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00:00Hello, everyone, and welcome to this special interview.
00:24It took Boeing Company decades to build its reputation as one of the most reliable and
00:29trusted airplane manufacturers in the world.
00:32But it took her only a few years to undo it all, as regulators, airlines, and even investors
00:37question this decade-long reputation and credibility.
00:41So what's Boeing's plan to navigate this crisis?
00:44And what's the company's strategy when it comes to quality and safety control?
00:48Here to discuss these questions and more is Dr. Brendan Nelson, president of Boeing Global
00:53and senior vice president of the Boeing Company.
00:57Thank you so much, Dr. Brendan, for being with us here at CNBC Arabia.
01:00It's my pleasure, May.
01:02So first, I would like to start with your presence here in the region.
01:05You were in Qatar.
01:06Now you're in UAE.
01:07And I think that you have a planned trip in Saudi Arabia.
01:09What are you aiming to achieve from these trips in the region?
01:12Well, the most important thing is relationships and partnerships.
01:16And the region, the Middle East, the Gulf countries are extraordinarily important, not
01:21just in global affairs, but certainly in the relationships that we have as the Boeing
01:26Company.
01:27We have some of our biggest, most important customers in the region.
01:31And we have 3,000 employees right across the region.
01:35We're increasing those numbers.
01:37And it's extremely important to us that it isn't just about commercial relationships
01:41in the commercial space or in the defense space, but also investing in people, the development
01:47of products, of innovation in the region, and supporting the visions of the leadership
01:53of countries like the United Arab Emirates, like Qatar, like the Kingdom of Saudi Arabia
01:58and others in the region.
02:00So Dr. Brendan, let's discuss Boeing Company and this year, 2024.
02:04It seems like Boeing is facing a lot of difficulties and bad headlines since the start of the year
02:10around safety incidents airplanes, Boeing airplanes are facing.
02:15So when you look at what's happening recently and the last couple of years, in your mind,
02:20is Boeing Company losing its credibility and its reputation, decades-long reputation, as
02:28a safe and well credible, reliable manufacturer of airplanes?
02:33Well, that is a judgment for others to make.
02:36It's certainly by any standard been a very challenging year for us.
02:39And we were devastated by the event that started the year off on the 5th of January
02:45with Alaska Air and the plug door.
02:48We paid tribute to the passengers and the crews of that airline.
02:53And since that event, a whole series of things have been done by the company.
02:57Over the last three years, we'd introduced a quality management system, a safety management
03:03system, which is widely regarded by the industry as being absolutely world class, and many
03:08other things.
03:09And then when you see this event, you can imagine how extraordinarily disappointed we've
03:13been.
03:14So since that time, we've worked hand-in-glove with the National Transport Safety Board,
03:19who completed its inquiry into the origin of the incident.
03:23We're working very closely with the FAA at the moment.
03:27We will fully respond to the FAA audit at the end of this month.
03:32And we know that everything that we have put in place will not only address the issues
03:39that have led to this, but lead to an even higher standard.
03:43And it's really important for us that we meet our own standards, let alone the standards
03:48that are quite rightly demanded by our customers, the flying public, and the regulators.
03:53I should also add that across 20 of our production sites in the United States and outside of
03:59it, we've now had quality stand-downs for 70,000 of our employees.
04:05That means taking people away from their workplace for a full day to actually ask them, what
04:11are your concerns?
04:12What are your ideas?
04:13What do you think we should be doing better?
04:16And we've received 30,000 suggestions around tools, equipment, the way inspections are
04:22done.
04:23One of the key issues that's led to this is what's called travel work, where work that
04:28should be completely finished to 100 per cent standard is not done so, including from
04:34some of our suppliers.
04:36And our major supplier on fuselages, for example, Spirit in Wichita, we're engaged in negotiations
04:42to reintegrate that into our company.
04:46And we've got our own people in the Spirit factory at the moment across 50 points looking
04:51at the quality of what comes.
04:53And we've already reduced any failures in quality by 80 per cent.
04:58So we've brought in independent Admiral Kirkland Donald in, who ran the US nuclear submarine
05:05program for many years, with an independent team and said to him, you look at anything
05:09you like and tell us what we need to do.
05:12And similarly for our customers, any of our customers, they are invited to and have been
05:17coming to the factory with their engineers to look at what we do, how we do it, and to
05:23satisfy themselves that we're meeting the standards that they expect and we have a responsibility
05:28to provide.
05:29Sheikh Ahmad bin Saeed al-Maktoum, Chairman and CEO of Emirates Airlines, a couple of
05:34days ago said that they're not happy with what's going on with Boeing and that they
05:40expressed some kind of frustration with Boeing's safety crisis.
05:44What do you say to Sheikh Ahmad?
05:45Well, firstly, an outstanding leader of one of the great, truly great global airlines.
05:52And he's right.
05:53He's absolutely right.
05:54And he will be reassured to know that in addition to the things that I have just gone through
06:01in terms of what we're doing to address things, to get our act together, as he might describe
06:07it, we've also had some changes in the leadership of our company and we are very determined
06:14that we will have all of these quality and safety issues addressed as quickly as we can,
06:23but in no way that will undermine our objective of 100 per cent quality on every plane at
06:30every time.
06:31And we will be through this as soon as we practically can.
06:34And obviously that's having an impact on the deliveries that we bring to our customers,
06:40but we are not going to chase rate at any risk to safety and quality.
06:48Do you think that this crisis has impacted orders received by Boeing?
06:54Did Boeing lose orders to Airbus because of the safety incidents that happened with Boeing?
07:01Well, May, that's something for others to speculate upon and make judgements about.
07:07All we can do is maintain our confidence that we make the best planes in the world,
07:12the most reliable planes, the planes that are the most efficient, the planes in which
07:18the public has confidence.
07:20And our objective is to make sure that every single plane we make is one that we can be
07:27proud of and our customers can fly efficiently, safely and with comfort for their passengers.
07:35But in terms of orders, that's a matter for others to make judgements about.
07:39Since you are here in the region, we heard from Etihad Airways that they're getting ready
07:44to have some new orders with Boeing.
07:47And we've heard the same with Riyadh Air, the new airlines, the new Saudi airlines,
07:51that they're looking to expand their fleets.
07:54So where are we today with negotiations and agreements with whether Etihad Airlines and
07:58as well as Riyadh Air when it comes to new orders?
08:02Well, I know you have to ask these questions, but I don't have to answer them all.
08:07And they're really matters for the customers themselves.
08:10And we don't talk publicly about the discussions we have with our customers.
08:15I will say that we are immensely proud that Riyadh Air and Saudia last year awarded to
08:21Boeing the fifth biggest commercial deal in our history of 121 787 Dreamliners.
08:29We've been working very hard on the narrow body campaign, working with Riyadh Air.
08:35And also that Etihad, which is one of our, again, one of our most valued customers, has
08:41the largest number of 787s in the region.
08:45So we'll be working hard to make sure that we support our customers, whatever they choose
08:50to do.
08:52Is Boeing facing any difficulties when it comes to delivery?
08:56Because Etihad took delivery of three Boeing 787 Dreamliners later in Feb this year, which
09:04is around eight months later than scheduled.
09:07So to what extent do you think that there will be delivery issues with Boeing this year
09:11and the coming years?
09:12Well, I can't speculate about delivery issues in the out years.
09:17We do know at the moment that we have some supply chain constraints.
09:22In fact, in some cases they are considerable, which impact both us and our competitors.
09:28And in relation to 787, we do have some supply chain constraints which are making delivery,
09:35which are challenging delivery schedules.
09:37Our customers know this.
09:39We work personally with every single customer to do everything we can to make sure we deliver
09:45the planes when we said we would and when they need them.
09:49But we are also, I'd also say to you that, look, we're in the aerospace business of course,
09:54but this is the most complex operating environment that business has seen for decades.
10:00With an energy transition afoot, we're in the process of decarbonising, very constrained
10:06supply chains that will still continue through most of this year, and also in many cases
10:11very tight labour markets, and not to mention the geopolitical changes that we're seeing
10:16in the world.
10:17We're confident that we can deal with all of these things, and I think the thing that
10:22should give people confidence, and certainly gives me confidence, I can assure you as one
10:26of the, privileged to be one of the senior leaders of the company, is we've got unprecedented
10:31demand for our products.
10:34Imagine having this conversation three years ago, when we were in the midst of the pandemic,
10:39hardly anyone was flying, airlines had their planes parked, and here now we've got extraordinary
10:46and insatiable demand for commercial aeroplanes and commercial flight.
10:51For reasons that are not all good, defence budgets are increasing, in fact a real increase
10:56of nearly 7% globally in defence expenditure last year.
11:01And we also are working at the very edge of technology, the Starliner is about to take
11:07people to the International Space Station, that's a Boeing built space liner of course,
11:13and of course we have the smartest people in the world.
11:17So in terms of our future, we have demand, we have innovation, technology, and super
11:24smart people.
11:25So you've got to be confident.
11:28So Doctor, one last question, and let's talk about the pursuit of carbon neutral aviation.
11:33How far are we from flying green, completely green?
11:39Flying completely carbon free?
11:41Yes.
11:42Our objective, the industry's objective which we support is to be carbon neutral by 2050.
11:49Now we are still a long way from that, and the key elements are energy, what are the
11:54fuels that go into the engines, sustainable aviation fuel, seven ways of making it, is
12:02the near term best option for all of us, and in the Middle East especially we're working
12:07with partners to develop technologies to produce SAF, then it's propulsion, the engines
12:15that are designed and how they're built, the aerodynamic design of aeroplanes, and then
12:21what happens in the flight deck, the technology which improves the efficiency of flight.
12:26So at this stage we're 2.5% of global emissions in the aviation space, we're about 12% of
12:33the transport sector, but we are absolutely determined, we have a responsibility to our
12:39generation and the next one to decarbonise.
12:42This is our social licence.
12:4480% of people on the planet have not yet flown in a plane.
12:49You and I at times think, oh I've got to catch another plane, but 80% of human beings on
12:54this planet have never flown.
12:56So we have a complex environment where we have to decarbonise in the design and manufacture
13:02of the planes, the propulsion systems, the energies that we use, and at the same time
13:08increase the capacity for flight so that human beings can fly to see one another, conduct
13:13business and take their cultures to the world.
13:16Thank you so much doctor for this interview, Dr Brendan Nelson, President of Boeing Global
13:21and Senior Vice President of the Boeing Company.
13:23Thank you so much sir.
13:25My pleasure Mae.
13:28And so ladies and gentlemen, this is the end of this special interview.
13:32Thank you so much for watching.