The Airbus-Boeing rivalry – in post-scandal reform

In future textbooks about corporate ethics, one chapter should certainly be dedicated to how two great rivals in aviation – Boeing and Airbus – were also rivals in how they fixed their company culture after each suffered a major scandal.

So far, their stories of reform are a good read.

For Airbus, the climax of its recovery may have come this week. It announced Tuesday that it expects to pay nearly $4 billion in penalties to settle corruption cases with France, Britain, and the United States. That would be one of the largest fines for corporate corruption in recent years. The hefty penalties, if approved by the courts, as well as a possible legal admission of guilt, are just part of a long process of reform for the European plane-maker.

Four years ago – and much to its credit – Airbus self-reported to authorities that its reliance on third-party sales agents to sell jets had resulted in cases of bribery. Outside experts were brought in to clean up the company and create more transparency. The use of middlemen ended. More than 100 Airbus employees were let go. And a new chief executive, Guillaume Faury, said ethical compliance was priority No. 1. 

“To embed irreproachable behaviors in all our business undertakings sustainably, we must take a hard look at both our systems and our culture,” he said soon after taking the helm.

In Boeing’s case, the scandal revolves around two fatal crashes of its 737 Max aircraft over the past two years, one in Ethiopia and the other in Indonesia. The aircraft was grounded last March by the U.S.

Internal memos revealed that a few employees knew of flaws in the aircraft that some pilots might be able to deal with. In the rush to compete with a new Airbus jet, Boeing was lax in its design and in its communication with regulators and airlines.

The technical fix to get the 737 Max back in the air is underway. But in the meantime, Boeing has apologized to families of the crash victims and set up a fund for them. It has also set up a better way for employees to funnel complaints. In December, its chief executive was fired and a new chief, David Calhoun, now promises to restore Boeing’s reputation for engineering integrity.

“We’re just going to get back down to restoring trust with one another, trust with our customers, and trust with our regulator,” he said in mid-January.

Both companies have a strong financial interest to make rapid reforms and comply with authorities. But at a time of any self-made crisis, executives also have an interest in conducting a deep moral audit of their companies. Airbus and Boeing have long had ethical codes. What’s key to avoiding mistakes, according to Gale Andrews, Boeing’s former chief ethics officer, “is the underlying moral intent.”

On that score the companies must outdo themselves even as they try to outdo each other in building better airplanes.