Boeing's stock falls as lawmakers blast CEO Calhoun for 'strip mining' company for profits

By Chris Matthews

Oversight hearing follows release of new whistleblower allegations

Boeing CEO David Calhoun turned to families of victims of Boeing crashes who were present at a Senate oversight hearing Tuesday to apologize for "all the grief that we have caused," promising that the company is "totally committed in their memory to work on focus and safety."

Calhoun's testimony came after the Senate committee released new evidence related to its investigation into the safety culture at Boeing during the hearing Tuesday, including the testimony of two whistleblowers coming forward for the first time.

Boeing (BA) employee Sam Mohawk alleged that the company is improperly tracking airplane parts that for safety reasons should not be installed on airplanes, according to a statement issued by Sen. Richard Blumenthal, a Connecticut Democrat and chair of the Senate Permanent Subcommittee on Investigations.

"This hearing is a moment of reckoning," Blumenthal said in opening remarks. "It is about a once iconic company known for engineering excellence and product prowess that somehow lost its way."

Boeing shares were down 1.6% Tuesday and have fallen nearly 33% year to date, according to FactSet. The company's performance has weighed on the Dow Jones Industrial Average DJIA and has trailed the S&P 500's SPX15% rise in 2024.

Blumenthal said he believes there is sufficient evidence to prosecute Boeing for violating an agreement with the Department of Justice following the 2018 and 2019 crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302, which killed hundreds of people.

The company entered into a deferred-prosecution agreement with the government in 2021 to resolve criminal charges that it defrauded regulators in connection with their oversight of Boeing's 737 Max airplane. It agreed to pay a $2.5 billion criminal penalty.

A Boeing spokesperson said the company received the documents from the Senate late Monday evening and is still reviewing the claims.

"We continuously encourage employees to report all concerns as our priority is to ensure the safety of our airplanes and the flying public," Boeing said.

Lawmakers from both parties criticized Calhoun and Boeing's safety track record.

Republican Sen. Josh Hawley of Missouri took aim at Calhoun's $32.8 million pay package in 2023, which was up from 45% from the year earlier.

Hawley argued that Calhoun was being paid very well to cut costs without concern for the effects of those cuts on workers or the quality of the company's products.

"You're not focused on safety, you're not focused on quality and you're not focused on transparency," Hawley said. "You're focused on exactly what you were hired to do, which is that you're cutting corners, you're eliminating safety procedures. ... You are cutting back jobs because you're trying to squeeze every piece of profit out of this company."

Hawley added that Calhoun is "strip mining" Boeing, "one of the greatest American companies ever ... for profit and shareholder value, and you're being rewarded for it."

In January of this year, a panel used to plug a section reserved for an exit door on the Boeing 737 Max 9 blew out shortly after Alaska Airlines Flight 1282 took off from Portland, Ore.

There were no fatalities, but the incident added to concerns about Boeing's procedures for ensuring safety and led to widespread groundings of the company's aircraft.

Calhoun told lawmakers that after the incident, the company "took immediate action to ensure the specific circumstances that led to this accident would not happen again."

Read more: Boeing's cash-flow woes hit company's bonds, raising fears of a debt downgrade

-Chris Matthews

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06-18-24 1554ET

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