crashes that happened five months apart in

Indonesia and Ethiopia.

Both planes were Boeing 737 Max eight seconds.

Then this past January, Boeing came inches from

yet another catastrophe as a door plug blew off an

Alaska Airlines 737 Max nine plane at 16,000ft

shortly after taking off from Portland, Oregon.

Nightmare scenario for passengers.

The clothes on one child sucked out.

This was no

surprise. Unfortunately, the company has struggled

mightily with manufacturing and we've

had over 20 production quality defects.

You know, it's hard to keep up with all of them.

No one was seriously injured in the accident,

but the blown off panel produced a force so strong

that some headrests and seatbacks were ripped from

the cabin. Fortunately, no one was sitting in the

two seats next to the panel.

I saw the picture, everybody saw the opening,

but what I really saw was the empty seat.

I imagine every human being who would see that

understands the severity and the consequence.

There was a time when people said, if it's not

Boeing, I'm not going now.

There are passengers who avoid or are scared to get

on Boeing airplanes.

The Department of Justice has opened a criminal

investigation into the Alaska Airlines incident,

and the Federal Aviation Administration said it

found dozens of problems after auditing Boeing's

manufacturing process.

It just raises issues about the production at

Boeing. What's going on? There have been a series

of problems over the last few years, and we just

need to get our arms around that.

Boeing announced major management changes.

Ceo Dave Calhoun, who was brought in to get the

company out of the Max crisis in 2019, just

announced he'll be stepping down at the end

of 2024.

We have another mountain to climb.

Let's not avoid what happened with Alaska Air.

Let's not avoid the call for action.

We will get through that. And I've committed myself

to the board to do exactly that.

Boeing's stock has also been on a decline.

It hit an all time high in 2019, before the Max

crash in Ethiopia plummeted during the

pandemic, and is down over 25% so far in 2024.

My sense is until you get an all clear, the stock

will probably be stuck in a range.

And you know, the key question, really, I mean,

the multi-billion dollar question is when does the

all clear and we just don't know yet.

CNBC explores how the 737 Max crisis unfolded, and

what the future holds for Boeing's best selling jet.

The official 737 christening ceremony took

place in the new final Assembly building on

January 17th, 1967.

The first Boeing 737 debuted in 1967.

Over the last few decades, strong demand for

the twin engine narrowbody jets led to

many evolutions. Of the 737 family, there have

been over 10,007 37 seconds made, and it's

flown over 30 billion passengers.

The plane is so popular that Boeing estimates a

737 takes off, or lands every 1.5 seconds.

If you've flown, you've likely flown at some point

in your life on a 737.

It's one of the most commonly used aircraft by

airlines around the world.

The commercial aircraft market is dominated by

Boeing and Airbus.

Together, their planes represented over 75% of

aircraft flying last year.

The two compete on various types of

jetliners, especially narrow body planes like

the 737 and A320, which account for close to 60%

of the global fleet.

In 2011, Boeing was under pressure after Airbus

launched an upgrade to its existing narrow body

plane called the A320neo, which stands for New

Engine option. The plane was more fuel efficient

and could save airlines money.

American Airlines and exclusive Boeing customer

at the time, was ready to place a big order with

Airbus and told Boeing it would have to move quickly

to win the airline over.

Boeing took a lot of shortcuts in developing

this aircraft, and those shortcuts literally bit

Boeing in its behind.

Designing a new airplane could take up to a decade

and billions of dollars in investment.

Boeing decided to re-engine the 737 with a

new engine variant, which was more fuel efficient

and called it the 737 Max.

It's a very simple reason why Boeing was looking at

Re-engining, essentially the 737, which had already

been around for decades.

It's cheaper. So instead of building a plane or

designing a plane from scratch, what they did was

made some changes to the existing aircraft to get

planes to market faster and then not to lose out

on orders to their rival, Airbus.

It offers four different sizes of the aircraft the

Max, seven, eight, nine, and ten.

The Max eight received FAA certification in 2017.

During development, Boeing engineers observed

the nose tendency to pitch up during a specific

extreme maneuver.

This led to the design of a software called the

Maneuvering Characteristics

Augmentation System, or MCAS, which would push the

airplane's nose down in the Max eight crashes in

Indonesia and Ethiopia.

Mcas was activated after receiving inaccurate

sensor data. It repeatedly pointed the

nose downward until it struck the ground.

Pilots on both flights fought to override the

system, but both ended in fatal crashes.

Pilots of all Max planes were not made aware of

MCAS existence until two weeks after the first

crash. It wasn't until after the second crash,

nearly five months later, that those planes were

grounded. The grounding lasted for 20 months, the

longest in aviation history.

A report from Congress found numerous design,

management and regulatory failures by both Boeing

and the FAA.

It detailed what it called a deeply disturbing

picture of cultural issues, and said that it

will take a long time and serious efforts to

thoroughly resolve.

In the five years since, Boeing has spent billions

trying to recover, but its reputation took

another damaging hit after January's Max nine

door incident.

It's a different set of lessons drilling holes

wrong, not putting in bolts right in.

In one one sense, the quality issues are much

more simple where the the MCAS issue, the control

system issue that they had on the max before was

in many ways more insidious, because it was

just a fundamental design flaw in the airplane.

When the first series of accidents occurred,

killing 346 people, Boeing was almost in

denial of any problems.

The most recent problem, Boeing, to its credit,

stepped up to the plate and they said, look, this

is a problem. We have to investigate it and we have

to fix it. And they've owned it.

While Boeing and the FAA have responded more

aggressively to the Max nine issue, reports and

audits of the accident are uncovering new

problems. Preliminary reports said the door

panel that flew off the Max nine appeared to be

missing four key bolts.

Boeing has also said that there is not paperwork

that has documented the door plug getting opened

and getting closed, while wrapping up manufacturing

on that plane.

The FAA production audit found multiple instances

where both Boeing and fuselage maker spirit

AeroSystems allegedly failed to comply with

manufacturing quality control problems.

The fuselage of the 737 Max aircraft is made by a

company in Wichita called spirit AeroSystems.

No relation, by the way, to Spirit Airlines.

There were issues beyond what happened on the

January 5th flight. There were planes with mis

drilled holes. There were parts of the fuselage that

were not up to standard.

Spirit AeroSystems used to be Boeing.

Wichita. Boeing spun off its Wichita unit as spirit

AeroSystems to improve profitability.

That puts the financial squeeze on spirit

AeroSystems to build the fuselages for the lowest

possible cost.

Clearly, this has come with some intangible cost

in terms of quality control.

About 70% of Spirit's revenue last year came

from making parts from Boeing. It's their biggest

customer, and then about 25% is coming from Airbus.

Boeing is now looking at purchasing spirit.

Some say like it'll give them a little bit more

control or a little bit more visibility into its

supply chain.

Experts also suggest the change in workforce

post-pandemic could be affecting.

Quality. And it's not a Boeing specific issue,

particularly post-Covid getting experienced labor.

There was a lot of retirement. You think,

well, you have a workforce that maybe

wasn't experienced where there are several

variables going on within an experienced workforce

where, you know, quite innocently, they just left

something off and it wasn't caught by the

system. That's where you worry, because that should

have been caught by the system. And then the big

question is, if that wasn't caught, what else

hasn't been caught?

Boeing has also been under pressure to ramp up

production. The company has delivered 1,462 Max

aircraft, but has 4,752 unfulfilled Max orders.

This has caused a number of issues for the

airlines.

Some of Boeing's biggest customers are having to

scale back their growth plans a little bit.

United is pausing pilot hiring for a couple of

months. Southwest Airlines is having to cut

some of its flight schedules for 2024 because

the planes are arriving late.

I'm disappointed that the manufacturing challenges

do keep happening at Boeing. This isn't new.

I'm disappointed in that.

Southwest and United have the most Boeing 737 Max

planes in their fleets, so the grounding of these

planes has had a ripple effect.

Airbus, meanwhile, has been slowly chipping away

at Boeing's market share.

Boeing had a big increase in net orders from 774

planes in 2022 to 1,314 planes in 2023, but Airbus

had over 2,000 orders last year.

It has delivered more planes and received more

orders for the fifth consecutive year in a row.

In the late 1990s, Boeing merged with McDonnell

Douglas. It was an aircraft manufacturer

which made commercial planes like the MD 11 and

MD 80, as well as space and military aircraft.

There is a belief that the focus at Boeing has

shifted since this merger with McDonnell Douglas to

profitability, as opposed to, uh, engineering

excellence.

I think one of the big, you know, indicators of

that was moving the corporate headquarters

away from any of the big manufacturing sites.

After the 1997 merger, Boeing moved its corporate

headquarters after 85 years in Seattle to

Chicago and more recently to Arlington, Virginia.

27 years later, experts and CEOs are still blaming

that merger for the more recent issues.

My assessment is, you know, this goes all the

way back to the McDonnell Douglas merger, and it

started a change in culture.

If I were.

Making recommendations to the company, I would say,

yeah, sure. Management should be located in the

Puget Sound region, their biggest manufacturing

site, and in fact, they should be sleeping on the

factory floor at this point to get everything

kind of back in order.

Many of Boeing's other programs have also faced

problems. They've faced cost overruns, and they've