Raphael Stevens

Boeing CEO Dave Calhoun sought out meetings with several U.S. senators this week after the midflight blowout of a 737 Max 9 door plug.
The FAA grounded the planes after the Jan. 5 Alaska Airlines accident.
Calhoun said he was meeting with lawmakers to “answer all their questions, because they have a lot of them.”

Alaska Airlines N704AL, a 737 Max 9, which made an emergency landing at Portland International Airport on January 5 is parked at a maintenance hanger in Portland, Oregon on January 23, 2024. 
Patrick T. Fallon | AFP | Getty Images

Boeing CEO Dave Calhoun met with several U.S. senators Wednesday on Capitol Hill as scrutiny on the company’s leaders intensifies over a blown door plug on one of the company’s 737 Max 9 planes.
“I’m here today in the spirit of transparency … [and to] answer all their questions, because they have a lot of them,” Calhoun told reporters.

The meetings were organized at Calhoun’s request, according to people familiar with the matter.
The Federal Aviation Administration grounded the planes after a door plug blew out Jan. 5 as Alaska Airlines Flight 1282, a nearly new 737 Max 9, was climbing out of Portland, Oregon, exposing passengers to a force so violent it sucked out headrests and seatbacks.
The FAA is still reviewing data from 40 early inspections of the planes before it can approve safety review instructions that would clear the path for the planes to return to service.
“It’s been difficult to predict [how long that process will take], so we’ve sort of stopped trying,” FAA Administrator Mike Whitaker told CNBC on Tuesday. “But as soon as we get it sorted out it’ll be up again.”
Sen. Dan Sullivan, a Republican from Alaska, told reporters after his meeting with Calhoun that the Senate is looking into addressing airline safety in the FAA reauthorization bill.

“Aviation safety can’t be reactive. It has to be proactive. And that is why we need to get this darn FAA reauthorization done,” Sullivan said.
Earlier Wednesday The Seattle Times reported that the fuselage panel that blew out during the Alaska Airlines flight, manufactured by Spirit AeroSystems, was removed for repair and then improperly reinstalled by Boeing’s mechanics, not Spirit’s.

Boeing CEO Dave Calhoun speaks with reporters on Capitol Hill in Washington, DC, on January 24, 2024, before meeting with a group of senators.
Jim Watson | AFP | Getty Images

Calhoun and Boeing declined to comment on that report Wednesday, citing an ongoing federal investigation.
“As the air safety agency responsible for investigating this accident, only the U.S. National Transportation Safety Board can release information about the investigation,” Boeing said in a statement about the Seattle Times report. “As a party to this investigation, Boeing is not able to comment and will refer you to the NTSB for any information.”
The NTSB didn’t immediately respond to a request for comment.
Spirit AeroSystems shares were up 6% midday Wednesday, boosted by that report. The stock is down more than 10% since the Jan. 5 Alaska Airlines incident. Boeing’s stock was trading about 2% higher Wednesday but has shed more than 10% since the incident. More

Tyson Foods has switched from CVS’ Caremark as its pharmacy benefit manager, in an effort to lower the amount it spends on providing drug benefits to its 140,000 employees
The food giant chose Rightway, a PBM startup which works on a fee basis and guarantees employers it can save them 15% on pharmacy benefit costs
Small PBMs like Rightway have mostly worked with small and medium-sized employers.
Tyson will become one of the first Fortune 100 companies to work with an upstart PBM, at a time when the large pharmacy benefit mangers are under pressure for their business models.

Tyson Foods Inc., sign at Tyson headquarters in Springdale, Ark.
April L. Brown | AP

Tyson Foods will become one of the first Fortune 100 companies to stop using the nation’s traditional large pharmacy benefits managers, as it looks to cut spending on high-cost drugs.   
After putting its benefits contract up for bid, Tyson dropped CVS Health’s Caremark and chose PBM startup Rightway to manage drug benefits for its 140,000 employees starting this year, the companies said Wednesday. Rightway guarantees it can save employers 15% on pharmacy costs by using a transparent model where it passes drug discounts to employers and plan members, while also providing concierge care to help employees find lower-cost alternatives like generics and biosimilars.

Tyson’s decision adds to an upheaval in the industry, as startups promising lower costs and transparency challenge the largest benefit managers, and pushed them to change their own business models. Tyson made the decision as it saw pharmacy costs soar.
“We were going anywhere between 12% to 14% increases for pharmacy — and on a $200 million spend that’s quite a bit. We found that the specialty (drug) component of our trends … were picking up a lot of the increase year over year,” said Renu Chhabra, Tyson vice president and head of global benefits.
When she tried to get answers on what was driving those trends from the company’s old pharmacy benefit manger, or PBM, Chhabra says she couldn’t get the kind of data she wanted.
“I wanted to look at Humira, and I wanted to see what the acquisition cost was. And then I wanted to understand what Tyson was paying for that; it was very difficult to get to those numbers,” she said. “Part of this was to really get a partner who can help us organize the information, make sure we understand how to manage specialty, and really looking at how to get the best net cost.”
A CVS spokesman told CNBC that while the company will no longer handle Tyson’s overall pharmacy benefits contract, it will continue to provide specialty drug pharmacy services in conjunction with Rightway.

“Our specialty pharmacy services support members managing high cost, complex conditions and typically represent over 50 percent of pharmacy benefit spend in the marketplace,” said CVS Caremark spokesman Phil Blando.
“Historically, we have provided Tyson Foods with significant transparency, including point of sale rebates for its members, a custom retail pharmacy network and unique utilization management strategies that resulted in flat trend over the last several years. Our most recent comprehensive bid would have exceeded the 15 percent savings rate claimed by a competitor and reported by a news outlet,” Blando said.

More CNBC health coverage

Choosing a transparent PBM startup

Most large employers work with the three biggest PBM players: CVS’ Caremark, Cigna’s Evernorth and UnitedHealth Group’s OptumRx. By the end of 2022, those big three PBMs controlled nearly 80% of the pharmacy benefits market in the U.S., according to a Health Industries Research Center report.
The large players contend that they have the scale to save employers on drugs costs, by negotiating big rebates from drugmakers. But they have come under increasing scrutiny from Congress and regulators at the Federal Trade Commission over the lack of transparency into the way they negotiate those discounts, and how much of those savings they actually pass on to employers and patients.
Smaller PBMs like Rightway have marketed themselves as more transparent alternatives, without the conflicts of interest that the more vertically integrated players have.
“The traditional PBM model has operated on a taxi-meter type approach. The more drugs that your members are on, the higher cost drugs that your members are receiving, the more money PBMs have made or are making,” said Rightway co-founder and CEO Jordan Feldman. “We wanted to fundamentally re-architect what it meant to be a PBM … we don’t trap margin because we don’t retain rebates.”

New competition in the industry

Until now, the upstarts challenging the big PBMs have only won over small and medium-sized companies. Tyson is Rightway’s first employer with more than 100,000 workers; its previous biggest client had 10,000 employees.
University of Southern California economist Karen Van Nuys said if more large employers turn to alternatives PBM players, it could improve competition and bring costs down.
“If they’re presented with a broader variety of transparent options where they can actually kind of see and compare … across different PBM providers what it’s going to cost them — I think that enables all of them to make better decisions about which provider to use,” said Van Nuys, a senior fellow at the USC Schaeffer Center for Health Policy and Economics.
But Lawton Robert Burns, a professor at the University of Pennsylvania’s Wharton School, is not convinced that the movement toward greater price transparency will be a magic bullet that brings down drug prices.
“They’ve undertaken a lot of competitive strategies to try to deal with this. So, they’re responsive,” Burns said. “Whether or not that’s going to make a huge difference, I don’t know. All I know is that price transparency, in general, just hasn’t solved many of our problems.”
At Tyson, the biggest health problem it hopes to tackle in the year ahead with its new PBM is diabetes management, and finding the right balance when it comes to coverage for GLP-1, or glucagon-like peptide-1, weight loss drugs like Wegovy and Zepbound, which carry a list price of more than $1,000 per month.  
“In June we’ll make those decisions on how we want to treat that, but we have to balance cost with access to care,” said Chhabra. “This is one of the biggest reasons why we also chose Rightway — because we have a lot more flexibility … going forward to make those joint decisions.”
Don’t miss these stories from CNBC PRO: More

Jon Stewart will serve as “The Daily Show” host on Mondays starting Feb. 12, and appear at least through the 2024 election cycle.
The rest of the week will feature a rotating cast of show regulars.
Stewart’s return comes as Paramount, Comedy Central’s owner, seeks to keep the signature series afloat at the network.
The economics of late-night TV have weakened in recent years, as advertisers flee the linear TV space and audiences have turned to streaming services and video clips on YouTube.

Guest Jon Stewart on “The Late Show with Stephen Colbert” on June 17, 2019.
CBS Photo Archive | CBS | Getty Images

Jon Stewart is returning to “The Daily Show” — but only on Mondays.
The comedian helmed the Comedy Central talk show between 1999 and 2015, before passing the torch to South African comedian Trevor Noah. Noah departed the show in late 2022, and the program has cycled through a slew of guest hosts over the past year, but never settled on a single replacement.

Stewart will serve as “The Daily Show” host on Mondays starting Feb. 12, and appear at least through the 2024 election cycle. The rest of the week will feature a rotating cast of show regulars.
Stewart’s return comes as Paramount, Comedy Central’s owner, seeks to keep the signature series afloat at the network, especially during an election year, as Stewart’s political commentary has often thrived in the past.
The economics of late-night TV have weakened in recent years, as advertisers flee the linear space. Audiences, too, have gravitated toward streaming video and often watch these programs online via YouTube the day after they run.
“Jon Stewart is the voice of our generation, and we are honored to have him return to Comedy Central’s ‘The Daily Show’ to help us all make sense of the insanity and division roiling the country as we enter the election season,” Chris McCarthy, president and CEO of Showtime and MTV Entertainment Studios, said in a statement Wednesday. “In our age of staggering hypocrisy and performative politics, Jon is the perfect person to puncture the empty rhetoric and provide much-needed clarity with his brilliant wit.”
Since his 2015 exit from “The Daily Show,” Stewart has kept busy as the executive producer of CBS’ “The Late Show with Stephen Colbert” and weekly spots on Apple’s streaming service via his show “The Problem with Jon Stewart,” which was recently canceled.

Stewart is also an avid philanthropist and has lobbied for health-care benefits for veterans and 9/11 first responders.Don’t miss these stories from CNBC PRO: More

Chipotle Mexican Grill wants to hire 19,000 new workers ahead of its busiest time of the year.
The burrito chain’s recruitment goal is up about 27% from a year ago.
Attracting workers has become more difficult for restaurants in recent years.

A “Now Hiring” sign is displayed in front of a Chipotle restaurant on October 07, 2022 in Washington, DC.
Anna Moneymaker | Getty Images

Chipotle Mexican Grill hopes to recruit 19,000 new employees to make its burritos and bowls this spring, the company said Wednesday.
The company’s hiring target suggests it’s expecting an even busier spring than usual, despite another round of menu price hikes in October. The chain’s recruitment goal is about 27% higher than a year ago, when it sought 15,000 new workers for its so-called burrito season in March through May.

For Chipotle, having enough workers becomes even more important during its busy period. The chain needs plenty of employees to meet higher demand. The spring weather lures back Chipotle customers who stayed away during the winter months, but the chain’s concentration in college towns means sales usually slow in the summer.
Chipotle has more than 110,00 workers currently.
Attracting workers has become more difficult for the restaurant industry in recent years, largely due to the pandemic. Hundreds of thousands of restaurant jobs disappeared as bars and eateries shuttered, either temporarily or permanently. Industry veterans switched to white-collar or warehouse jobs, seeking safety from Covid-19, better working conditions or both. In September, the restaurant workforce finally bounced back to pre-pandemic levels, according to Department of Labor data.
But even before Covid, restaurants struggled to hire and retain younger workers, who often seek internships instead.
Chipotle on Wednesday also touted new benefits that aim to help those younger workers tackle financial challenges. The company will match up to 4% of eligible employees’ salaries by making contributions to their 401(k) if they make student loan payments. Additionally, Chipotle workers can also sign up for a Credi.ai debit card, which builds credit without fees or interest.
Chipotle is expected to report its fourth-quarter earnings after the bell Feb. 6. More

The FAA launched an audit of Boeing’s aircraft production after a door panel blew out during an Alaska Airlines flight.
The agency has dispatched a “couple of dozen” inspectors to Boeing’s production lines, FAA Administrator Mike Whitaker told CNBC.
“We’re shifting from more of an audit approach to a direct inspection approach,” he said.

Michael Whitaker, nominee to be the next administrator of the Federal Aviation Administration (FAA), testifies during a Senate Committee on Commerce, Science, and Transportation hearing on Capitol Hill October 4, 2023 in Washington, DC. The FAA has been without a Senate-confirmed administrator for 18 months. (Photo by Drew Angerer/Getty Images)
Drew Angerer | Getty Images News | Getty Images

WASHINGTON — The Federal Aviation Administration has “boots on the ground” at Boeing’s 737 Max factory — and will keep them there until the agency is convinced the manufacturer’s quality control system is working, FAA Administrator Mike Whitaker told CNBC.
The FAA earlier in January said it will audit Boeing’s Max production line, after an almost brand-new Boeing 737 Max 9’s door plug blew out on an Alaska Airlines flight at 16,000 feet, exposing passengers to a force so powerful it sucked out seatbacks and headrests, according to federal investigators.

No one was seriously injured on the flight, and no one had been seated next to the gaping hole left by the blowout. The FAA grounded that model of Boeing’s best-selling 737 Max a day after the accident and later said it will increase oversight of the company’s production lines.
“We’ve got a lot of inspectors on the ground, visually inspecting the aircraft as it comes through,” Whitaker said Tuesday in an interview at FAA headquarters. “We’re shifting from more of an audit approach to a direct inspection approach.”
The scale of such a review is a challenge, Whitaker said, citing the manpower required to conduct that many inspections. The FAA has dispatched a “couple of dozen” inspectors, he said.
“Until we’re comfortable that the [quality assurance] system is working properly … we’re going to have boots on the ground,” he said.
Both Alaska and United Airlines said they found loose bolts on several Max 9 planes during preliminary inspections.

Return to service

The FAA is working with Boeing and airlines on inspection instructions that would pave the way for the 737 Max 9 to return to service. Whitaker, who is three months into the FAA’s top job, declined to comment on when he expected the planes to return to service.
“It’s been difficult to predict, so we’ve sort of stopped trying,” he said. “But as soon as we get it sorted out it’ll be up again.”

In this photo released by the National Transportation Safety Board, investigator-in-charge John Lovell examines the fuselage plug area of Alaska Airlines Flight 1282 in Portland, Oregon, on Jan. 7, 2024.
National Transportation Safety Board via AP

Though safety inspections were initially estimated to take between four and eight hours per plane, Whitaker said they’ve “been longer than that.”
“We’ve required a lot of measurements,” he said. “Once the area’s exposed, we want to understand bolt tensions and gaps and things of that nature. So we’ve required more data than would normally be the case because we really wanted to understand the issue.”
United, which has 79 Boeing 737 Max 9 planes in its fleet, more than any other carrier, said Monday it’s assuming the planes will remain grounded through the end of January. The carrier is forecasting an adjusted loss of as much as 85 cents per share this quarter as a result.
United CEO Scott Kirby on Tuesday expressed frustration at Boeing and its repeated production issues and delays. He said United is taking the larger variant, the 737 Max 10, out of its fleet plans, because of lengthy delivery delays. The FAA hasn’t yet certified that plane, nor has it certified the 737 Max 7, a smaller model that Southwest Airlines is awaiting.

Boeing scrutiny

The accident on Alaska Airlines Flight 1282 is the latest and most serious in a string of apparent production flaws at Boeing, which has been trying to clean up a reputation for quality that was tarnished by two deadly crashes about five months apart. Those accidents involved the 737 Max 8, a smaller variant of the same aircraft family. A worldwide grounding of both the Max 8 and Max 9 began to lift about four years ago.
Alaska Airlines CEO Ben Minicucci told NBC News on Tuesday that the door-plug blowout was “unacceptable out of the factory” and that the carrier is adding additional staff for oversight on the production line to make sure there is “a second set of eyes to look at those critical areas.”
On Tuesday, Stan Deal, CEO of Boeing’s commercial airplane unit, its largest, apologized for the delays in getting its aircraft to customers.
“We have let down our airline customers and are deeply sorry for the significant disruption to them, their employees and their passengers,” he said in a written statement. “We are taking action on a comprehensive plan to bring these airplanes safely back to service and to improve our quality and delivery performance.”
Boeing is planning to pause work at several production lines for safety sessions for factory workers to “evaluate what we’re doing, how we’re doing it and make recommendations for improvement,” Deal told staff Tuesday. The sessions start Thursday at the 737 factory in Renton, Washington.

This photo released by the National Transportation Safety Board shows the door plug from Alaska Airlines Flight 1282 on Monday, Jan. 8, 2024, in Portland, Ore.
National Transportation Safety Board via AP 

Boeing announced Jan. 16 the appointment of an independent advisor to lead a review of the Max 9 problem.
When asked whether the Max 9 crisis will mean more of a permanent change in how the FAA, which certifies Boeing’s planes, oversees the company, Whitaker said the agency is “looking at all options.”
“If there are functions that Boeing has not done appropriately, I think we’ll look at whether we should take over some of those functions or whether there’s an opportunity for a third party, a nonprofit technical organization, to provide a fresh set of eyes,” he said.
“There’s no reason to think that they can’t get back to a point where they’re meeting their quality standards and an increasing production,” Whitaker said. “But right now, we need to be assured of that.”  More