West said.

“Traveled work has existed for a very long time, and in recent years, we tried to get ahead of it,” he said. “Turns out it wasn’t enough. For years, we prioritized the movement of the airplane through the factory over getting it done right, and that’s got to change. The leadership team got it in the immediate aftermath of January the 5th. We control how this happens, and it’s about our resolve to get ahead and get after traveled work.”

• READ MORE: FAA Gives Boeing 90 Days to Improve

West noted that Boeing CEO Dave Calhoun is in the factory “personally making sure that we do get control of it, because once you do reduce travel to work, your quality gets better, your stability gets better, and probably most importantly, the work of the mechanic gets better.”

On March 1, for example, the company announced it would no longer be traveling work between contractor Spirit AeroSystems in Wichita, Kansas, which manufactures fuselages, and the Boeing plant in Renton, Washington.

“We will only accept a fully conforming fuselage from Spirit, which means in the near term, there might be variability of supply,” West said.  “But long term the predictability that we’re going to get is dramatically better, and the nonconformances dropped significantly in our factory because it takes those nonconformances and it pushes them upstream where they belong to get actioned.”

West stressed that production is continuing at Boeing, and it has aircraft scheduled for delivery through 2028.

Impact on Customers

West acknowledged that the slowdown is impacting Boeing’s customers.

“[But] they have been supportive of everything we’re trying to do to enhance safety and quality for the industry,” he said. “We are in regular, very transparent communications, and they know precisely where we stand and the progress that we’re making, and we, at the same time, have to understand what their needs are as they think about their flight schedules and their passengers.

“Ultimately, our job is to make sure that we can execute on behalf of our customers in a way that’s more predictable, more dependable, with the highest quality in mind, and we’re going to do that one airplane at a time, and our customers are hanging with us and we’re appreciative of that.”

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As the rudders are a flight control system, federal regulations require the NTSB be notified in the event of a malfunction. According to the report, the servo that activates the rudders may have been adversely impacted by the cold.

What Happened

According to the report, the jet operated as United Airlines Flight 1539 had flown from Lynden Pindling International Airport (MYNN) in Nassau, Bahamas, to KEWR in New Jersey. Shortly after touchdown the captain who was pilot flying noted the rudder pedals “did not move in response to the ‘normal’ application of foot pressure while attempting to maintain the runway centerline. The pedals remained ‘stuck’ in their neutral position.” 

• READ MORE: NTSB Releases Preliminary Report on Florida Jet Accident

The captain used the nosewheel steering tiller to keep the aircraft near the centerline during the rollout as the aircraft slowed. The steering tiller is controlled by hand and used in the relatively tight quarters of the ramp.

Per the NTSB, the captain asked the first officer to check the function of his rudder pedals. The first officer reported his pedals were not responding, however, the captain then noted that shortly thereafter the rudder pedals began to operate normally.

The issue was reported to airline maintenance, and the aircraft removed for service.

The flight data recorder, which records aircraft performance data, corroborated the pilot’s statements regarding the malfunction of the rudder system. The data showed that during the landing and subsequent rollout the rudder surface position remained near its neutral position even though the force applied to the rudder pedals was increasing. 

• READ MORE: NTSB Chief Testifies That Boeing Is Stonewalling on 737 Door Plug Blowout 

The NTSB noted that “about 30 seconds after touchdown, a significant pedal force input was observed along with corresponding rudder surface movement. Afterward, the rudder pedals and rudder surface began moving as commanded and continued to function normally for the remainder of the taxi.”

The investigation involved the FAA, United Airlines (UAL), Boeing, and Collins Aerospace. It was noted in the report that the post-incident troubleshooting and inspection of the rudder control system found no obvious malfunctions with it or any of its components whose failure would have resulted in the restricted movement observed during Flight 1539 and the subsequent test flight that followed the event.

“As a precaution, the aft rudder input torque tube and associated upper and lower bearings and the rudder rollout guidance servo were removed for further examination by the NTSB systems group,” the report said.

Following the removal of the rudder system components, UAL conducted a second test flight on the airplane and found the rudder control system operated normally.

Component Details

According to the information gathered by the NTSB, “pilot control of the 737-8 rudder is transmitted in a closed-loop system from the pilots’ rudder pedals in the cockpit through a single cable system, aft rudder quadrant, pedal force transducer to the aft rudder input torque tube in the vertical fin. Rotation of the torque tube provides the command inputs to the two main and standby rudder power control units (PCUs) to move the rudder surface.”

The incident airplane was delivered to the airline in February 2023. The aircraft was configured with “a rudder SVO-730 rollout guidance servo that was disabled per UAL’s delivery requirements to reconfigure the autoflight system from CAT IIIB to CAT IIIA capability.”

Investigators stated that although the servo was disabled, it remained mechanically connected to the upper portion of the aft rudder input torque tube by the servo’s output crank arm and pushrod. The rollout guidance servo was removed from the incident airplane and subjected to cold soaking to determine if the cold had adversely affected the torque required to move the servo’s output crank arm.

Per the report, at room temperature it was found that the torque to rotate the servo’s output crank arm was within design specifications.

After the unit was then “cold soaked” for one hour and the test was repeated, it was found that the torque to move the servo’s output crank arm was significantly beyond the specified design limits.

“Because the servo output crank arm is mechanically connected to the rudder input torque tube, the restricted movement of the servo’s output crank arm would prevent the rudder pedals from moving as observed during Flight 1539 and the test flight,” the report said.

• READ MORE: Boeing Subcontractor Scrutinized Over Door Plug Failure

The reported rudder malfunction happened approximately a month after an Alaska Airlines Boeing 737-9 Max lost a door plug during climbout from Portland International Airport (KPDX) in Oregon. No one was injured, however, the incident led to the grounding of the aircraft. Boeing has been under intense scrutiny from the FAA and NTSB since the event, with both agencies focusing on the manufacturer’s safety culture.

“We appreciate the NTSB’s work on this preliminary report and will continue to fully support their investigation,” a Boeing spokesperson told FLYING. “We worked closely with United Airlines to diagnose the rudder response issue observed during two 737-8 flights in early February. With coordination with United, the issue was successfully resolved with the replacement of three parts, and the airplane returned to service last month.”

The NTSB noted the report is still preliminary, and the information may change as the investigation continues.

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In an internal communication sent to employees of Boeing’s Commercial Airplanes division, division CEO Stan Deal said this was the first of many quality stand-down days for the factories involved in the 737 program.

“Production, delivery, and support efforts will pause for a day, so teammates can take part in working sessions focused on quality,” Deal said. “The sessions allow all teammates who touch the airplane to ‘pause, evaluate what we’re doing, how we’re doing it, and make recommendations for improvement.’

“During the stand-downs, teammates will participate in hands-on learning, reflection, and collaboration to identify where quality and compliance can be improved and create actionable plans that will be tracked to closure.”

Quality Stand-Downs will be held over the next several weeks at other Boeing factories and fabrication sites to include all airplane programs.

According to the Seattle Times, a whistleblower at the Renton plant allegedly has paperwork that claims the door plug was removed for repair from the fuselage of the Alaska Airlines 737 Max 9 that lost the plug in flight, then reinstalled without the required four bolts that hold the door in place. If the National Transportation Safety Board (NTSB) investigation confirms this, the blame for the event would fall on Boeing, rather than Spirit AeroSystems, the makers of the 737 fuselages.

• READ MORE: Alaska Airlines Grounds 737 Max Fleet Following Explosive Decompression

The aircraft was delivered to Alaska Airlines in October 2023. It did not have enough time in the air for it to be subject to a so-called “heavy maintenance” cycle.

The door plug was found in the backyard of a Portland, Oregon, area schoolteacher. It has been sent to the NTSB laboratory in Washington, D.C., for analysis. Investigators are trying to determine if the four bolts that are supposed to hold the door plug in place were installed correctly.

In the meantime, the entire fleet of Boeing 737 Max 9 aircraft remains grounded and subject to extra inspections. The Max 9 is primarily used by United Airlines and Alaska Airlines. Both carriers are having to cancel flights and adjust schedules to make up for the loss of aircraft while they continue to closely inspect their fleets.

According to Alaska Airlines CEO Ben Minicucci, a close inspection of the 737 Max 9—which makes up 20 percent of the company’s fleet—uncovered loose bolts in many of the airplanes.

“I am more than frustrated and disappointed,” Minicucci told NBC News. “I am angry. This happened to Alaska Airlines. It happened to our guests and happened to our people. And my demand on Boeing is, what are they going to do to improve their quality programs in-house?”

• READ MORE: NTSB Identifies Part That Failed on 737 Max 9

Boeing and Alaska are facing lawsuits from passengers who were on board Flight 1282 on January 5. As the aircraft with the gaping hole in its side descended into Portland, several thought they were going to die and sent farewell messages to their loved ones via text.

Among the concerns were that the airliner had three maintenance write-ups regarding the pressurization system, but the aircraft was permitted to remain in service as long as it did not fly over water.

What Is a Door Plug?

The door plug covers a space that can be turned into an emergency exit if the operator of the aircraft desires. The outline of the door plug can be seen from the exterior of the airplane. Inside, if the emergency exit option is not selected, the space looks like a bulkhead in the fuselage with windows.

The fuselages for the 737 are made by Spirit AeroSystems, which is also investigating its quality-control measures. In December, two former employees at the Wichita, Kansas, facility filed a class-action suit alleging that a lack of quality control was endangering the company.

FLYING will continue to follow this story and post updates as they are available.

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Those words come from a statement from the FAA, which announced Thursday that it has formally notified Boeing that it is conducting “an investigation to determine if [the company] failed to ensure completed products conformed to its approved design and were in a condition for safe operation in compliance with FAA regulations.”

The investigation is a result of an incident on January 5 when an Alaska Airlines Boeing 737 Max 9 (737-9) lost a door plug in mid-flight, resulting in a rapid decompression of the aircraft and an emergency landing.

The airline immediately grounded its fleet of 737 Max 9s. Within hours the FAA grounded the model countrywide. This has resulted in hundreds of flight cancellations and delays for United Airlines and Alaska Airlines, which utilize the design. 

The FAA stated that the aircraft will not return to the skies until they have been inspected and found to be safe, noting “the safety of the flying public, not speed, will determine the timeline for returning the Boeing 737-9 Max to service.”

The FAA added: “Boeing’s manufacturing practices need to comply with the high safety standards they’re legally accountable to meet.”

• READ MORE: Boeing Subcontractor Scrutinized Over Door Plug Failure

In a letter sent to Boeing on Wednesday, the agency said that it had recieved notification of “additional discrepancies on other Boeing 737-9 airplanes” and noted these circumstances “indicate that Boeing may have failed to ensure its completed products conformed to its approved design and were in a condition for safe operation in accordance with quality system inspection and test procedures.”

The letter noted Boeing has 10 business days to respond to the FAA.

This is a developing story. FLYING will continue to provide updates as they are made available.

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The modular layouts can be combined for a total of 144 unique cabin configurations, seating between 13 and 25 passengers depending on the design. Three color schemes are available on Select jets. While the company outfits a number of Boeing models for VIP use, BBJ Select is available solely for the 737-7.

• READ MORE: Boeing Sees Strong Demand for Bizliners

“Boeing Business Jets is offering customers a new, streamlined approach to designing a unique, comfortable, and functional interior for our BBJ 737-7 jet,” said BBJ president Joe Benson. “For customers who may not have the time or desire to create a fully bespoke interior, BBJ Select offers pre-designed options to outfit their cabin, which allows us to offer the jet at a very attractive, fixed price.”

According to BBJ, the Select program saves time and money by removing costs for “one-time engineering and related work for the installation of a clean sheet cabin design.”

The company has partnered exclusively with completion centers Aloft AeroArchitects and Greenpoint Technologies for the program, with Boeing overseeing the design, build, and delivery of the aircraft. The setup allows customers to sign a single contract with Boeing rather than multiple ones for the aircraft and completion work.

While no firm orders have been announced, BBJ reports that the first Select jets could be ready to enter service in 2026.

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Tuesday the air carrier announced it had selected the 737 Max 10,  the largest of the 737 variants. 

According to Boeing, the purchase is the biggest in the history of the airline and includes a firm order for 150 737-10s with an option for 150 more.

“Ryanair is pleased to sign this record aircraft order for up to 300 Max 10s with our aircraft partner Boeing,” said Michael O’Leary, Ryanair’s Group CEO. “These new, fuel efficient, greener technology aircraft offer 21 percent more seats, burn 20 percent less fuel and are 50 percent quieter than our B737-NGs. We expect half of this order will replace older NGs while the remaining 150 aircraft will facilitate controlled, sustainable growth to just over 300 million guests per annum by 2034.”

• READ MORE: Airline Rapid Growth Plans Hinge on Boeing 737 Max

Said Boeing President and CEO Dave Calhoun: “The Boeing-Ryanair partnership is one of the most productive in commercial aviation history, enabling both companies to succeed and expand affordable travel to hundreds of millions of people. Nearly a quarter century after our companies signed our first direct airplane purchase, this landmark deal will further strengthen our partnership. We are committed to delivering for Ryanair and helping the airline group achieve its goals.”

This new order will be posted to Boeing’s Orders and Deliveries website once it is finalized.

At present, Ryanair includes a growing fleet of 197-seat 737-8-200 airplanes. The larger 737-10 variant has 228 seats and, according to Boeing, offers the best unit economics of any single-aisle airplane.

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The net loss totaled $425 million, or 69 cents per share, compared with a loss of $1.16 billion, or $2.06 per share, a year earlier. Revenue for the quarter rose 28 percent to $17.92 billion from $13.99 billion a year earlier.

• READ MORE: Airline Rapid Growth Plans Hinge on Boeing 737 Max

“We delivered a solid first quarter and are focused on driving stability for our customers,” said Dave Calhoun, president and CEO of Boeing. “We are progressing through recent supply chain disruptions but remain confident in the goals we set for this year, as well as for the longer term.”

Boeing’s Commercial Airplanes operations reported a 60 percent revenue increase to $6.7 billion from $4.2 billion, benefiting from higher deliveries of 737 and 787 deliveries, partially offset by 787 customer considerations. The operating margin (of 9.2 percent) also reflects abnormal costs and period expenses, including research and development.

• READ MORE: Boeing Slows 737 Max Deliveries Because of Parts ‘Quality Issue’

Boeing noted that the fuselage supplier for its 737 program recently told the company that methods affected certain fuselage fittings. While the resulting problems do not immediately threaten safety, the company said, correcting them will slow near-term production and deliveries. The company said it still expects to deliver 400 to 450 aircraft this year. Its plans  include increasing production to 38 aircraft this year and to 50 per month during the 2025 to 2026 timeframe.

For the 787 program, Boeing said it is building three airplanes per month and plans to increase production to five per month in late 2023 and 10 per month during the 2025 and 2026 timeframe.

Commercial airplane orders totaled 107 during the quarter, and the company received commitments from Air India for 190 737 MAX, 20 787, and 10 777X aircraft, and from Riyadh Air and Saudi Arabian Airlines for up to 121 787 airplanes.

Boeing said it delivered 130 airplanes during the quarter and its backlog reached 4,500 airplanes with a value of $334 billion.

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The deal is a boon to the top aircraft makers, certain engine manufacturers, and the aircraft industry’s vast network of component and equipment suppliers.

The New Delhi company said the order includes 40 Airbus A350s, 210 Airbus A320 and A321 Neos, 20 Boeing 787s, 10 Boeing 777-9s, and 190 Boeing 737 MAX aircraft. Air India also said the A350 aircraft will be powered by Rolls-Royce engines and the 777s and 787s will use GE Aerospace engines. The remaining aircraft, all single-aisle models, will be powered by engines from CFM International.

Air India’s announcement also resonated in the political realm. For example, President Joe Biden spoke yesterday with Prime Minister Narendra Modi of India about what the White House called “the historic agreement for Air India to purchase over 200 American-made aircraft from Boeing.” Biden said the sale will support over one million American jobs across 44 states.

“Air India is on a large transformation journey across safety, customer service, technology, engineering, network and human resources,” said N. Chandrasekaran, chairman of Tata Sons and Air India. He said a “modern, efficient fleet is a fundamental component of this transformation” and a major step toward the company’s goal of offering world-class service for global travelers.

The new aircraft will modernize and expand the airline’s fleet while providing opportunities for Indian aviation professionals and spurring the country’s “aviation ecosystem,” the airline said.

Air India said it expects the first of the new aircraft to enter service late this year, with most coming online beginning in mid-2025. The company also said it has separately begun taking delivery of 11 leased 777s and 25 A320s aircraft to accelerate its expansion.

The new aircraft will come with a new interior design and will complement the airline’s previously announced plan to refit its existing 787 and 777 aircraft with new seats and entertainment systems. The first of the refitted aircraft are slated to enter service in mid-2024, Air India said.

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The company’s net loss for the quarter totaled $663 million, or $1.06 per share, compared with a loss of $4.16 billion, or $7.02 per share, a year earlier. Revenue grew to $19.98 billion from $14.79 billion for last year’s fourth quarter.

For the full year, the net loss increased to $5.05 billion, or $8.30 per share, from $4.29 billion, or $7.15 per share, during the same period in 2021. Revenue for the year rose 6.9 percent to $66.61 billion from $62.29 billion.

Boeing benefited from an increase in aircraft orders last year as airlines recovered following the downturn in travel resulting from the pandemic. However, the company has had a difficult time increasing aircraft production to keep up with orders due in part to supply chain problems.

“We had a solid fourth quarter, and 2022 proved to be an important year in our recovery,” said Dave Calhoun, Boeing’s president and CEO. “Demand across our portfolio is strong, and we remain focused on driving stability in our operations and within the supply chain to meet our commitments in 2023 and beyond. We are investing in our business, innovating and prioritizing safety, quality, and transparency in all that we do. While challenges remain, we are well positioned and are on the right path to restoring our operational and financial strength,” Calhoun said.

Boeing said 737 production is stabilizing at a rate of 31 aircraft per month, and it expects to increase to 50 per month by 2025 or 2026. Production of the 787 “continues at a low production rate with plans to ramp production to five per month in late 2023 and to 10 per month in the 2025/2026 timeframe,” the company said.

During the quarter, the company said it received orders for 376 aircraft, including an order from United Airlines for 100 737 MAX aircraft and 100 787s. Boeing said its Commercial Airplanes operation delivered 152 aircraft during the quarter, with a backlog totaling more than 4,500 airplanes valued at $330 billion.

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