Networks and wings: how does Boeing keep itself flying?
But what's happening to Boeing? The aircraft manufacturer, a symbol of American power, has been going through turbulence for several years. From the 737 Max crash to the very recent Air India 787 accident, the causes are manifold. One question remains about this succession of difficulties. Corporate governance could provide part of the solution.
Christine Marsal, University of Montpellier
Boeing's financial woes continue to deepen: after cumulative losses of almost 20 billion euros between 2020 and 2023, fiscal 2024 shows a loss of almost 11.345 billion euros. The "descent into hell" seems inescapable, yet the aircraft manufacturer recently won a major military contract and new orders from a Singapore-based aircraft lessor. If the reasons for the company's financial woes are well known, how can we explain why it retains the confidence of investors? First of all, the weight of pension funds in the company's capital has risen from 47% in 2020 to almost 68% in 2025. Between 1997 and 2019, management decided to gradually increase the dividend from $0.56 per share in 1997 to $8.19 in 2019. Designed to reassure shareholders, this dividend policy alone cannot explain investors' apparent stability.
While serious quality problems have plagued the aircraft manufacturer in recent times, Boeing seems unstoppable. Over the years, the company has built up a solid business network, coupled with a network of influence that makes it "untouchable" today. To understand this resistance to technological and financial vagaries, we analyze the composition of its board of directors over several years.
Who's in charge?
In large listed companies, the Board of Directors (BoD) is supposed to represent the shareholders, who are the owners of the company. It appoints the Chairman, validates strategy, monitors the actions of the CEO and can even dismiss him or her. Its members are elected at the Annual General Meeting, often on the recommendation of a nomination committee, according to criteria of competence, diversity and independence.
But this delicate balance can be upset when the CEO is also Chairman of the Board. This accumulation of functions - the famous CEO - makes the same person the strategist, the executor... and the controller of his own actions. Which raises the question of whether this combination should be maintained. The case of Boeing provides a perfect illustration of the excesses of this cumulation through the results of a research article published in 2023. The data covers the period from 1997 to 2020. In particular, it shows that the lack of diversity on the board of directors may partly explain the company's setbacks.
A Board dominated by its CEO
This combination of functions - Chairman of the Board and Chief Executive Officer - concentrates power at the top and reduces the capacity for internal checks and balances. This is all the more true as the Board of Directors (BoD) remains tightly-knit, with between 11 and 13 members over the period under review.
Diversity makes timid progress. In 1997, only two women sat on the Board. By 2020, there were three, representing barely 23% of members (and still 3 women in 2024). Over the entire period, there are rarely more than two or three representatives of ethnic minorities (African-American, Hispanic, Asian or Indian), often women from these communities.
The Board is organized around four traditional committees - audit, finance, compensation and appointments - to which two new committees were added in 2020. The first, dedicated to "special programs", brings together former CEOs and members with military experience. The second, focused on safety, is a direct response to the 737 Max accidents.
On average, directors join the Board at 56 and leave at around 66. The renewal rate is high: no fewer than 38 different directors have succeeded one another over the years. This renewal has not always ensured a better balance of profiles or more independent governance.
Engineers in retreat, financiers in strength
Technical profiles from industry and specialists in complex projects are being squeezed out over time. Between 2012 and 2014, they virtually disappeared from the Board of Directors. Their place was taken by cost-cutting experts, financial directors and former bankers. The arrival of JimcNerney in 2005 marked the rise of former General Electric Group employees.
Between 2012 and 2016, Boeing's Board of Directors became a little more politicized. Several former high-ranking officials joined its ranks: a former Secretary of Defense, a former U.S. representative to the UN, two ambassadors, a former White House aide... Influential figures, both Republican and Democrat, succeeded one another on the Board.
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Military presence
The presence of military personnel (former or retired) is also growing. From 1997 to 2020, we have successively identified a former "Marine", a former general who worked for the Secretary of State for Defense, a retired marine general, a vice-admiral and a retired admiral. In addition, several military personnel have held positions within NATO. This aspect will still be present in 2024.
This shift confirms a trend that has already begun: Boeing is strengthening its links with the spheres of power, at the same time as it is moving away from its industrial roots. The Board is becoming less a technical steering body than a strategic and political lever.
Focus on financial efficiency
At the same time, Boeing is slashing its workforce: 231,000 employees in 1997, 141,000 by 2020. The tone is set: priority is given to financial efficiency, to the detriment of technical and ecological skills, which are relegated to second place.
However, this change of direction comes at a key moment for the Group. The 787 "Dreamliner" program is underway, with all its innovations: composite materials, new engines, new ways of working with subcontractors. Projects of this scale require enlightened management. Paradoxically, however, while the technology was gaining momentum, the Board of Directors was losing its technical experts.
The same scenario applies to the 737 Max. Officially, the aircraft is merely an update of an existing model. Unofficially, engineers were sounding the alarm: technical choices were risky, and a new aircraft would be safer. But their warnings went unheeded. Lacking a relay within the Board of Directors, they went unheeded.
A Board too homogeneous to debate
Boeing's preference for financial and political profiles has deprived it of diversity of thought. Less debate, less confrontation of ideas. And it's often in this friction that the right decisions are born. In the case of the 737 Max, the lack of dialogue allowed safety flaws to slip under the radar.
Worse still, a US Senate investigation suggests that the group's proximity to certain political decision-makers may have facilitated accelerated certification of the aircraft. Paradoxically, this may not have helped the company, whose reputation has been tarnished by fatal air disasters. In actual fact, the causal factors are certainly more complex, and this proximity is one of the factors that may explain, but it would be excessive to make it the sole factor.
While the Dreamliner and MAX programs are going through their paces, a number of shareholders are sounding the alarm. The city of Livonia, Michigan, as well as asset management giants Vanguard and BlackRock, are demanding accountability. Livonia denounces a lack of transparency on the 787 program. Vanguard, for its part, is calling management to account for the safety of the 737 Max and questioning the Board of Directors' real involvement.
Accused directors
This pressure led to legal action: the Board members were accused of not having exercised their duty of supervision, particularly on safety issues. The case was settled out of court. Boeing agreed to pay $225 million... not directly, but via its insurers.
To put it plainly: convicted directors escape any personal financial liability. In early 2025, another agreement put an end to the criminal proceedings opened after the two 737 Max crashes in 2018 and 2019. The company thus avoided a potentially explosive public trial, at the cost of a settlement negotiated with the US government.
Ironically, during the development of the Dreamliner, Boeing executives recognized the crucial role of engineers in coordinating subcontractors. But this realization did not stand up to the financial logic that took hold at the top. At Boeing, it wasn't a technological crisis that precipitated the downfall of the 737 Max, but a crisis of governance. A company that designs airplanes without listening to its engineers runs the risk, one day, of not knowing how to fly them.
Christine Marsal, HDR Senior Lecturer, Management control, bank governance, University of Montpellier
This article is republished from The Conversation under a Creative Commons license. Read theoriginal article.