DealBook Conference 2019
November 6, 2019, New York City, United States
DealBook Conference 2019
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Boeing CEO Dennis A. Muilenburg Expresses Regret Over Fatal Plane Crashes | DealBook
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About speakers

Dennis A. Muilenburg
Chief Executive Officer at Boeing Company
Andrew Ross Sorkin
Columnist & Editor-at-Large at New York Times

American business executive, and the former president and chief executive officer (CEO) of The Boeing Company, a multinational aerospace and defense company. He was CEO from July 2015 until December 23, 2019, when he was fired after the aftermath of the two crashes of the 737 MAX.

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Sorkin is an award-winning journalist and author. He is a financial columnist for The New York Times and a co-anchor of "Squawk Box," CNBC's signature morning program. Sorkin is also the editor-at-large of DealBook, a news site he founded in 2001 that is published by The Times.Sorkin is the author of the best selling book, Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System—and Themselves, which chronicled the events of the 2008 financial crisis. The book was adapted as a movie by HBO Films in 2011. Sorkin was a co-producer of the film, which was nominated for 11 Emmy Awards.Sorkin began writing for The New York Times in 1995 under unusual circumstances: he hadn’t yet graduated from high school.

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About the talk

Topic: Business

The Boeing Company President and C.E.O. Dennis A. Muilenburg talked to Andrew Ross Sorkin at the New York Times DealBook Conference on November 6, 2019.

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Thanks again. It's good to see you. And then again, I just I do want to thank you for keeping the commitment to be here when we first started talking about doing this. I think you thought and I probably thought that perhaps the 737 Max would be back in the sky or at least there would be a time when I know you have a timeline timeline that might have been sooner than later and I have so many questions and and some of them are personal. I don't want to talk about this whole experience more than anything else. I know that you've been you've testified

and has a lot of people come to you for different information and I want to get some of the information but I also want to talk about how you think and learn how you thought about this process what you've learned from this process and I thought we could start here, which is that, you know yesterday Dave Calhoun. We got the chairman of your company was on television with Phil LeBeau. Telling the world about a phone call that you made to him on Saturday morning. I believe of this week after having testified after having met so many of the victims and you made a decision

where you told him that you didn't want to take a bonus for this year and I want to talk about that but tell us about what happened on Saturday morning. Thanks. Thanks for the chance to join you this morning. First of all, I have just a ton of respect for Dave and and I appreciated the comments. He made earlier this week Saturday morning's conversation really came out of my discussion with the families of the victims earlier in the week between the two hearings on a Tuesday evening. I spend a few hours with the with the families and I had the chance to listen to their personal

stories and Heard their sorrow their grief and it was as a father and husband myself. I was heartbroken over that and it would take a lot of pride in the safety the products we build and people count on us for safe travel and those stories just had a huge impact on me in and caused me to think about what could we do as a company? What else could we do to help these families and also for me just to step up with a sense of responsibility as a leader of this company. I felt it was important for me to to forgo those bonuses

and send a message of responsibility and also just begin to think about how we can help with the healing for these family. So I called Dave Saturday morning and conveyed my request to do that and Dave can be in the board and it was a good discussion around that but again that all ties back to our mission is a company in the importance in the work we do. I asked you because you did get to see them in person. But there's been so much criticism and critique of the company throughout this whole process that it hadn't been as human and I wonder whether you feel now that you should have gone and

visited with those victims earlier and I think about that every day and I wish I had gone to visit them earlier and we've been focused ever since the accident on understanding what happened doing everything we can to to fix the airplane to improve the max. We've been focused on working to make it the safest airplane ever to fly, but the personal element of an impact it's had on families what's reminded me of the importance of the work we do and we talked a lot about at Boeing about the fact that lives depend on what we do literally and I should demand this incredible sense of excellence and

how we do it. But until it's personal until you're really talk with the families and really hear those personal stories. There's nothing else like that that's going to stick with me forever. It's it's now it's part of me and it's it's part of the legacy of our company and I we're going to learn from it and it's going to make us better as a company. That is so important. Tens of millions of dollars like ultimately by the by the time the numbers are calculated to me. It's not it's not so much about the the dollars that the dollar figures themselves. It's more about a sense of

responsibility here and focusing on what's important in conveying to our team at all of our customers to the families that to me. It's it's not about money. It's about the importance of what we do and our commitment to safety as a company this all needs to tie back to a culture of safety and giving them to a victim spot. Yeah, well part part of my plan I have in public about this but part of my plan is to contribute significant amounts of that to charity and that'll include substantial amounts

going to the funds that we set up for the victims families. That's a personal decision for me. But something I intend to do related question. There's been a big debate in the airline World about an N at the company from what I understand about whether there should be clawbacks in terms of compensation both for senior Executives and other people potentially future incidents. I think you heard comments on that yesterday and certainly our board is going to take a look at your every dimension of our processes policies

related to safety and clawback provision. So I'm sure he'll be part of that discussion. That's not really wear my football. What do you think? Compensation when I say problems at this scale when you're in the air, but I think it's important to differentiate between responsibility and and culpability. First of all, it's an important difference but take a look at clawback provision take a look at every one of our policies and processes and how they go back and reinforce her safety culture. I fully support that

our company Works our business model works because we build design supports a fair point. We provide safe travel for the public and everything. We do should reinforce that objective and you may think I'm trying to but I just want to go back in time. If you go back after the second crash you call President Trump him that this playing with safe and just stay in the sky. This is despite Regulators grounded. I think it was to compare notes just after the second accident to find out what was going on to

convey our concerns and they were in to encourage that any decisions be made you made Based on data data system. Safety Aviation system safety are the reason it's worked. The reason is the safest form of transportation in the world because we make decisions based on data. That was the subject of my first call. Now overnight we discovered some new data satellite-based dated what you've seen reports Ford in the media that Drew some potential connections between the two accidents or made a second call on on the second day in and at that point after talking

with our board conveyed our recommendation to ground the fleet again Based on data. In scramble mode trying to figure out what had gone wrong and Andrew we were working with all the authorities The Regulators around the world trying to understand what happened and you thinking back on that time frame if if back then if we knew everything that we knew now, we would have made a different decision early and we tried it every step to make the best decisions based on

the data. We had working with all the Regulators. But yeah, we could have done better. I think the key is you'll learn from these accidents were going to be better as a company. We're making the fixes that we need to make to the airplane and we won the safest airplanes ever to fly and we're going to learn and we're going to get better as a company or just understand this because there was a. During this is when the crashes that happened. Play the moment, but I understand. Were you screaming at me when you were seeing evidence work or it could have these text exchanges by the

wasn't working black. What did you know what that time for real important understand that the safety case for the airplane is not determined by one individual or or singular emails that the safety cage free people to speak up. Right? We want to hear those inputs. We want to hear different points of views, but it's really important we talk about safety the airplane. I think these are our decisions are made by big teams of people working across different disciplines. The safety case for the airplane is

based on pilots fly real airplanes with real software over months and months of time. We did 1600 test flights on this m caste system. As part of our Max development process. So yeah, we build our safety case Based on data and in substantives on the other end of him last week. He said how did you not until you were set out a 9 alarm fire to say we need to figure out exactly what happened? And we were we are working around the clock every day on this again any inputs we get from our employees we take those seriously, we're working around the clock focused on safety. One of one of the things that

came up last week is this idea though that the company and yourself have not talked this individual yet. And I know he doesn't work at the company anymore, but I would have been at this guy's doorstep trying to understand everything you saying no injury. You got to go back to the time frame here. So this is this is the email or instant message early this year as part of the investigative process. We produce that to the authorities and handle that appropriately and you got to go back to the safety case that was being made to in the time frame when this instant

message was actually written several years ago the airplane with the real software with real Pilots real airplanes are flying to software demonstrating its certifying it several months before this instant message. 4 months after 6 7 month flitetest activity. That's the real safety case for the airplane, but I think it's important to understand that I want from this experience difference. Do you think the reaction would be we are grounding these Plains now

and right. I think you're going to see us leaning even heavier in that direction. I mean, we're always going to be a company that's going to look at the data behind what occurs in and make good salads, but I can tell you that we've elevator don't think Which Wich to keep a book of people playing snare I said if we knew everything back then it we know now we would have grounded the airplanes after the first accident right that's that's our headset really important that we focus on the safety culture. So what you're going to see in our company, we've always had it at the

core of our company a focus on safety but that's being elevated in new ways now establishing a new board committee on safety and the safety organization that reports directly up to our chief engineer. We realigned entire engineering function at all of that is focused on driving safety focus and performance and culture in our company. And I know what the core of our company it's about building designing savior of the argument that the airline industry bones specifically is too close with the FAA

anymore place, but that's historically the FAA and Boeing we're working to close. We respect their oversight the delegated authority process that I think you're referring to that's been stood up over the last 20 years. You look at the data Aviation safety is improved by about 95% over the last 20 years. Some of that can be attributed to the stand up at this delegated authority which allows the FAA to fully exercise oversight role, but tap into the deep depth of Industry technical technical knowledge Boeing and across our

supply chain that combination improve safety, but it's really important we have strong oversight. We respect the FAA is roll and it is an independent Bowl voluntarily and it goes to competition with having with Jenny and Alex that this whole business is trust business and actually people in the public ID, even if you think the data it is in your favorite the public doesn't the relationship. And we think that the that the relationship should fundamentally change that actually you want more oversight committee. I failed you want to do less Adept it would call the delicate delegation. If you

will of some of the regulatory oversight which has been delegated right now to Boeing on the paper about and I know it wasn't related to these accident but bowing pushed earlier, but that would fit it working, but would you ever say if not working for the public and therefore it's not working. Well, we're certainly going to report support reforms that can be done. Right? We think it's a very appropriate to look at the balance in that delegated authority roll. We do think it's important be able to tap into industry expertise, but we

have to ensure that the FAA has every tool at its disposable at its disposal for for strong oversight. And we're going to support that and I think there's some logical reforms that could be made to look at rebalancing and we're going to support that effort. We think it's important to to help rebuild the trust of the flying public in the air because we have Southwest Airlines plane is fundamentally what you think you actually have to do to get their first of all we have to make sure the

airplane is absolutely safe. So everything we're doing right now is focused on safely returning the max to flight. We're going to take the time to get it right. This is not going to be governed by a particular timeline that you heard from the FAA as well. We're going to make sure they are playing it safe to everything we're doing is focused on that. I think we wait for the FAA assuming you would like it's Prudential Eyes by all the other International Regulators before even the FBI given this trust issue. Will there are dozens of regulators round the world that are involved in the Pro.

BFA is coordinating across all of those regulators and we're supporting that effort again. They've the timeline will be determined by The Regulators. Our job is to make sure the airplane safety is if you were there any water in there having to use that somehow some of this with little to begin with I don't think that was the case but do you think The Regulators around the world to stitch onesies around the world are focused on safety certainly public opinion factors into that, but what I've seen across this entire framework of regulators is a

focus on safety and that's what that's what it should be our business works because Aviation is safe because their planes are safe and because the public has confidence in the safety of those airplane, so we got to get this airplane back in flying safely. We have to make sure we provide all the training that's needed. We're going to be working with Pilots with the airlines. We know we've disrupted their operations were going to have to help them recover successfully and ultimately, The boys to their pilots and their Crews will matter to the Flying public and it's our job to work in time

to rebuild a great deal of respect for the pilot supplier airplane. So we have a large a team of Pilots inside a Boeing some of whom have experience with both our defense and Commercial customers. We work with are commercial pilots with Airlines around the world. They are the the voice of our customers their opinion definitely matter send and they're engaged with this right now in testing the airplane flying in the simulators. We've had hundreds of simulator session around the world where the pilots can experience the updated

airplane. We've identified for improvement. So we we've identified some areas where we need to build redundancy into the End cast off course, we've added three layers redundancy. We've also identified some areas where we need to improve the You've heard it from the Pilot State. They wish they had more information on mcast. We tried to get that information right in the original training manuals, but we clearly see that as an area to improve Sprint provide more you making to be trying to

delete certain things in this training manuals in these training manuals. It's really important that we we build those manuals to try to train the pilots on how to respond to the effects of failures rather than diagnosed failures. That's an important distinction. So that is an iterative process where we try to include the right information those manuals overtime and clearly here we can get her all the way right. We're going to add some more information going for Ralph Nader grand niece was killed on one of these planes and has said repeatedly that he doesn't take his Planes

in the air at that physically the way there's they're structured no matter what software is put on them that there's a fundamental problem. Which what do you say to him? Well, I certainly respect his opinion and I know it was a personal effect. This has had on on him and all the families. I'm going to respect those inputs and and we're going to listen to that and we're out for empathy plant look physically that this is an airplane that's in the family of Boeing airplanes in our heritage of how we design integrated airplanes clearly. We can

make some improvements to it. But this is a a solid airplane terms of fundamental design and with the software updates were making the training updates were making the amount of scrutiny that's going into this airplane as we tested now. This will be one of the safest airplanes ever to fly. I want to ask you a question and then want to open it up. You were stripped of your German title used to effectively run the board. You don't now. How does it how does that change things do you think that was that actually changes the business and

how you guys operate? Was it cosmetic what what what what drove it it was a real in substitute of change and one that I fully support we talked about it the board. First of all our chairman Dave Calhoun is somebody that I have a ton of respect where I work worked with him well and the ideas that the combination of the two of us can be a force multiplier for the company in our customers and this split in the roles and makes a solid governance move. It also frees up some bandwidth for meet again focus on the primary effort here focus on safely return the max to flight and

so I respect and support for that decision. I think it's good for the company good for our customers what's open at the questions? I know there's so many and I I saw it earlier Jeff sonnenfeld underwear. Jeff is the Yale business school and that you've got to hand over their Jeff and I know you had a question for Dennis I want Dennis I just got Andrew of this is an appropriate follow-up to the last panel for being here. But the last time we were talking about CEO voice and just wonder about the frustration about times where you are unable to use your voice for good

reasons. This joint is already technical review of regulators if you spoke out but we would lose a seat at the table. You can't say anything is unlike any other Industry Department of Justice didn't want you to share with other parts of government has complained that a test pilot had in the simulator. You can't go out and and trash your customers by asking questions about their maintenance procedures of known problems or or 23 + year old pilots in 26 year old captains. You can't get out and talk about that, you know what the pictures of

pilot shortage in parts of the world. So you have to musically sit there and be the receiving end of Grandstanding or if we weren't here public I would say bloviating Congressional figures as well as and no offense sanctimonious journalist that make you an easy morality play. There are bad guys and good guys in Industry. Can sometimes the good guys get confused with the bad guys, cuz we go for a simple morality? How do you deal with not answering not being able to answer back and defend yourself a year ago? You couldn't talk like you are now what's

it like going through that year of being a scapegoat is important that we folks in our values as a company and and never never forget that and you'll just this has been a tough situation for a company but it's nothing compared to what these families have faced and we have to remember that and you're my job is the leader of this company has to take responsibility. I think there's been a lot of questions when accidents like this happen around and what were the causes and what were all the what were all the parameters. Well the fact is that any accident with one of our airplanes is

unacceptable. We take responsibility for that. It's important for me to stand up to that and anti demonstrate our values as tough as it might be we have to stick to our core values run safety quality and integrity and in the end we going to come out as a better company as a result of all of this Challenge and that's what we're focused. I see the legendary, Joe perella In the front row. Thanks Andrew. I have a question of a different nature of Dennis and that is a in 2001 Boeing moved its corporate headquarters

from Seattle where you had been since your founding to Chicago and I guess my question is. Did the separation of the corporate office in the decision-making there from where the plane is manufactured? And I assume we're many Engineers are did that affect the company's ability to respond to this crisis the communication between these entities. I think you get the thrust my question the answer's no, I don't think so and let me give you a reason for that

Eli. I started with Boeing at 34 years ago as an intern summer intern Engineering in Seattle. I spent the first 15 years of my career in Seattle. I know that team exceptionally, well, we still have about half of our employee based there. And as a CEO of the company my favorite thing to do is get out and spend time with her people and being the factory to be on the floor and I feel very confident that the communication lines across her company were open and transparent that we can always get better. We can always get better at sharing information, but I feel very confident that What team was

working together as one team that we all had the the ultimate goal of safety hazard focus and yeah, I've heard that same story or suggestion that somehow having headquarters in Chicago and the bulk of the work in Seattle causes some division in the company. I just don't see it in and having spent a lot of time in both Seattle and Chicago. I think I can speak with a voice of experience their final question from The Witches this I'm sure at some point along the lines. Did you know what you have any I don't know should I resign given this

trust issue given the balance of public trust trust with regulators and at the same time trust with employees of the company and what you think you bring to the table during this period of trying to get this plane back in the air. How have you thought about that has there ever been a day where you're sitting around? The Lincoln what this is not working. It's not working. I got to get out of here is better for the company for me to leave and I think it's fair to say I thought about it, but to be frank that's not what's in my character.

I don't see running away from a challenge resigning is the right solution the way I grew up what I believe in today and the values and try to share with my teams will we have challenges we face into a your these two accidents? They happened on my watch at bowling and I feel obligated. I feel responsible to just stay on it to work with a team to fix it to see it through. I think that's really what it's about. And I thought that's just a responsibility. I think supporting and that's that's what our company is about. We

we owe the world safe flight. That's what are businesses. That's why I poured my life into this company. That's what are our teammates do everyday and that sense of responsibility and Leadership is is important to me and I think ultimately that's how we rebuild the trust is the flying public. So as long as the board that allows me to serve in this role, I'm going to serve in it and I'm going to put everything into it that I can and do our objective is to make sure that flying public has Safe Transportation. You want to be in this role for years now. After the devil you

talk a lot about trying to get the 737 Max back in the are absolutely I can't imagine a better job than then being the leader of the Boeing Company. This is an incredible company that per hundred and three years has done amazing things for the world. And we we have the privilege of providing safe travel. We support service men and women around the world with their defense products. We help astronauts be safe at the edge of space. We do amazing things and I am so proud of the hundred fifty thousand people bowing and I'm honored to have this leadership

role in to me. It said again about our values around safety quality and integrity and if I can bring that to the table, that's the most important thing I can do it. Well, I I think I'm having everybody we wish you a lot of luck. Thank you so very very much.

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