On January 5th, a door plug blew out of the side of a Boeing 737 Max 9 plane flying for Alaska Airlines from Portland, Oregon, to Ontario, California. (A door plug is a section of the plane’s fuselage bolted in to take the place of an optional emergency exit. It is meant to be an integral part of the plane’s body.)

Miraculously, during the twenty minutes it took for the plane to circle back and land, no one was sucked out of the gaping hole. But for two decades leading up to the incident, wealth has been sucked out of the company via legalized stock manipulation to benefit Wall Street and Boeing CEOs.

Since 2013, the Boeing Corporation initiated seven annual stock buybacks. Much of Boeing’s stock is owned by large investment firms which demand the company buy back its shares. When Boeing makes repurchases, the price of its stock is jacked up, which is a quick and easy way to move money into the investment firms’ purses. Boeing’s management also enjoys the boost in price, since nearly all of their executive compensation comes from stock incentives. When the stock goes up via repurchases, they get richer, even though Boeing isn’t making any more money.

Rather than reinvesting more deeply in the company’s products, Boeing chose to pay off stockholders and Boeing executives.

As a result, Boeing has two missions: 1) Produce profitable and safe products for their airplane-buying customers, and 2) Produce stock buybacks for Wall Street and CEOs. Unfortunately, for the rest of us, these missions are in conflict.

Finding the money for stock repurchases inevitably leads to cost-cutting. Most often, the first move is to lay off as many workers as possible. But other more subtle strategies include cutbacks in preventive maintenance and environmental controls, the outsourcing of work to lower-wage firms, skimping on health and safety protections, and underfunding quality control. The goal is to become lean and mean, skating out to the very edge of cost reductions without jeopardizing the product. Or, well, at least not harming it too much.

You’d think that Boeing would not compromise on safety, given that one small production error or software glitch could down a plane worth hundreds of millions of dollars while killing hundreds of people in one blow. But you’d be wrong.

Boeing is a world leader in stock buybacks. Between 1998 and 2018, the plane manufacturer also manufactured a whopping $61.0 billion in stock buybacks, amounting to 81.8 percent of its profits. Add in dividends and Boeing’s shareholders received 121 percent of its profits. (Data compiled by William Lazonick and The Academic-Industry Research Network, from Boeing 10-K SEC filings.)

How much is that really? Well, according to Lazonick and Mustafa Erdem Sakniç, writing in The American Prospect in 2019, Boeing facing the obsolescence of its 737 planes, could have created an entirely new airplane from scratch with fully modern technology. Instead, the company decided to re-engineer the older model, name it the 737 MAX, and save $7 billion dollars. Perhaps not coincidentally, the $7 billion dollars “saved” is the amount of the stock buybacks Boeing made each year between 2013 and 2019.

Rather than reinvesting more deeply in the company’s products, Boeing chose to pay off stockholders and Boeing executives. In the three years before Boeing software glitches caused two 737 MAX crashes in 2018 and 2019 that killed 346 people, Boeing’s CEO Dennis A. Muilenburg received $95.9 million in gross pay. Lazonick and Sakniç report that nearly all of it was via stock incentives, since his annual salary never exceeded $1.7 million. (Perhaps again, not coincidentally, a Texas court ruled in October 2022 that the passengers killed in the two 737 MAX crashes are legally considered “crime victims.”)

And just to........

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