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Boeing CEO hammered on Capitol Hill: 'Why haven't you resigned?'

Dave Calhoun testified that the troubled planemaker was making progress but admitted to whistleblower intimidation.

Embattled Boeing (BA) CEO Dave Calhoun testified in front of the Senate Permanent Subcommittee on Investigations (SPI), where a bipartisan group of senators took him to task over a string of safety lapses and alleged wrongdoing.

Calhoun, who will step down at the end of the year, apologized again for the accidents that claimed the lives of hundreds of passengers on Boeing 737 Max flights in 2018 and 2019 and also for the latest mishap of a door plug “blowout” during an Alaska Airlines (ALK) flight in January.

“I would like to apologize on behalf of all of our Boeing associates spread throughout the world, past and present, for your losses; they are gut-wrenching. And I apologize for the grief that we have caused,” Calhoun said, addressing the victims' families in the hearing room, adding, “Our culture is far from perfect, but we are taking action and making progress.”

Calhoun added that the flawed Maneuvering Characteristics Augmentation System (MCAS) on the 737 Max, as well as Boeing at large, “are responsible for those crashes.”

UNITED STATES - JUNE 18: Dave Calhoun, CEO of Boeing, testifies during the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations hearing on
Dave Calhoun, CEO of Boeing, testifies during the Senate hearing on "Boeing's Broken Safety Culture" on Tuesday, June 18, 2024. (Tom Williams/CQ-Roll Call, Inc via Getty Images) (Tom Williams via Getty Images)

The drama amped up even before Calhoun’s testimony, however, when a new Boeing whistleblower emerged, alleging that the plane maker’s use of nonconforming parts soared 300% compared to before the grounding, that the 737 Max and the factory lost parts and could not keep track of others, and that those failures were hidden from the FAA during one inspection.

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Senator Blumenthal (D-Conn.), chair of the committee, questioned Calhoun about all the whistleblowers that have come forward and allegations that they have been intimidated.

“Something went wrong” with whistleblower intimidation, Calhoun said, adding that Boeing has fired and disciplined some managers who committed intimidation, without revealing other details.

Separately, the Department of Justice is weighing whether to bring charges against Boeing for violating the deferred prosecution agreement it signed with the DOJ following the Lion Air and Ethiopian Airlines accidents in 2018 and 2019, respectively.

The DOJ is concerned Boeing may have committed fraud following the latest investigations into the Alaska Airlines door plug blowout. The Wall Street Journal was the first to report the DOJ opening a criminal investigation into Boeing and its manufacturing practices for the 737 Max.

Blumenthal said there was “near overwhelming evidence” that the deferred prosecution agreement had been violated, noting there were “more than a dozen whistleblowers at this point” alleging wrongdoing.

US Senator Josh Hawley (R-MO) speaks as Boeing President and CEO Dave Calhoun testifies during a Senate Homeland Security and Governmental Affairs Committee Investigations Subcommittee hearing to examine
Sen. Josh Hawley (R-MO) speaks as Boeing CEO Dave Calhoun testifies during a Senate hearing to examine "Boeing's broken safety culture" in Washington, D.C., June 18, 2024. (SAMUEL CORUM/AFP via Getty Images) (SAMUEL CORUM via Getty Images)

The biggest critique of Calhoun and his performance came from Senator Josh Hawley (R-Mo.), who hammered Calhoun for his salary — $32.8 million, a 40% increase from a year ago — as the plane maker dealt with the Alaska Airlines blowout and revelations of safety lapses across its product portfolio.

“You're getting paid a heck of a lot of money. It's unbelievable; if anybody's coming out of this deal good, it’s you. Why haven't you resigned?” Hawley asked.

Calhoun responded, “I'm sticking this through. I am proud of having taken the job. I'm proud of our safety record, and I am of our Boeing people.”

“You're proud of this safety record? Wow,” Hawley retorted.

Hawley said Calhoun and upper management had “hollowed out” the manufacturing and engineering processes at Boeing, instead relying on contract and outsourced manufacturing, in which some contractors used “Dawn dish soap and hotel key cards” to wedge certain parts into place, echoing allegations from whistleblowers.

The Senate panel's investigation will continue with Boeing and Calhoun owing the panel more data and information. The DOJ also has until July 7 to decide whether to prosecute Boeing following accusations that the plane maker violated its deferred prosecution agreement after the Alaska Airlines door plug incident.

Meanwhile, Boeing shares ended the day down nearly 2%, and have fallen approximately 33% since the start of the year. The benchmark S&P 500 index is up 15% in the same time frame.

Pras Subramanian is a reporter for Yahoo Finance covering the auto industry. You can follow him on Twitter and on Instagram.

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