Interview: Why Boeing’s CEO Says He’s Bucking His Critics
In the run-up to the Farnborough International Airshow, Boeing CEO David Calhoun met with Aviation Week editors Joe Anselmo and Sean Broderick at the company’s new headquarters in Arlington, Virginia. Editor Guy Norris joined the conversation via video. Excerpts follow.
- Willing to walk away from 737-10
- Chief legacy could be digital toolset for next airplane
- “Not going to write checks forever” in space
AW&ST: Boeing is $44 billion in net debt, first- and second-quarter earnings were full of charges, you haven’t been able to deliver 787s for more than a year, and the 777X program has had repeated delays. Are those not the signs of a company in disarray? No, they’re not. They’re signs of a company coming back. I started this in January of 2020. I think everybody knows the situation [then]: a 737 MAX accident where we still had not cleared the accountability question. So we did it, quickly. We set a realistic certification path with a regulator who had lost their faith and trust in us because we kept projecting and suggesting that a cert was right around the corner, and it hadn’t been. We took stock, we laid out a plan for what would take the remainder of 2020, and we got there. We got an airplane certified. So I feel like we’ve climbed a mountain, gotten over to the other side, and we’re working our way through it, and the team has done a hell of a job.
The 787 had some anomalies with respect to compliance with our own designs. None of them came close to a safety issue. The 787 has been working its way through all of those noncompliance questions. I think we’re close to the finish line, but I don’t get to tell you where the finish line is. I will celebrate when we move that airplane because of what our team went through and the way they responded. It was frankly amazing. I think we’re turning the corner, and in this industry you don’t turn the corner in a week, a month or even a quarter.
I love our portfolio. I point to the spots where a 787 beats an A350 most of the time, where the 777 family will now have zero competition at the highest end of the market. The 777 is going to stand on its own for decades; the 777X will get certified. When you’re flying this portfolio against that one, there’s nothing that I’ve learned in the last 2.5 years, not one thing, that would suggest to me that our portfolio doesn’t compete really well.
But there are still some in the financial community, and some customers, who are calling for more changes all the way up to the board level. How do you respond?
I love my team. They are facing the same challenges that I am. My board has faced not only those but governance challenges . . . and we’ve seen our way through all of that. Everybody who has led a company, they’ll look back and it will be the roughest moments when their teams jelled the most. We’re in the middle of that, and we are jelling. And so I have the utmost faith in my team.
The regulatory environment is at an all-time high, and you’ve repeatedly said it’s the right approach. But is there a danger at some point of applying so much regulatory scrutiny to programs that they are forced into stagnation? There is no delicate way to talk about this. It’s a long and tedious subject. We started with a trust problem, and I’ll take the hit for that. So then you just have to trust each other and work transparently. When the transparency question is behind you, it doesn’t get faster, but it gets a lot easier.
I think we’re now on the same page, working toward an end. It takes longer now; documentation takes longer. There are [times] when I wish we could have said, “Oh come on, really?” But I think both sides are going to look back at it as a very healthy moment, and we’re going to be better for it. And I don’t think it is going to have any lasting damaging effects on Boeing. I can’t point to the regulator and say they screwed us up.
If the 737-10 model is not certified by the end of December, you’ll need congressional relief from a pending deadline that would require flight deck system changes. The Dash-10 is a little bit of an all or nothing. I think our case is persuasive enough that we get there. This is a risk I’m willing to take. If I lose the fight, I lose the fight.
So you would not build the Dash-10 in that case? I think we’d end up having to face right into that question. . . . We believe in this airplane, period. We believe the intent of the counterparties that negotiated the [flight-crew-alerting mandate] time frame wanted this airplane covered. And I find very few voices that would suggest otherwise. . . . But if you go through the things we’ve been through, the debts that we’ve had to accumulate, our ability to respond or willingness to see things through, even a world without the Dash-10 is not that threatening.
The 737 line at Renton, Washington, is bumping up against its target of 31 aircraft a month. How are you handling all of the workforce and supply chain issues that are bedeviling the entire industry? It’s about the engines. It’s just simply going to be about the engines, and I’m not going to get ahead of what I believe that rate is going to be. There’s no question that if you just took demand, I could announce rates as high as 60 [a month] for the next couple of years. But I would be irresponsible for doing it because of stability and supply chains. Like you said, we’re trying to get to 31. We have months in the 20s, and we’re going to have months in the 40s. That’s not stability. Until we can get to stability—very low deviations on month-to-month—we’re not going to announce rate increases. And we’re going to make sure we send transparent signals to the supply chain.
We’re just starting to see demand for long-haul travel coming back. Has the demise of the widebody market been overstated? Oh, big time. I have no doubt the widebody market is back in force. It just took a lot longer.
The freighter market has been an important lifeline for Boeing widebodies, but International Civil Aviation Organization (ICAO) emissions rules threaten the longer-term future of the 767F and 777F. You launched the 777-8F, but have you decided to ask for an exemption, or will you take the plunge on going with an all-new 787-based freighter option? How about if I said “yes” to all of the above. We treasure the freighter market. We have a lot of experience in it. We’ve gained a leadership position, and we want to keep it. We know we’re going to have to do it by staying ahead of the ICAO limits, and I like our chances on all fronts. And yes, a 767 exemption makes all the sense in the world purely on a sustainability argument. We’ve got the 777-8F first, but there are other things we can do, and most likely will, because of our commitment to that market.
Russia’s invasion of Ukraine has led to the loss of the major engineering design center you had in Moscow. How are you replacing all that engineering talent? Our hiring progress has been really, really good. We’ve been adding engineers since [2021, and including this year] we’ll have 5,000-6,000 more net adds. So the organization’s been growing, but they’re still a little more domestically based than I would like. We’ve got a big impetus to move to some overseas centers. Moscow is a bit of a shutdown.
Standing up a new digital strategy seems to be the driving force for your next commercial airplane program. Can it really make that much of a difference in cutting development time? We’ve had three iterations on the defense side, and two of them I can talk about. MQ was our first, T-7 the second, and we’re piecing together the best of those experiences. For this leadership team and me, the most important legacy that we can bring, other than the stability to get us back to where we were, is going to be the use of that toolset on the next airplane.
I equate it to vaccines. Everybody knows the underpinnings of the [COVID-19] vaccine developments were the technologies that brought it to the marketplace in such a short time. Those platforms underneath are the ones that enabled the vaccines, which have allowed our industry to recover. We need the same analogy. We need to use these tools prolifically. It’s doable, it’s our moment now, and we have to staff up and get ready to pull the trigger.
What about propulsion? The GE-Safran RISE won’t be available until the 2030s. That’s exactly why I can take my time [on launching a new narrowbody] and do this right. If I thought there was an engine out there that would give me 15% [fuel-burn improvement], or an engine that was going to get certified with an open architecture in the next 8-10 years, that’s what I would be working on. I would have called that airplane out before the other guy and run the play. I don’t believe that’s going to happen. I think I’ve got a window. I want to build the foundation, and when we pick the plane, hopefully the propulsion technologies will be a little further along. And I’m as much interested in emissions as I am in efficiency. We have the time to get it right. If I can get the underpinnings done, when the technology is ready I can put it to work much faster and in a more predictable fashion. I’m going to use most of what’s in the modeling tool to certify, too. That’s a big deal.
Boeing has a blended wing body model and the Transonic Truss-Braced Wing, which are getting a lot of traction with the sustainability crowd and the research community. Do you feel like you’ve got a horse in the race there? Yes. I think hydrogen, blended wings, some of these things are going to lend themselves to that in the next half-century, but we need to be ready for them. The lion’s share of progress in this half-century is still going to be SAF [sustainable aviation fuels] and fleet renewal. There’s just no denying the numbers. Otherwise, we’re kidding each other about 2050.
Do you really think the global airline industry can get to net-zero emissions by 2050? I think we have a better shot than most industries. And it is mostly dependent on SAF. We’ve developed a tool that lets you look at the world’s traffic every day and start throwing some lenses at it with respect to SAF utilization, airplane type, what would happen if you accelerate renewal rates of the fleet by 10%, etc.
Hydrogen is going to move the needle about 1% in the 2050 time frame. That’s just reality. So why do I mention this tool? Because we cannot make the same mistake that energy has made, where policy-makers get so far ahead of industry capabilities that the music stops. That possibility exists for aviation if we don’t inform the policymakers with very simple tools whether something they [advocate] is doable or not.
Before you were CEO, when Boeing was flush with cash, it bid very aggressively on defense competitions such as the MQ-25 uncrewed aircraft system and T-7 trainer. Now you have to execute. Are you worried about that, given Boeing’s challenges with the KC-46 tanker and other programs? I’m not. I’ve never considered our first contract for the T-7 or MQ-25 to be loss contracts. I was on the board, and I always considered them investments. And when we had to post losses on the day we signed the contracts, I would always say, “Make no mistake, these are investments in programs and products that we think have long lives and are going to add sufficient enough value to the services that we’re going to make plenty of money on.”
So were we too aggressive? Who knows, who cares. I like them both. And while they’re not perfectly on schedule, and we’re getting whacked because of the fixed price and inflation and a few other things, that is not what I sweat. I just want to make sure the products get done well, and I believe they will.
How pleased were you with the CST-100 Starliner team coming back strong with the successful test of the crew capsule? [Aviation Week’s Irene Klotz] wrote about it and captured it perfectly. You didn’t avoid the things that were pitfalls along the way, but you understood that was a coming out party for us. . . . I believe strongly in space. I think a commercial market will come about, and it can be robust. We’re going to need more than Elon Musk to make that the case. But I sure like the way he’s seeded it.
Frankly, I like everything he does in space exploration, including some of the risks he takes. Because he reminds us that’s what the industry has to do. That’s how we got to where we are. I’m a pretty big believer in that. Boeing has experience in operating and maintaining space stations. That skill could be applied more broadly commercially.
Do you think there will be enough missions for NASA’s heavy-lift Space Launch System (SLS)? That I don’t have an answer to. My posture is that there is a market that looks like it wants to be big enough, and I’m willing to take risks leaning into that. I want to prove it all out to be ready, but I’m not going to do silly things, like lose money for 10 years. I will not apply the same logic I would apply to the T-7 and MQ-25 to that. I would want to take a little less financial risk up front because I think it’s one of those bets that’s on or off. You get it or you don’t. And you don’t want to make the bet and not get anything.
Boeing has put a lot of money into Starliner, too. When do you expect that to start to pay off? I don’t really know the answer. We like the program, and we know it’s going to get utilized in the early going. Then the question is: “Do we have more [space] station opportunities, and is there enough traffic?” If there is, it will be great. But we’ll be prudent every step of the way. We’re not going to write checks forever.
What are you most proud of during your tenure as CEO of Boeing? My job is to keep everybody on course and remind them that they’re going through the hardest time. I can’t think of an industry that suffered an internal issue like we did with the MAX, followed by a complete meltdown of the entire global industry for two years. So my supply chain got shut down because of me, and then my demand got shut down because of COVID. Demand has come back faster than I ever imagined it would. Supply, for a whole variety of reasons, is going to take longer to come back. But you’d rather be facing today’s world than the world in the early parts of COVID. I’m just really proud of the team for coming through that. c