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Pentagon has quietly growing doubts about Boeing’s direction

Pentagon leaders are nervous about where Boeing is headed and what the struggles of this strategic asset mean for the United States.

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Release Date
May 18, 2022
Pentagon has quietly growing doubts about Boeing’s direction
As key commercial customers add their voices to calls for new leadership at Boeing, behind the scenes, there are growing concerns at the upper echelons of the Department of Defense about the direction of the company and its commercial aircraft business, according to government, industry and financial officials.

The Pentagon has a significant stake in the company’s long-term health as Boeing’s single biggest customer. The Pentagon’s top leaders, including the Secretary of the Air Force, Frank Kendall, recently sought internal and third-party analyses and recommendations on the future of the company.

Related: New Boeing CEO tasked with fixing rifts he and the board helped cultivate

As one side of the large jetliner duopoly, Boeing is too big to fail. While it is a publicly traded company, it is also an important instrument of U.S. power. Certainly as a provider of weaponry to the Pentagon, but also as the country’s largest exporter with its jetliners.

It’s a superlative that officials are concerned Boeing may not hold. Consistent schedule delays, systemic manufacturing quality issues, cost overruns and a widening imbalance in its long-term market share with Airbus means it is ceding ground as not only as a major hub in the U.S. industrial network, but as a tool of soft power — the ability to wield the nation’s economic influence globally.

Boeing’s top leadership has sought to allay concerns about the company’s performance and direction, as it concentrates resources on solving certification, design and manufacturing challenges across its business. “We’re on the verge of turning the corner,” said chief financial officer Brian West last week at an investor event.

Related: First Biden budget to accelerate push toward Boeing 737 replacement

Yet, the scene now unfolding in May 2022 has distinct echoes of an earlier run-up to leadership changes at Boeing in the fall of 2019, when the company was facing Federal Aviation Administration concerns over an incomplete submission to return the 737 Max to service, a pivotal flight test for its CST-100 Starliner that could make or break its prospects for carrying astronauts to the International Space Station and many calling for change at the top of the company and its business units.

It was the confluence of those events that culminated in the ousting of chief executive Dennis Muilenburg and the elevation of David Calhoun, the company’s chairman and longest serving board member, as its new — and now embattled — CEO.

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