Business

It has been an inhospitable winter in Boston. Following the resignation of Claudine Gay as president of Harvard University on January 2nd, her interim replacement said he could not recall “a period of comparable tension” at the institution. Ms Gay was ousted after a plagiarism scandal erupted over her academic work. But her position had been precarious for months; some donors were upset that she seemed to tolerate students’ antisemitic outbursts. For conservatives, Ms Gay, who was Harvard’s first black and second female president, was also a symbol of liberal elites’ fixation on diversity, equity and inclusion (DEI).The ostensibly hard-headed sorts who attend Harvard’s management school, and that school’s ties to harder-headed corporate America, might be expected to insulate it from wider campus convulsions. Not quite. Businesses too are facing a DEI reckoning. As a consequence, Harvard Business School (HBS) is facing pressure on two fronts.Students at HBS are the holders of the winning tickets in the lottery of American capitalism. On average, they arrive with five years of work experience, nearly half of them from prestigious consulting or financial firms. Two years studying for the 115-year-old institution’s MBA degree all but guarantees a comfortable professional perch. Some do much better still. The fortunes of HBS alumni have helped build its reputation and, thanks to their generous donations, stock its coffers (combined with annual income from MBA tuition fees, executive education, a publishing business and online courses, in 2022 the school made $966m in revenue).After the murder of George Floyd, a black man, by a police officer in May 2020 HBS underwent a self-examination typical of other American institutions at the time. “What we could agree on is that the experience of black students at the school, as they reported upon graduation, was not quite the same as white students’. There was a deficit,” says Robert Kaplan, a faculty member involved in the review. HBS’s approach to DEI has since resembled that of corporate America—and of the rest of Harvard. In 2021 it hired a chief diversity-and-inclusion officer and tried to increase the diversity of the student body and faculty.Bringing DEI into the business-school classroom has been more controversial. Compared with the rest of the university, HBS faculty are probably less woke. The pressure for more DEI came mostly from students, recounts a professor. And if the aim of management education is even partly to simulate the challenges faced by grown-up executives, it is hard to imagine a curriculum ignoring such issues entirely. America’s demography is changing, and so are workers’ expectations about what their workplace ought to look like. The current backlash against DEI policies requires bosses to be far more thoughtful about how they approach them. It is requiring the same of business schools. Easier said than done.MBA students at HBS are taught using the “case method”. Classes ask students to put themselves in the shoes of bosses facing a specific problem. Since 2020 students have complained that those shoes do not fit. The result has been a significant increase in the ethnic and gender diversity of the case “protagonists”. But, as one faculty member notes, “the idea that you would be studying a chief financial officer doing a discounted-cashflow model, substitute a white man for a black woman, and then high-five all around is ridiculous.”HBS made a course called “inclusion” compulsory for first-year MBA students in the academic year of 2021-22. A version of it, which focused heavily on race and gender, had previously been optional; “We heard from the students that you’re teaching the course to the people that don’t need it,” says a faculty member with knowledge of the course. Many students and staff felt the new course lacked rigour and, partly because it was taught to a single group of 1,000 people, discouraged discussion.Echoing worries about free speech on other campuses, professors whisper that conservative and religious students feel less able to speak up more generally. The view is supported by the results of a student survey shown to faculty last year. Shortly after the attacks on Israel on October 7th and beginning of the war in Gaza, Bill Ackman’s comments about the war and Harvard’s campus politics caused some HBS students to lobby the school to disinvite the billionaire investor (and HBS graduate) from appearing on campus as a “protagonist” in a case about his hedge fund.As in boardrooms, HBS’s thinking on DEI is in flux. The inclusion course was first redesigned, to less damning reviews, then shelved. In June 2023 Francesca Gino, one of its architects, was put on unpaid administrative leave after accusations of fraud in her work (she has filed a lawsuit against Harvard University challenging her dismissal and alleging gender-based discrimination.) In the end, Mr Ackman did visit. Like America Inc, HBS is learning to walk the DEI tightrope—the hard way. ■ More

State of Freight

The global supply chain is feeling the fallout from Iran-backed Houthi rebels attacking vessels in the Red Sea.
Freight prices are set to jump Monday, while longer transit times around Africa are disrupting and delaying product deliveries.
Spring clothing, footwear, home goods, electronics, patio furniture and pool supplies are just some of the products on these rerouted vessels.

A ship transits the Suez Canal towards the Red Sea on January 10, 2024 in Ismailia, Egypt. 
Sayed Hassan | Getty Images

The global supply chain is feeling the fallout from Iran-backed Houthi rebels attacking vessels in the Red Sea. Freight prices are set to jump Monday, while longer transit times around Africa are disrupting and delaying deliveries of products.
Vessels aren’t able to come back to Asia in time, and ocean carriers are canceling sailings on short notice, both as a result of ship diversions, Honour Lane Shipping told clients in an email. 

Spring clothing, footwear, home goods, electronics, patio furniture and pool supplies are just some of the products on these rerouted vessels. British clothing retailer Next recently warned of stock delays as a result of the longer ocean transit. Ikea also warned in December of its own supply chain crunches as a result of the Red Sea.
“The rerouting of vessels is leading to longer transit times and increased costs,” Jon Gold, vice president of supply chain at the National Retail Federation, told CNBC. “Unfortunately, the longer the disruptions occur, the more challenges will arise in ensuring supply chain reliability and efficiency.”
Gold said retailers are working on implementing mitigation strategies to avoid further disruption by moving up key shipment orders and diverting shipments to the West Coast.
The longer voyages are adding to the cost of freight, as well.
“This creates strong motivations for ocean carrier(s) to increase rate(s) by establishing General Rate Increases (GRIs), Peak Season Surcharge (PSSs), and other contingency or emergency surcharges,” the company said. “HLS warned Transpacific freight rates could spike to highs not seen since early 2022, with the Suez Canal route suspended, and the Panama Canal route restricted.”

MSC, the largest ocean carrier in the world, was the first shipping company to release rates for the second half of January. Starting Monday, container rates for MSC clients will be $5,000 for U.S. West Coast routes, $6,900 for the East Coast and $7,300 for routes to the Gulf of Mexico.
“This is really an unexpectedly huge rate increase,” HLS wrote.
Under the U.S. Shipping Act, all ocean carriers have to give a 30-day notice requirement before they can impose surcharges or GRIs, but the Federal Maritime Commission has waived this for shipments from Asia to the U.S. being rerouted around South Africa’s Cape of Good Hope.
Kuehne + Nagel analysts told CNBC that 419 vessels are currently being rerouted due to the Red Sea situation. The total container capacity is estimated at 5.65 million twenty-foot-equivalent units (TEUs, or containers), with a total value of $282.5 billion, according to calculations using MDS Transmodal estimates that trade in a single TEU is valued at $50 million.
Vessel volume in the Suez Canal has fallen 61% to an average of 5.8 vessels per day, compared with volumes before the Houthi attacks, according to logistics data firm Project44. Egypt, which owns and operates the Suez Canal, charges between $500,000 and $600,000 per vessel transit. This is resulting in massive losses for a country that is already hurt by a declining tourism industry and soaring inflation.
Meanwhile, Tuesday’s large-scale attack by the Houthis is fueling expectations the diversion route around the Horn of Africa will become more stabilized.
“As most carriers currently still reroute completely anyhow, we do not see more divisions than before,” Franziska Bietke, global sea logistics communication manager at Kuehne + Nagel, told CNBC on Wednesday. “The magnitude of yesterday’s attack is likely to reinforce the global carriers’ position that the passage is too risky.”
 Vessel route changes are now happening on a daily basis, according to Bietke.
“The situation is extremely fluid and volatile,” she said.
Logistics companies are also warning clients of container shortages. This is something not experienced by shippers since Covid. Because of the delays in shipping, containers are not located where they need to be.
Mark Rhodes, regional director of ocean product for Asia-Pacific at Crane Worldwide Logistics, explained to CNBC that containers arriving in Europe through the diverted route will need to make their way back to the manufacturing hot spots in Asia.
“The container shortage remains fresh in our memories from the COVID pandemic,” Rhodes said. “The outbound leg from Asia to Europe is just the beginning of what could be more turbulent times ahead in 2024.”
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Neiman Marcus CEO Geoffroy van Raemdonck said there’s “no need” to sell the business as rumors swirl that rival Saks Fifth Avenue is eager to take it over.
“Our shareholders don’t have the need to sell the business because we have a billion of available liquidity, we’re profitable and we’re reporting results that are in a good place and can only be better,” van Raemdonck told CNBC.
Over the recent holiday, comparable sales trends at Neiman were down low single digits compared to last year, while store comparable sales trends were flat compared to the prior period.

Shoppers enter and exit the Neiman Marcus at the King of Prussia Mall in King of Prussia, Pennsylvania, on Dec. 8, 2018.
Mark Makela | Reuters

ORLANDO, Fla. — As rumors swirl over whether Saks Fifth Avenue will acquire Neiman Marcus, Neiman’s CEO told CNBC there’s “no need” to sell the business, adding it’s unlikely to change hands in the next five years. 
Neiman’s largest competitor and biggest rival has reportedly made a series of bids to acquire it over the years, and most recently made a $3 billion offer that was rejected, The Wall Street Journal reported in December. The takeover attempt comes as department stores struggle to stay relevant while many shoppers opt to shop from their favorite brands directly. It also comes as the luxury industry resets after a surge in demand during the Covid-19 pandemic that has begun to taper off for some.

Some people close to the companies have told CNBC a merger between the two is inevitable, and is a matter of when, not if. But Neiman’s CEO Geoffroy van Raemdonck said there is currently “no process to sell the company.” 
“In the history of times, there’s been multiple conversations over maybe two decades, from each side looking at it, and it hasn’t happened,” van Raemdonck told CNBC on Tuesday during the ICR Conference in Orlando. “What I can say is that our shareholders don’t have the need to sell the business because we have a billion of available liquidity, we’re profitable and we’re reporting results that are in a good place and can only be better as we execute on our strategy and the economy rebounds and so there’s not an urgency on our side.” 
Since Neiman filed for bankruptcy in 2020, Pacific Investment Management, Davidson Kempner Capital Management and Sixth Street Partners have owned the luxury retailer. Eventually, those owners will seek to offload the business, but van Raemdonck said it won’t be any time soon. 
“In the future, they will sell, and that future is probably the next five years. Sell or go public or do something,” said van Raemdonck. “There’s always going to be a lot of heat when you are owned, when you’re private and owned by unnatural holders but there’s no process to sell the company right now and if someone has an interest, we’ll definitely listen to them.” 
The decision will largely come down to Neiman’s owners. They have not yet received an offer that was large or attractive enough to move the needle, a source familiar with the matter previously told CNBC.

Over the recent holiday, comparable sales trends at Neiman were down low single digits compared to last year, while store comparable sales trends were flat compared to the prior period, the company said in a news release Tuesday.
In the quarter leading into the holiday season, Neiman saw demand slow across “all facets” of its business that spanned all geographies, all channels and all types of customers, said van Raemdonck. He called the luxury retail environment “volatile.”
If Neiman were to merge with Saks, the companies would be able to strip down costs, negotiate better terms with vendors and perhaps, put up a better shield against shifting industry trends that have dampened the relevance that department stores once commanded.Don’t miss these stories from CNBC PRO: More

Wall Street wants legacy media companies to prove that streaming can be a profitable model, but it has yet to be convinced.
The answer might seem simple: a cable-style bundle, only with streaming. But getting all these rivals to collaborate is almost as difficult as navigating increasing regulatory scrutiny, one analyst said.
Similarly, prospects for mergers and acquisitions are uncertain, as several companies hold massive debt loads already, and regulators are wary of limiting competition.

Picture Alliance | Picture Alliance | Getty Images

It’s the third act of the streaming wars. That’s the time a hero, seemingly beaten and broken, rises up and saves the day. But Wall Street is worried that hero may never come for Hollywood.
Legacy media companies including Disney, Warner Bros. Discovery, Comcast and Paramount Global are trying to figure out the solution to self-inflicted financial wounds, particularly big spending as they chased streaming subscribers to compete with Netflix.

Companies have since slashed their budgets and adjusted their strategy for licensing homegrown movies and shows. Several streamers have added services supported by ad revenue, cracked down on password-sharing and raised prices.
Yet, Wall Street still isn’t satisfied. Warner Bros. Discovery and Comcast outperformed the S&P 500 in 2023, though just barely. Disney and Paramount underperformed. Netflix, on the other hand, overperformed significantly, with shares up 65%.
“We’re looking for someone to put forward a credible vision of how this industry is going to have a sustainable business model,” said Doug Creutz, managing director and senior research analyst at Cowen.
The answer might seem simple: a cable-style bundle, only with streaming. But, getting all these rivals to collaborate is almost as difficult as navigating increasing regulatory scrutiny, Creutz said. Similarly, prospects for mergers and acquisitions are uncertain, as several companies hold massive debt loads already and regulators are wary of limiting competition in the industry.
Wall Street wants a solution, or, at the very least, a company to set the stage for a potential solution. It was clear how to make money from linear TV, but so far it’s unclear how investors can cash in on streaming beyond investing in Netflix.

“The only thing that gets people back into the media investing has to be some type of hope that they can build an economic position in the streaming world,” said Michael Nathanson, MoffettNathanson founding partner and senior research analyst.

Figure out the bundle

There’s momentum for bundling subscription streaming services into something that resembles traditional cable TV, as media companies seek a way to create and sustain streaming profitability. Bundling, in turn, could ease the consumer experience, bringing content all into one hub.
“In theory, that’s a really good idea,” said Creutz. “But, there’s a lot of details that would have to be hammered out.”
The biggest hurdle is getting all the media companies to agree on what it would look like.
“You have to get a bunch of people in a room together to agree on something,” he said, “people who are not necessarily inclined to be cooperative.”
One of the biggest hurdles is how these companies would calculate average revenue per user, or ARPU, and subscriber growth when offering their services at a discount. A bundle would shrink ARPU, but if enough subscribers sign up, the cost could be offset.

Consider M&A difficulties

Mergers and acquisitions present another path to a bigger bundle, but Wall Street isn’t sure there will be a big deal in 2024.
“I think that there’s still an expectation that someone’s going to ride right across the horizon with some M&A that’s gonna fix problems,” Creutz said. “And I don’t think that’s going to happen.”
No company really wants to be a buyer right now, he said. Disney is still holding a high debt load from its acquisition of 20th Century Fox in 2019, and the same is true for Warner Bros. Discovery after its 2022 merger.

Rafael Henrique | Lightrocket | Getty Images

“What I’ve seen as a fundamental problem is that [these companies] have balance sheets built on linear cable network economics that are no longer stable,” Nathanson said. “The challenge to overcome is what do you do about your linear cable networks? Just given those headwinds, the combination of debt, plus instability of a core business that was good and sticky and stable — that’s the biggest conundrum.”
The biggest target is Paramount. Controlling shareholder Shari Redstone is reportedly eager to make a deal. She controls Paramount through her company National Amusements.
Warner Bros. Discovery CEO David Zaslav and Paramount CEO Bob Bakish met in late December for a preliminary discussion, but some speculate the leaked talks were a way for Warner Bros. to position itself as a viable asset for Comcast’s NBCUniversal.
There may be regulatory issues, too. Universal and Warner Bros. were two of the top three domestic movie studios by revenue in 2023, according to data from Comscore.
“I don’t think the regulatory environments would be supportive of consolidation,” said Creutz.

Leave ’em wanting more

A scene from “Barbie.”
Courtesy: Warner Bros.

Legacy media companies are also grappling with a beleaguered theatrical industry, which has yet to recover from the pandemic. Yet, Wall Street still sees value in this distribution avenue.
After all, Warner Bros.’ “Barbie” tallied more than $1.4 billion at the global box office, while Universal’s “The Super Mario Bros. Movie” and “Oppenheimer” snared $1.3 billion and $950 million, respectively.
“The message we sent to Hollywood in 2023 is we don’t need superheroes or Star Wars to go back to the theater,” Josh Brown, CEO at Ritholtz Wealth Management, wrote in a LinkedIn post last month. “We need events. Great scripts. Big stories. Real movie stars. Cinema!”
Film production stalled during the pandemic and again during dual Hollywood labor strikes last year. All of that resulted in fewer releases and smaller box-office returns. As it stands, the 2024 calendar is packed with sequels, prequels and spinoffs — the kind of content that failed to capture audiences in 2023.
“As we have seen with the stock prices of exhibitors, the reduced film slate outlook for 2024 has [clearly weighed] on investor sentiment heading into this year,” said Eric Wold, senior analyst at B. Riley Securities. “While the slate for 2025 has benefited from the slate delays in 2024, we do not believe investors are willing to step up to the plate right now and may wait until later in the year when visibility into 2025 improves.”
While cinema chains wait for Hollywood production to ramp back up, Wall Street foresees heavy investments in premium screens — such as IMAX, Dolby, Screen X and 4DX — that offer elevated experiences at a higher ticket price.
“The main focus of investors is a return to pre-pandemic profitability levels even with a reduced level of film output and attendance,” Wold said.
Additionally, Hollywood is still sorting out how it wants to handle theatrical windowing. Before the pandemic, films stuck around in theaters for at least 90 days before making the transition to on-demand, home video and streaming. Now, there’s no set timing. It’s up to the studio to make that call.
On one side of the spectrum, “Barbie” and “Oppenheimer” both spent more than 120 days in cinemas before coming to the home market. Then there was “Five Nights at Freddy’s,” which was released in cinemas and on NBCUniversal’s Peacock on the same day. Each strategy has its own rewards.
For “Barbie” and “Oppenheimer,” grassroots efforts led millions to see double features of the films on opening weekend, and word-of-mouth kept cinemagoers coming for months. For “Freddy’s,” horror-movie buffs and fans of the video game the film is based on turned out in hordes for its debut, and repeat viewings were held via streaming.
Either way, though, the lesson is clear: People still want to watch movies.
“There’s already too many TV shows,” Brown wrote. “Start making films again.”
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. More

Boeing’s CEO said the company acknowledges “our mistake” after a part blew off a 737 Max 9 during an Alaska Airlines flight.
The accident left a gaping hole in the fuselage.
The FAA has grounded dozens of 737 Max 9 planes so they can be inspected.

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

Boeing CEO Dave Calhoun on Tuesday said the company acknowledges “our mistake,” after a door plug on a 737 Max 9 blew out in the middle of an Alaska Airlines flight, creating a gaping hole in the fuselage and prompting a grounding of that aircraft type by federal regulations.
The Federal Aviation Administration grounded the 737 Max 9s less than a day after the incident on Alaska Airlines Flight 1282 so the jets could be inspected. The more common 737 Max 8 was not affected.

“When I got that picture [of the Alaska Airlines 737 Max 9], all I could think about — I didn’t know what happened [to] whoever was supposed to be in the seat next to that hole in the airplane,” Calhoun told staff, according to remarks shared by Boeing. “I’ve got kids, I’ve got grandkids and so do you. This stuff matters. Every detail matters.”
No one was seated in 26A on the flight, which was next to the panel that blew out, saving passengers from a possible tragedy.
But the accident puts more scrutiny on Boeing and its CEO. The company has struggled with a string of defects on its planes over the past few years, while it tried to ramp up production and improve its reputation after fatal crashes in 2018 and 2019.
Alaska Airlines and United Airlines, the two largest operators of the 737 Max 9, said on Monday that they have each already found loose parts on the same area of other Max 9s that underwent review.
Calhoun said Tuesday that the company will work with the National Transportation Safety Board in its investigation and that the FAA is overseeing inspections “to ensure every next airplane that moves into the sky is in fact safe and that this event can never happen again.”Don’t miss these stories from CNBC PRO: More

Honda Motor revealed two concept cars as a preview for a new lineup of electrified vehicles that will begin arriving in North America in 2026.
The concept models are called the “Space-Hub” and “Saloon,” which the first production “Honda 0 Series” EV will be based on, according to the Japanese automaker.
Honda plans to introduce the first model of the Honda 0 Series based on the Saloon concept in North America, followed by model introductions in Japan, Europe and other countries.

Honda Saloon concept electric vehicle
Courtesy Honda

Honda Motor revealed two concept cars Tuesday at the CES tech conference as a preview for a new lineup of electrified vehicles that will begin arriving in North America in 2026.
The concept models are called the “Space-Hub” and “Saloon,” which the first production “Honda 0 Series” EV will be based on, according to the Japanese automaker. Honda says the new “0 Series” of vehicles are being developed under three core principles: “Thin, light and wise.”

“We will create a completely new value from zero based on thin, light and wise as the foundation for our new Honda 0 EV series to further advance the joy and freedom of mobility to the next level,” Honda CEO Toshihiro Mibe said in a release.
Honda plans to introduce the first model of the Honda 0 Series based on the Saloon concept in North America, followed by model introductions in Japan, Asia, Europe, Africa and the Middle East, and South America.

Honda Space-Hub concept electric vehicle
Courtesy Honda

The Saloon is a sleek, futuristic-looking vehicle that seems fit for “Tron” movies, with a large open-mouthed front-end light in neon lighting with a redesigned Honda “H” in the center. The back, like the front, features a large indented rectangular area with red lighting around the interior with “Honda” in the center.
Inside, the Saloon features a minimalistic digital cockpit with a yolk steering wheel, which is similar to concept cars from other companies that have debuted at CES. To enter, a large falcon wing door opens upward from the roof of the vehicle.
The Space-Hub is a minivan/shuttle that includes the same type of design characteristics as the smaller Saloon but in larger formats. Its interior features a similar cockpit, but it has a cavernous back area with lounge-type seating.

Honda Saloon concept electric vehicle
Courtesy Honda

Both concepts appear to be designed to feature autonomous driving capabilities: the steering yolk is able to retract into the dashboard of each.
Honda said 0 Series will first feature an advanced driver-assistive system based on technologies first deployed in Japan, followed by a next-generation “automated driving,” or AD, system. The company says the upcoming system will expand the use of some hands-off functions for use on both expressways and surface streets. 
“The next generation AD system is being developed based on Honda’s ‘human-centric’ safety concept. It will feature advanced AI, sensing, recognition and driver monitoring technologies to achieve more human-like, natural and high-precision risk predictions, making it possible to offer AD features people can feel safe and confident using,” Honda said in the release.

Honda Saloon concept electric vehicle
Courtesy Honda

Honda did not release exact specifications or performance expectations for the concept vehicles or upcoming EVs other than projections for recharging.
The company said the Honda 0 Series models launching in the late 2020s will be capable of fast charging from 15% to 80% of battery capacity in about 10 to 15 minutes.
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Correction: An earlier version of a headline on this article misspelled “Space-Hub.” More

NERVOUS TRAVELLERS will break out in a cold sweat seeing pictures of a gaping hole in the fuselage of an Alaska Airlines Boeing 737 MAX 9, blown out at 15,000 feet (4,600 metres) after the plane had taken off over Oregon on January 5th. Nervous investors will have the same reaction to share prices of Boeing and Spirit AeroSystems, a firm spun off by the planemaker in 2005 which manufactured the fuselage and the failed part, a plug in the airframe where some larger MAX models have an emergency exit. The two companies’ market value plunged by 8% and 11%, respectively, following the incident.Miraculously, no one was seriously injured; had the aircraft rapidly depressurised at a higher altitude the outcome could have been worse. The precise cause of the malfunction remains unclear. The plane, delivered to Alaska Airlines on November 11th, was brand new. Similar unused emergency exits have been installed on a previous version of the 737 without problems.Regulators around the world have grounded the entire fleet of MAX 9s with the same door-plug, pending inspections to ensure their airworthiness. Early indications suggested a one-off manufacturing problem originating at Spirit, noted Bernstein, a broker. But on January 8th United Airlines said that preliminary examinations had identified other planes with “installation issues” connected with the door, such as “bolts that needed additional tightening”.image: The EconomistThankfully for Boeing, its airline customers and their passengers, fastening the loose bolt should not be too difficult. The MAX 9, a larger version of Boeing’s short-haul workhorse, makes up just over 15% of all 737 MAXes in service, and an even smaller share of unfilled orders (see chart 1). Only four out of five of the existing MAX 9 fleet, or 171 aircraft in all, have the unused exits. The bigger problem for Boeing is that the episode reinforces the impression that it has lost its way.The descent of America’s once high-flying aerospace champion began in October 2018, when a 737 MAX crashed in Indonesia. Five months later the same model crashed in Ethiopia. Both disasters were linked to problems with flight-control software and led to the grounding of the entire 737 MAX fleet for 20 months while the software was fixed. Boeing paid around $20bn in fines and compensation. Critics alleged that the company was paying too much attention to returning money to shareholders and not enough to engineering. A new chief executive brought in at the start of 2020 to salvage Boeing’s image, Dave Calhoun, promised to return Boeing to its roots of technical excellence.The door drama is only the latest sign that Mr Calhoun’s task remains incomplete. Deliveries of the company’s long-haul 787 Dreamliner have been suspended several times in the past few years in light of quality-control problems. In April 2023 Boeing said it would have to fix the vertical stabilisers on 737s in production at Spirit and in storage. Although it was not a safety risk, the defect put another dent in Boeing’s reputation. Another knock came in August, when the company said it would need to correct improperly drilled holes in part of the pressurised cabin of 165 737 MAXes assembled by Spirit. Ironing out manufacturing niggles is one reason that deliveries of Boeing’s 777X, another long-haul jet, will begin only in 2025, six years behind schedule.The 777x delay alone has set the company back at least $8bn in extra costs. The close call over Oregon will pile on more costs still, by forcing it to spruce up production processes. Boeing has not turned an annual profit since 2018. It lags behind its European arch-rival, Airbus, in orders for short-haul jets, by 4,800 to 7,300. It is struggling to rehire skilled workers laid off during the covid-19 lull as it tries to increase production of the 737 MAX from 38 a month to 50 by 2025-26, in order to meet strong demand from airlines dealing with a surge in post-pandemic revenge flying.image: The EconomistSome of Boeing’s woes on Mr Calhoun’s watch were beyond his control. Soon after he took over at the start of 2020 covid sent the industry into a tailspin. Both Boeing and Airbus lost roughly half of their market value between March and autumn of that year. But whereas Airbus shares now trade at an all-time high, Boeing’s are worth half what they were at their peak in early 2019 (see chart 2). If the American planemaker is to soar again, Mr Calhoun will need not just to respond to problems but prevent any more of them. ■ More

Aircraft manufacturer Boeing will revise inspection instructions for its 737 Max 9 planes after a panel blew out midflight last week during an Alaska Airlines flight.
Alaska Airlines and United Airlines identified loose hardware on planes of the same model type during preliminary checks.
“Every Boeing 737-9 Max with a plug door will remain grounded until the FAA finds each can safely return to operation,” the FAA said.

An Alaska Airlines Boeing 737 Max 9 aircraft is grounded at Los Angeles International Airport in California on Jan. 8, 2024.
Eric Thayer | Bloomberg | Getty Images

Aircraft manufacturer Boeing will revise inspection instructions for its 737 Max 9 planes after a panel blew out midflight last week during an Alaska Airlines flight and after Alaska and United Airlines identified loose hardware on planes of the same model type during preliminary checks, the Federal Aviation Administration said Tuesday.
The FAA grounded dozens of the jets following that Alaska Airlines incident, and Boeing on Monday issued instructions for inspecting the jets, which were approved by the FAA.

Revisions to multi-operator messages, which contain the instructions, can be based on feedback from airlines, the company or inspectors.
“Boeing offered an initial version of instructions yesterday which they are now revising because of feedback received in response. Upon receiving the revised version of instructions from Boeing the FAA will conduct a thorough review,” the FAA said in a statement Tuesday.
“Every Boeing 737-9 Max with a plug door will remain grounded until the FAA finds each can safely return to operation,” the agency said. “The safety of the flying public, not speed, will determine the timeline for returning the Boeing 737-9 Max to service.”
Boeing said in a statement Tuesday it is in close contact with customers and the FAA.
“As part of the process, we are making updates based on their feedback and requirements,” the company said.

The National Transportation Safety Board said its investigation into the Alaska Airlines accident is focused on what failed in the blown-out door plug on the nearly brand-new 737 Max 9.
An NTSB official said at a press conference on Monday night that on the flight, all 12 stops that help the door to stay place “became disengaged, allowing it to blow out of the fuselage.” Guide tracks on the door were also fractured. The official said the NTSB hasn’t recovered the bolts that hold it in place and haven’t determined “if they existed there.”
The NTSB will analyze the door that blew out further at its lab in Washington. The door was found by an Oregon school teacher, the agency said earlier this week.Don’t miss these stories from CNBC PRO: More