Boeing is in the middle of a public relations nightmare. The world’s largest commercial aircraft manufacturer is being investigated by the Department of Justice in response to two deadly crashes involving its 737 Max jets less than six months apart. Shortly after the second crash, which occurred on March 10 and involved an Ethiopian Airlines jet headed from Addis Ababa to Nairobi, Kenya, regulators in China, the European Union, and the US grounded all Boeing 737 Max jets. The initial panic over the safety of Boeing’s jets has died down, but the investigations into what went wrong on the Ethiopian Airlines flight and the deadly Lion Air crash five months earlier are ongoing — and Boeing remains in damage control mode.
On Monday, the CEO of Ethiopian Airlines said it would be difficult for Boeing to restore his trust in the safety of its planes. Though it’s still unclear what caused the deadly accidents, it’s undoubtable that the manufacturer’s reputation — and its stock — has taken a hit. But Boeing isn’t the first big company to struggle with a scandal of a similar scale; companies like Chipotle and Toyota have faced enormous safety concerns as well. The question isn’t if Boeing will be able to bounce back, but how long it will take — and how much it will cost — for its reputation to recover.
Gene Grabowski, a partner at the public relations firm kglobal, told me that three factors determine whether a company can recover from a crisis: how big the problem is, how the company handles the problem, and how strong the company’s business is. “Boeing’s recent situation, it’s a huge problem,” Grabowski said, and added that the company hasn’t handled it as well as it could have. But Boeing’s business is so strong, he doesn’t doubt it will recover eventually. “There aren’t that many aircraft manufacturers. If Boeing were a carmaker, it would be more serious because there’s more competition,” he said.
“It’s going to cost Boeing between $30 billion and $40 billion, but they’re going to recover because their business is so strong,” Grabowski said. “The United States government wouldn’t let Boeing go out of business — they’re like GM or AIG. If they had to, they’d bail them out.”
But that doesn’t mean Boeing has done everything right on the road to recovery, Grabowski said.
“One of the seeds of Boeing’s mishandling of the crisis is the very fact that it considers itself a business-to-business operation,” Grabowski said. “A business-to-consumer operation like Procter & Gamble — or an airline, like Southwest Airlines or even United on its best days — is better at handling crises. But companies that perceive themselves as business-to-business actually do a worse job because they’re not used to dealing directly with consumers.”
Another issue, he said, was that Boeing’s CEO called the president before the FAA decided to ground certain Boeing jets to convince him to keep the planes in flight. “Whether he said that because he didn’t have the facts or was ignorant of the facts, or whether he was trying to veil the fact that he knew [something was wrong],” Grabowski said, Boeing’s CEO made a “big mistake” by calling Trump. “Either he was being disingenuous or he was speaking to the president without the facts.”
John McDonald, the founder of the crisis management firm Caeli Communications, disagrees with Grabowski’s assessment that Boeing has handled the crisis poorly. After the Lion Air crash last October, he said, “Boeing did a really good job, initially, of saying, ‘We need to find out what’s happening. We’re going to work on this and figure it out.’”
According to McDonald, people’s fear of flying on Boeing aircraft after the Ethiopian Airlines crash wasn’t because of that accident alone, but because of an apparent pattern between that incident and the Lion Air crash. “Until the pattern was established, people didn’t think it applied to them,” he said.
This isn’t just the case with plane crashes; Chipotle’s late 2015 E. coli scare is another good example. “People get sick all the time from tainted food, but they don’t see it as something that is a threat to their personal safety,” McDonald said. “How many people get listeria poisoning [each year], or poisoning from some kind of bacterial infection they get from food-borne illness? There’s a lot, but it doesn’t stop you from eating,” at least not until a pattern is established.
Chipotle recovered. It’s had a few food safety scares since the 2015 incident, but its stock price is approaching 2016 levels, though the road to recovery wasn’t easy. “Chipotle initially did not do a great job,” Grabowski said. “What got Chipotle through it was a board of directors that stayed with them. Chipotle wasn’t doing well for a number of years, but they’re coming back.”
Grabowski said there was another factor that contributed to Chipotle’s recovery: crisis fatigue. “One of the reasons nobody talks about Chipotle anymore is that we’ve had hundreds if not thousands of crises since then, and in food we’ve had scores,” he said. Eventually, he said, enough time will pass and people will move on from Boeing’s crisis, too — unless, of course, there are similar incidents in the future.
Eric Dezenhall, the CEO and founder of the public relations firm Dezenhall Resources, agrees that Boeing will recover eventually — and that it will take time. “Boeing is going to survive, but they’re not going to look good in the short term,” he said. “They have the leadership, the resources, and the diversification to survive. What I always tell clients in these situations is, ‘Don’t look for praise anytime soon.’”
Dezenhall and Grabowski both pointed to a crisis Toyota faced in 2009 after customers began complaining that their cars were randomly accelerating, in some cases resulting in deadly car crashes. Toyota was forced to recall certain vehicles and was the subject of a class action lawsuit and eventually agreed to pay a $1.1 billion settlement. As one of the lawyers who brought the case against Toyota told the Wall Street Journal in 2012, it was one of the largest settlements in a lawsuit involving the auto industry. The recalls and the lawsuit cost the car manufacturer more than $3 billion.
“Toyota put hundreds of millions of dollars into recovering from that,” Grabowski told me. “In their showrooms, [it put] little displays of how the brakes work, how they improved the braking systems. They changed the floor mats because some people said that the floor mats were slipping and hitting the accelerator. Toyota bounced back, but only after spending hundreds of millions of dollars and putting a lot of what I call ‘show me’ materials in [its] showrooms.”
To regain the public’s trust, Dezenhall said, Boeing similarly needs to prove that its products are safe. But instead of swaying individual customers, the manufacturer needs to “regain the confidence of the airlines and the governments that regulate them.” The average person, he said, isn’t going to fully understand the issues or the recovery process. “How do you explain aviation software to billions of people? You don’t. But if people see that major airlines are flying the planes and governments are allowing them to fly, combined with time passing with no adverse events, that’s your answer.”