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Speaker 1: Dave Calhoun, the Boming CEO, sitting down with Bloomberg's guy Chance.

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Speaker 1: The conversation you want to tune into. Let's take a listen. Recently,

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Speaker 1: you've obviously had a series of safety incidents that have

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Speaker 1: put you back. You're seeing that reflected in the financials.

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Speaker 1: You are now on a journey to change the culture

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Speaker 1: of the business, to put the financials back on a

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Speaker 1: more even keel. We see this day in and day out.

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Speaker 1: Give me a sense of the timeline you're working with here.

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Speaker 1: How long is this process gonna take?

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Speaker 2: First of all, the best answers to the question, is

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Speaker 2: it's going to take as long as it's going to take.

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Speaker 3: Yep.

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Speaker 2: And one of the flaws any of us can get

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Speaker 2: into is to predict that moment. But I can predict

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Speaker 2: circumstances that will define those moments.

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Speaker 3: Everybody knows.

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Speaker 2: When this started, it was with a couple of horrific,

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Speaker 2: horrific accidents where lives were lost. A company at that

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Speaker 2: moment in time had a very difficult experience what I

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Speaker 2: call the lack of transparency, the unwillingness to take responsibility immediately.

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Speaker 3: And I've been candid about that.

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Speaker 2: I believe transparency of all things and relative to all cultures,

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Speaker 2: is about the most powerful word I've ever seen. Any company,

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Speaker 2: especially large scale companies, who are willing to be transparent

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Speaker 2: about everything, they'll suffer less because the minute you start

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Speaker 2: to hide something in a big company, others notice and

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Speaker 2: they might hide. And I'm not suggesting there was nefarious

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Speaker 2: or anything of the sort, but transparency is.

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Speaker 3: Like the most critical thing in the world.

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Speaker 2: And when we started this what I call the recovery moment,

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Speaker 2: which was beginning of twenty twenty, we made wholesale changes

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Speaker 2: to the leadership team, We made wholesale changes, began wholesale

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Speaker 2: changes to the board.

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Speaker 3: We stopped production of the Max.

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Speaker 2: So we went a full year year in a month

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Speaker 2: without producing a single airplane. Created a safety office based

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Speaker 2: on lots of experiences that the FAA had working directly

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Speaker 2: with airlines. Ironically, they mandated a safety management system for airlines,

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Speaker 2: but not yet for the manufacturers of the supply chain

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Speaker 2: in the industry.

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Speaker 3: So we decided we would take that.

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Speaker 2: We would learn everything that we could create a safety office,

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Speaker 2: and most importantly in that is stay tuned to the fleet,

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Speaker 2: know what it's doing every day all day, and then

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Speaker 2: be transparent about everything you see and get good at that.

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Speaker 2: So take that forward, and this is where I'll start

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Speaker 2: to approach the experience we had with Alaska Airlines, which

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Speaker 2: was the depressurization event and the escape of the door.

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Speaker 3: So our supply chain.

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Speaker 2: And ourselves started production in the first month of twenty

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Speaker 2: twenty one from a rate of zero and a workforce.

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Speaker 3: While we hadn't laid it off.

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Speaker 2: We had moved it to a whole variety of places

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Speaker 2: around our factories, and then we had to move them

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Speaker 2: back and remobilize all of that effort.

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Speaker 3: At the same time. I haven't even mentioned COVID.

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Speaker 2: That happened, so demand for airplanes fell precipitously. We know

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Speaker 2: that it also shut down our two factories because the

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Speaker 2: first case in the US was right between them, literally,

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Speaker 2: so we had a moment that's hard to describe.

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Speaker 3: But then we had to begin the mobilization.

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Speaker 2: And I would agree with everything Giome said about the

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Speaker 2: supply chain and the ramifications of COVID on the supply chain,

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Speaker 2: the turnover of experienced people, the loss of really important skills,

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Speaker 2: and then coming back in a much slower and maybe

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Speaker 2: a bigger word sporadic pace than any of us had

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Speaker 2: hoped for. Maybe we should have expected it, but at

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Speaker 2: least we were hoping for better than that. So for

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Speaker 2: twenty one and twenty two and twenty three, we were

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Speaker 2: gradually bringing up the rates. Demand for airplanes came back

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Speaker 2: faster than any of us ever imagined it would, and

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Speaker 2: it came back in a robust way. We were increasing

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Speaker 2: our rates, but a little bit of an issue began

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Speaker 2: to arise. You may know, when nonconformance gets to your

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Speaker 2: factory and you have the capability to fix it, you do,

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Speaker 2: and you can do one of those, and you do

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Speaker 2: two of those. But when it starts to overwhelm the

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Speaker 2: positions in your factory and you're doing more and more

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Speaker 2: of that kind of work, or simply trying to accommodate

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Speaker 2: a part that didn't show up. Ye didn't show up

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Speaker 2: when it was supposed to be to in position two,

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Speaker 2: let's do it in position four. So this happens, and

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Speaker 2: it migrates, and it migrates into the factory. And I

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Speaker 2: will say, while it was not the specific cause to Alaska,

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Speaker 2: in my view, it was the systemic cause. It was

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Speaker 2: the issue that created the opportunity a little bad behavior

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Speaker 2: without a doubt on the part of somebody who we

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Speaker 2: don't know yet, but it created an opportunity in the

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Speaker 2: last position of a factory to then allow for an

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Speaker 2: escape which we are not allowed to do and never

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Speaker 2: will be allowed to do. So that was sort of

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Speaker 2: a you know, a short story of a long set

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Speaker 2: of issues.

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Speaker 3: But what do you do when this stuff happens? You?

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Speaker 3: You know, this is what I love about the industry,

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Speaker 3: just for what it's worth.

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Speaker 2: Eighteen or nineteen eighty nine, a United Airlines lost aircraft

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Speaker 2: in Sioux City, Iowa, and there were.

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Speaker 3: Many fatalities. I was a ge.

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Speaker 2: It was a total moment for Ge on the subject

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Speaker 2: to say, if he a complete overhaul of the business,

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Speaker 2: the company, its approach to engineering, the maturity of design practices,

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Speaker 2: and the allegiance to the skills that are required to

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Speaker 2: perfect the mature a design practice. Lots of details, but

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Speaker 2: it was an overhaul of the entire company.

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Speaker 3: And I also remember when.

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Speaker 2: I came in as CEO at the end of the

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Speaker 2: next decade in nineteen nineties, it was it's like it

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Speaker 2: happened yesterday. Every employee remembered it, they understood it, their commitment.

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Speaker 2: Design practice has always started with a brief discussion on

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Speaker 2: what happened in Sioux City.

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Speaker 3: That's going to be us. That's going to be us.

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Speaker 2: And I don't know exactly when that moment is, when

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Speaker 2: we're starting to feel really stable. I think in the

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Speaker 2: engineering world and our commitment in the design space, human factors,

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Speaker 2: all the things that led to the real tragedies at

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Speaker 2: Lionair and in Ethiopia, I believe that those fixes are

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Speaker 2: in place, and now we're maturing, maturing, and we don't forget.

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Speaker 2: And now I think in this Alaska moment and the

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Speaker 2: escape that we got from our factory, I think the

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Speaker 2: comprehensiveness of our plan, our willingness to take responsibility in

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Speaker 2: the first instance, send a clear message to all of

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Speaker 2: our company. The transparency will be paramount in this process.

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Speaker 2: We presented this comprehensive plan to our regulator. Here's one

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Speaker 2: thing I want to makeure everybod understands this is our plan.

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Speaker 2: It's not our regulator's plan. This is our plan. It's

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Speaker 2: not our regulator's plan. They will provide oversight like they

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Speaker 2: do and they will regulate us, but it has to

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Speaker 2: be us. We got to believe in it, we gotta

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Speaker 2: love it. We got to want to do it, and

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Speaker 2: we got to take the.

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Speaker 3: Pain that goes with slowing down the factory. We got

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Speaker 3: to take the pain.

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Speaker 2: And if we slow it down and stick to the

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Speaker 2: disciplines that will synchronize this supply chain with the insatiable

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Speaker 2: demand for airplanes and stay disciplined on that, we will

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Speaker 2: put all this in a rearview mirror and we will

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Speaker 2: be way better for it. And there will be a

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Speaker 2: moment later in life where someone will look back and say,

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Speaker 2: this may have been the most important moment in Boeing's life.

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Speaker 1: So what advice do you give to your success? What

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Speaker 1: kind of person does that success need to be? You

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Speaker 1: just lay out what needs to happen, What kind of

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Speaker 1: person is going to be delivering that kind of plan.

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Speaker 1: What kind of person would you like to see? What

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Speaker 1: kind of person needs to be in your chair to

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Speaker 1: do what you've just described.

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Speaker 2: Again, I'll just start with a word transparency. You just

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Speaker 2: can't click for a minute, There's there are no.

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Speaker 1: But is it an external candidate?

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Speaker 3: Is it an internal I know, guy, I'm not going there.

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Speaker 3: So well, we can.

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Speaker 2: Go anywhere you want, but we're not We're not going there.

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Speaker 2: I will just tell you this it'll be a deliberate process.

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Speaker 2: It is Yep, it has been thought through. They will

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Speaker 2: get to a conclusion. It'll be a great one and

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Speaker 2: I'll be the most supportive player on the field.

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Speaker 1: But it's going to be it's going to be an

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Speaker 1: ongoing journey. This is not something that's going to be

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Speaker 1: completed easily or quick. What you've just described is something

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Speaker 1: that happened over many years. How symmetrical it's been.

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Speaker 2: Again, you're getting way too into this one, this process

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Speaker 2: and the thought process around what it takes and what

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Speaker 2: it is, who it is.

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Speaker 3: And remember I'm sixty seven going on sixty eight.

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Speaker 2: This is not like we woke up and here, let's

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Speaker 2: go do it. It's a methodical It'll be well done well,

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Speaker 2: and it'll be well articulated, and it'll be timely.

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Speaker 1: And Boeing will be a different company as a result

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Speaker 1: of it. Is.

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Speaker 2: It is a different company. If I didn't believe that,

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Speaker 2: I wouldn't go Everything that we've put in place, our

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Speaker 2: commitment to transparency, the extent to which we practiced it

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Speaker 2: post Alaska, the extent to which we practiced it post Alaska,

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Speaker 2: in full visibility to every interest that had been surrounding

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Speaker 2: us for the last five years made a difference and

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Speaker 2: it will continue to make a difference. And I believe anybody,

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Speaker 2: and by the way, our board now is educated on

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Speaker 2: what it means.

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Speaker 3: Anybody who comes into.

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Speaker 2: This role has to start with that thought process, that

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Speaker 2: notion and the rest of these initiatives and efforts. In

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Speaker 2: my view, that'll be the momentums there. It'll continue. And

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Speaker 2: if I always give somebody a warning sign, it's pace.

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Speaker 2: First question. First question you ask me, when is it

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Speaker 2: going to be done? Well, it's going to be done.

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Speaker 2: When it's going to be done, and be patient and

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Speaker 2: keep the supply chain synchronized.

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Speaker 1: The metrics we should look out for, the metrics moster.

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Speaker 2: Actually we posted the metrics that we're looking at, so

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Speaker 2: they're transparent for everybody, transparent for our regulator. So yes,

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Speaker 2: And what those metrics are meant to represent in a

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Speaker 2: factory is stability.

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Speaker 1: How important is Bowing to America.

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Speaker 2: I you know, I believe it's the most important company

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Speaker 2: in the world. And I'm not objective, but here's the thing.

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Speaker 3: Here's the thing. Our mission is to protect, connect and

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Speaker 3: explore the world. Just think for a second about each

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Speaker 3: of those how.

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Speaker 2: Important they are to the world, and particularly now I

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Speaker 2: love Gilm's answer to the question on do we need

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Speaker 2: four or five more competitors?

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Speaker 3: We need two great ones, and yeah, there will be,

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Speaker 3: there will be.

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Speaker 1: We have course we do.

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Speaker 3: Of course we do. Of course we do.

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Speaker 2: We take off and land every second of every day,

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Speaker 2: every second of every day, we deliver safe air planes.

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Speaker 2: This is this is if I've no question about about that.

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Speaker 3: But just stop for a minute. There's two guys that

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Speaker 3: do this.

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Speaker 2: Connect the protect which nobody really talks about with respect

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Speaker 2: to Boeing and the work that we do for our

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Speaker 2: US military, and now, way more importantly, as we move forward,

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Speaker 2: the growing work we do for the allied forces around

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Speaker 2: the world who are all contending.

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Speaker 3: With new threats.

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Speaker 2: That's a whole new It's not a whole new opportunity,

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Speaker 2: but it is an opportunity that is getting all the

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Speaker 2: emphasis that it could possibly be getting. And as long

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Speaker 2: as we continue to develop products that are relevant to

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Speaker 2: those new threats, will be in a great place.

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Speaker 1: In terms of let's just circle back a little bit.

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Speaker 1: Do we need an Is there an engineering quality that

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Speaker 1: you need to run this company? Do you need to

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Speaker 1: get your hands dirty and understand what is happening on

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Speaker 1: the short floor. Is that ultimately, well, if.

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Speaker 2: The answer, if you're directing that at me like every popular.

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Speaker 1: Media, no, no, no, no, I'm not I'm not. I'm wondering

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Speaker 1: what really what I'm asking you is the success The

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Speaker 1: question is is this Is this an engineering problem? If

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Speaker 1: there's no talent problem, is.

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Speaker 3: It a it's no one problem.

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Speaker 2: The engineering talents in our company are are enormous.

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Speaker 3: Yep, I've I've been.

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Speaker 2: Hanging around a lot of engineering companies and interest for

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Speaker 2: a long time. Yeah, I've never seen one with more

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Speaker 2: breadth and more skill in my life. It has to

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Speaker 2: be organized, It has to be applied in a discipline

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Speaker 2: way with respect to a successor. They're not going to

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Speaker 2: engineer anything. If they engineer something, that's when we should

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Speaker 2: all run for the hills.

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Speaker 1: Okay.

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Speaker 3: So they have to be keenly.

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Speaker 2: Aware of where the engineering expertise lies and to make

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Speaker 2: sure it's supported in every way it can be, and

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Speaker 2: that it gets the last vote on everything, and it

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Speaker 2: gets the last vote on everything. So that's what you do.

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Speaker 2: Manufacturing processes. Do I have to assemble airplanes? Does my

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Speaker 2: successor need to assemble airplanes?

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Speaker 3: No.

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Speaker 2: Does it need to know the factory stable. Does it

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Speaker 2: have to have the metrics in place that provide for that.

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Speaker 2: Does it have to have the residence, skills and proficiencies

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Speaker 2: in place to make sure that's the case? Answers Yes,

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Speaker 2: and there is all of that. It has to be organized.

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Speaker 2: We got to wake up call to do it even better,

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Speaker 2: and that's what we do. We just focus on it

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Speaker 2: and just do it.

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Speaker 1: Again. Coming back to the point you raised about competition,

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Speaker 1: this is a point of disruption though in the industry.

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Speaker 1: I'd come back to the sustainability question. This is the

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Speaker 1: point of disruption in the industry. If Boeing's looking that way,

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Speaker 1: is it going to be distracted from the disruption that

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Speaker 1: is taking place in this industry? Potentially? Are you, by

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Speaker 1: having to go through this process leaving yourself open to

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Speaker 1: the distruction we've seen in the ev Sex even going

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Speaker 1: to look at what's happening here in Europe with the

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Speaker 1: car industry, there are others that are that are interested

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Speaker 1: in what you do and want to do it better.

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Speaker 1: How do you make sure that that doesn't happen.

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Speaker 2: Well, what we did and of the things I'm very

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Speaker 2: confident is what we did is we sustained all of

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Speaker 2: the major technology research programs and development programs related to

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Speaker 2: the technologies we think play on the next platform. All

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Speaker 2: of these have to be developed, tested, matured before you

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Speaker 2: can actually design an airplane that increates it. Yep, And

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Speaker 2: that's a lesson all of us have learned, who have

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Speaker 2: ever developed an airplane.

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Speaker 3: Make sure you take the time to mature those things.

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Speaker 2: But I feel very good about the portfolio of capabilities

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Speaker 2: that we will bring to that airplane, very good about it.

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Speaker 2: And again, you take the time to make sure they're

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Speaker 2: mature and ready, and there will be some significant changes

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Speaker 2: as we go forward. Yes, efficiency is the one that

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Speaker 2: we all talk about, but I think autonomy is another one.

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Speaker 3: That everybody should talk more about.

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Speaker 2: Doesn't mean pilotless, it just means autonomy capable.

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Speaker 1: Okay, let's just think about that for a moment. We're

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Speaker 1: struggling to certify derivatives of current aircraft. What do you

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Speaker 1: think the regulators are going to think about? How much

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Speaker 1: of a lag is there going to be in new

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Speaker 1: airplanes coming to market? When do you think you're going

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Speaker 1: to be This is the question that you're not going

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Speaker 1: to answer. Yeah, exactly, But let's assume that it's within

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Speaker 1: the next ten years. How long let's say let's say

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Speaker 1: it's ten years from now, how long would it take

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Speaker 1: to certify that aeroplane and is that how much? How

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Speaker 1: much of a slowdown in the process is not going

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Speaker 1: to mean.

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Speaker 3: Yeah, I can't predict that. I will say this.

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Speaker 2: We are we are an applicant for an autonomous civil

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Speaker 2: vehicle with our small air tax he called whisk Yep.

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Speaker 3: We're an applicant, and that.

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Speaker 2: Means that the regulator has accepted the application, and that

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Speaker 2: means they're organizing themselves to certify autonomy and to develop

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Speaker 2: an approach they can codify. And it's one of the

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Speaker 2: big reasons that we're invested in risk. It's one of

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Speaker 2: the big reasons. And I have a lot of confidence

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Speaker 2: that that that airplane will not only hit the market,

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Speaker 2: but it will be deemed safe and it will demonstrate.

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Speaker 1: That you talked before about how importance Boeing is to

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Speaker 1: America and to the world. But let's let me ask

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Speaker 1: you a question. The we're gonna we're gonna have an

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Speaker 1: election in November. What do you want to see from

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Speaker 1: the next administration? What is Boeing want to from the

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Speaker 1: next administration.

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Speaker 2: Yeah, well we're everybody knows I think, Uh, we're a

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Speaker 2: company that relies on trade.

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Speaker 3: Free trade to us will always be sort.

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Speaker 2: Of first on the list of desires. I'll be the

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Speaker 2: first to acknowledge that that seems to be going in

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Speaker 2: the wrong direction and has been for quite something.

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Speaker 1: To worry.

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Speaker 3: Yeah, I'm worried.

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Speaker 2: I'm worried that the ramifications of isolation are gonna are

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Speaker 2: gonna I don't want to overstate the word, but they're

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Speaker 2: gonna bring down economies.

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Speaker 3: They just are. They just are. Now.

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Speaker 2: I happen to be in an industry because choices are

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Speaker 2: limited and because needs are great. It probably won't hit

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Speaker 2: me first, But I worry about isolation with respect to

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Speaker 2: the economic ramifications for lots of countries and lots of people,

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Speaker 2: and isolation then breeds disenchantment, and disenchantment ultimately it's political turnover.

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Speaker 2: So I that's the world I worry about with respect

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Speaker 2: to isolation, and I don't like any of the signs

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Speaker 2: I see.

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Speaker 1: Okay, how does that? How does that change the way

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Speaker 1: you think about the way the buying is going to operate.

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Speaker 2: We're going to run hard, continue to build the world's

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Speaker 2: best airplane. And then we're going to compete, and I'm

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Speaker 2: gonna lobby every day all day for free trade.

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Speaker 1: Does it stop this? Does it stop the sustainability story?

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Speaker 1: Just cooperate?

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Speaker 3: No?

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Speaker 1: No, I've heard building bridges number of times today. What

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Speaker 1: you're describe me, it's not building bridges, it's it's blowing

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Speaker 1: them up.

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Speaker 2: It's what I'm observing, and I suspect you are too.

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Speaker 2: So we just have to be honest about what we observe.

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Speaker 2: We have to express our concern for what may happen

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Speaker 2: as a result, and those in industry I think have

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Speaker 2: a pretty good picture on that. And then we have

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Speaker 2: to lobby and convince the public and politicians that free

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Speaker 2: trades in everybody's best interest.

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Speaker 1: Is there a dang to the sustainable the story ends

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Speaker 1: up becoming we went through the the launch a saga.

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Speaker 1: We'll remember that. Is there a danger that we end

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Speaker 1: up balkanizing this process of sustainability, balkanizing the process of

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Speaker 1: the next next generation of aeroplanes, that there is no

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Speaker 1: cooperation and it becomes a an effort that is that

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Speaker 1: is driven by industrial policy with very domestic purposes of

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Speaker 1: mind and in mind.

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Speaker 3: Well that's a description of a of an end game.

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Speaker 3: I have no interest in UH.

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Speaker 2: I don't think it gets there. I really don't think

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Speaker 2: it gets there.

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Speaker 1: UH.

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Speaker 3: And it's with respect to this industry.

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Speaker 2: This industry, we have allied nations supporting both UH.

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Speaker 3: Both supply sides. In my view, that will play well.

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Speaker 2: Ultimately. We know we're going to have a competitor from China.

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Speaker 2: We have a keen awareness for all of that. We

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Speaker 2: should not be afraid of it. We should continue to

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Speaker 2: develop technologies. I agree with Gillolme's comments completely. Just keep

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Speaker 2: developing technologies the world needs and wants, compete with the

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Speaker 2: best of the best. In my case, yep, that's killome.

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Speaker 2: He would probably say the same. We just keep trying

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Speaker 2: to outdo each other, and that's what we keep running.

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Speaker 2: I think a China competitor's got a long way to

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Speaker 2: go on that front, measured in decades and decades, not

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Speaker 2: in years.

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Speaker 1: How should government support bog and Airbus? How should government

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Speaker 1: support the process of building the next generation of aeroplanes?

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Speaker 1: How should government supports the sustainability story that we're all

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Speaker 1: hopefully on the journey we're all on.

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Speaker 2: I think they have to mandate sustainability. I think we're

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Speaker 2: all committed to it, so I'm not suggesting we need

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Speaker 2: a slap in the face, but there are certain things

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Speaker 2: that will have to happen policy wise that create the

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Speaker 2: absolute need and more importantly, confidence that we are down

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Speaker 2: that path. And that's all things sustainable fuel, all things

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Speaker 2: sustainable aviation fuel. That is, that's the answer that gets

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Speaker 2: us even close to our objectives by twenty fifty. So

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Speaker 2: I'm in great favor of those kinds of policies, subject

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Speaker 2: to the political sides understanding of what capabilities and timeframes

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Speaker 2: are required to get there, and I believe we have

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Speaker 2: tools across our industry. We have one we call Cascade

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Speaker 2: where you can do the math really easily, like in

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Speaker 2: an hour, to figure out what policy objective will do

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Speaker 2: to emissions in the next twenty twenty five years.

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Speaker 3: So that's what we need to do. I don't think how.

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Speaker 2: I don't think our industry needs financial help to develop airplanes.

404
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Speaker 3: Do we all do? Fine?

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Speaker 2: We have capital markets that want to support and if

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Speaker 2: anybody knows the extent which capital markets want to step

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Speaker 2: in and support our industry, it would be me. Because

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Speaker 2: we were in a desperate need at a desperate moment,

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Speaker 2: and it came, and it came fast, and it came

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Speaker 2: in a big way. So I don't think capital markets

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Speaker 2: are constraint for our industry by any stretch of the imagination.

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Speaker 2: So I do think, though, on the subject of sustainability,

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Speaker 2: intelligent policy will help to mandate the.

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Speaker 1: Outcome You're going to Dorman, Dude, I had time. Is

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Speaker 1: there a lesson in that? Is that something we should

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Speaker 1: think about? In that history Europe and the United States?

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Speaker 1: It feels like we're maybe growing apart rather than growing together.

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Speaker 1: How do we think about that?

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Speaker 3: I probably would. Normandy has all kinds of meanings for me,

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Speaker 3: mostly personal.

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Speaker 1: Uh.

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Speaker 2: You know, my dad dropped in one hundred and first

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Speaker 2: on the other side of the enemy line, and there's

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Speaker 2: a lot of stories about how it happened. My point

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Speaker 2: in saying that is that that story, I mean, it

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Speaker 2: captures you like you can't believe it, feel like you're

427
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Speaker 2: watching a movie. But I've never seen anything that reminded

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Speaker 2: me in my time of that what would have been

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Speaker 2: that moment for him? Until I saw the Russian invasion

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Speaker 2: of Ukraine that all of a sudden looked to me like, wow,

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Speaker 2: that might have been a moment he went through. So

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Speaker 2: for me, I want to see NATO. I want to

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Speaker 2: see the support for NATO grow. I want to see

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Speaker 2: the understanding of what the ramifications of a week NATO

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Speaker 2: would mean. And I never want to see a war.

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Speaker 2: So I'm going to Normandy for lots of personal reasons.

437
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Speaker 2: But I think we're in a moment.

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Speaker 3: I just do.

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Speaker 2: And if we don't know it, we ought to get

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Speaker 2: real about it. And I think we ought to support

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Speaker 2: every element of NATO, every element of NATO. I was

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Speaker 2: in Poland, of course, was on the front line yesterday

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Speaker 2: all day. This is what we talk about. I've had

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Speaker 2: good toss discussions here. We just have to understand the threat.

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Speaker 3: It's real.

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Speaker 2: And I think I saw a glimpse of what all

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Speaker 2: of the all of the protectors of France in this case,

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Speaker 2: an enormity uh faced.

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Speaker 1: Ladies and gentlemen. Dave cal thank you,