Logos Consulting Group president Helio Fred Garcia was interviewed about the Boeing 737 Max crisis on CNBC’s Squawk Box program. The segment, which aired at 8:45 Eastern on April 29, 2019, was in anticipation of the Boeing annual meeting of shareholders held later that morning.
Garcia appeared in the CNBC studio in the Times Square NASDAQ Market Site. He appeared with another guest, Carter Copeland, an analyst at Melius Research who covers Boeing. He was interviewed by co-hosts Becky Quick and Andrew Ross Sorkin.
The crisis began when a Lion Air 737 Max 8 crashed on takeoff in Indonesia on October 29 2018. An Ethiopian Air 737 Max 8 crashed on takeoff in Ethiopia in similar circumstances on March 10. Investigations have implicated a software issue.
On April 28 The Wall Street Journal reported that Boeing had failed to alert some airlines that a safety feature found on earlier models that warns pilots about malfunctioning sensors had been deactivated, according to government and industry officials.
Acknowledging the annual meeting starting in just over an hour, co-host Becky Quick asked Garcia, “It seems like there’s a news story or two every day on Boeing. What’s the battle they face at this point?"
Garcia replied,
“The battle they face is that the key to maintaining or restoring trust is to show you care, and their response hasn’t consistently showed they care. I’ve been baffled by their continued assurance that the plane is safe while also saying, ‘But we’re working on a software fix,’ And I couldn’t understand the relationship between those two statements until the Wall Street Journal story yesterday, when I think I figured it out. And that is, when they say the plane is safe, they mean when pilots know how to fly it. But it’s clear from the Journal story that apparently has been confirmed that they didn’t tell the airlines clearly enough that the standard safety feature from prior 737s was optional on this one. Some airlines didn’t have it.”
Quick asked, how could the airlines not have known? Garcia replied,
“It may have been known by procurement, but it didn’t get to the pilots. And one of the things that I do is teach Engineers crisis at Columbia. And I tell them, in the crisis you’ve got to stop thinking like an engineer. You’ve got to start thinking like the people who use your technology. And I don’t think Boeing was thinking like a pilot. They were thinking like the technologist: ‘We know this plane is safe, and pilots know how to fly it.’ And I think the disconnect was, the pilots weren’t aware that the safety feature had been turned off.”
Co-host Andrew Ross Sorkin asked whether Boeing had a management problem, and whether similar to Wells Fargo’s CEO Tim Sloan, who was fired after his crisis, the Boeing CEO would need to go.
Garcia pushed back,
“I’m not convinced that there’s an equivalence with Wells Fargo. There was malfeasance there. There doesn’t seem to have been malfeasance at Boeing. At Boeing it seems to be a tragic misunderstanding. Pilots believed they knew how to fly this plane. Boeing believed apparently that it had told the airlines how the plane needs to be flown. The disconnect is the pilots seemed completely unaware. I would advise Boeing to take as much time as possible for the pilots to be fully confident that they know how to do this. If this means delaying the ungrounding of the fleet, delay the ungrounding. That’s what going to get them through the crisis. They now need to be so responsible.”
Sorkin noted a number of related problems that Boeing is facing. Garcia said,
“I would argue that they have two strikes against them now. They can’t mess up going forward. So they need to be hyper-cautious, hyper-responsible, hyper-concerned about the user of their product and the people who get into the plane and fly in it. That has to be their first priority.
You can watch the entire interview here:
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