(Bloomberg) -- In the three weeks since a 737 Max 9 jet lost an exterior panel mid-flight, Boeing Co. Chief Executive Officer Dave Calhoun has been on a mea culpa tour, acknowledging his company’s shortcomings to employees, enraged customers and lawmakers on Capitol Hill. 

Now the CEO must face the analysts and investors trying to quantify the financial fallout from the near-catastrophic blowout that left a gaping hole in the airborne plane and threw the company into crisis. 

The challenge facing the CEO when Boeing reports results on Wednesday is to appease investors enough to stem a hemorrhage in the stock, while not appearing too preoccupied with financial metrics. Since the accident, criticism has mounted from regulators, lawmakers and the flying public that Boeing has put too much focus on its stock performance in recent years, and not enough on manufacturing quality.

“It’s a job interview to some extent,” said Ken Herbert, an analyst with RBC Capital Markets. “It’s going to be high profile with a lot of attention paid to it, more so than usual.”

After the Jan. 5 accident on Alaska Airlines Flight 1282, regulators quickly grounded most Max 9 jets, then told Boeing not to raise production rates while investigators inspect its quality and manufacturing processes. Some of Boeing’s most loyal customers are in open rebellion, and the stock is the worst performer by far this year on the Dow Jones Industrial Average.

But a sliver of recent good news — the 737 Max 9 model has begun flying again, and China has finally started taking deliveries of the cash-cow aircraft after almost five years — offers Calhoun an opportunity to reset the narrative, provided the feisty and blunt-talking executive keeps his cool.

The stakes couldn’t be higher for Boeing or Calhoun as he lays out the path forward. Whistleblower revelations of sloppy workmanship on the production line and rare public rebukes by longstanding US customers have intensified criticism of the company’s senior leaders, and the board has discussed the need to make changes among the senior ranks.

Under normal circumstances, Boeing would use its earnings report to lay out production plans and cash-flow projections. That familiar narrative won’t work this time: Calhoun must confront concerns over quality controls, and how the Federal Aviation Administration decision to bar an increase in 737 production clouds Boeing’s financial outlook. In an emotional address to workers days after the Alaska Air accident, Calhoun emphasized that the focus on safety will be the primary guiding principle for the company.

Wide Audience

“Investors will not be the main audience” when Calhoun discusses earnings, said Seth Seifman, an analyst with JPMorgan. “The FAA, folks on Capitol Hill, the press, the public, and customers all rank higher in the pecking order of constituencies Boeing must tend to right now, and investors should hope management does this well,” he wrote in a Jan. 24 report.

Investors were long accustomed to playing a central role in Boeing’s strategic thinking. In the years leading up two crashes with 737 Max aircraft and the pandemic, Boeing handed back $68 billion to shareholders through share buybacks and dividends, far in excess of what archrival Airbus SE paid out.

It’s unclear whether Calhoun and Brian West, Boeing’s chief financial officer, will be able to provide much guidance for 2024, given the uncertainty around the FAA’s clampdown on quality and the looming risk of a strike by Seattle-area factory workers later this year. The company has a long list of question marks to address on the earnings call, from customer compensation for the recent groundings to the prospect of even longer delays in certifying the final two 737 Max models. 

Alaska Air Group Inc. said last week that it expects a financial hit of $150 million from the grounding of its 737 Max 9 fleet, saying “we fully expect to be made whole” by Boeing for the loss. United Airlines Holdings Inc. said the grounding would raise costs and contribute to an adjusted loss of as much as 85 cents a share this quarter, potentially piling more compensation on Boeing. 

United has also taken the coming Max 10 out of its planning after numerous delays, providing an opening for Airbus to steal a high-profile order. 

Factory Oversight

Then there are the FAA actions aimed at bolstering safety. The agency plans to release within weeks a detailed look into Boeing’s safety management and culture, findings that will influence future regulatory action. Another FAA-appointed task force has begun studying risks in the US supply chain — providing a rare opportunity to address stresses highlighted by the Alaska accident. 

“What are the unintended consequences from outsourcing? How does it impact rework at Boeing?” said Rich Plunkett, a member of the panel and an official with the union representing Boeing engineers.

The FAA’s more hands-on approach to oversight of Boeing has potentially far-reaching repercussions that aren’t easily calculated by analysts’ financial models. Mike Whitaker, the agency’s new administrator, outlined plans to bring in more “boots on the ground” at Boeing, while scrutinizing the planemaker’s quality control and manufacturing procedures. 

“I could see this taking a couple years before Boeing gets their legs beneath them and say ‘we can ramp up,’” said Cliff Collier, a former executive with Vought Aircraft Industries, now a principal with Charles Edwards Management Consulting. Boeing will “have to take a look at everything. It’s going to spill over into the 787” and other aircraft programs, he predicted. 

Calhoun got a short-term boost on Monday when Ryanair Holdings Plc Chief Financial Officer Neil Sorahan told Bloomberg TV the Irish low-cost carrier would take any Max 10 deliveries — or other Max jets, for that matter — that other airlines don’t want. Shares of Boeing advanced 0.7% in premarket US trading.

Safety Stand Downs

Boeing took an initial step when it halted all 737-related work for 10,000 employees across three sites on Jan. 25 for a quality stand down. In such sessions, workers and managers are encouraged to speak up about training shortfalls, improper practices and safety breakdowns they’ve witnessed. Issues that are raised are investigated and spur corrective action like re-training, slowing down factory work, Collier said.

Stan Deal, who heads Boeing’s commercial airplanes unit, said in a Jan. 26 message to workers that the meetings yielded “frank feedback” and hundreds of suggestions for improvements. He plans to hold similar quality stand downs at all of the division’s airplane programs and sites over the next few weeks. 

“The whole industry is going to go through the same thing Boeing is going through: a stand down, looking at what we’re doing,” Collier said. “We’ll all be better for it.”

--With assistance from Kate Duffy.

(Updates with share prices, review panels from 13th paragraph)

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