As authorities probe Boeing’s safety protocols as part of their investigation into what went wrong with a flight that blew a hole midair last week, the role of a major supplier is also coming into focus: Spirit AeroSystems.
Alaska
Jet accident probe expands to include Boeing supplier
Spirit builds the fuselage, or main compartments, of the Boeing’s 737 Max 9 jets at its Wichita factory before shipping them for finishing by Boeing. Spirit said its work on the fuselage includes completing the initial installation of the panel that broke off the Alaska Airlines flight, although it’s not clear whether the doors were reinstalled later. The company says it is responsible for manufacturing about 70 percent of each Boeing 737 aircraft before it is delivered by rail to Boeing’s factory in Washington.
At the Boeing factory, the plane’s wings, engines and internal components are installed before delivery to airlines. Investigators will seek to learn more about the manufacturing process with Spirit’s input, an NTSB spokesman said.
The Alaska jet was almost brand new, and four experts have said initial evidence suggests a problem that cropped up when it was being built.
So far, public attention has fallen primarily on Boeing, one of only two major airliner manufacturers globally. The company has struggled to repair its reputation after design flaws contributed to two deadly plane crashes several years ago. In remarks to employees Tuesday at Boeing’s 737 factory in Renton, Wash., chief executive David Calhoun said the company’s approach to Friday’s incident would involve “acknowledging our mistake.”
“We’re going to approach it with 100% and complete transparency every step of the way,” he said. The company distributed a transcript to the media and declined to comment on what Calhoun considered the company’s mistake. “We are going to work with the NTSB who is investigating the accident itself to find out what the cause is.”
In the wake of the Alaska Airlines incident, Spirit has said little publicly but started holding safety meetings Monday with teams across the company, spokesman Joe Buccino said. The meetings were focused on quality and following processes, he said.
“As a company, we remain focused on the quality of each aircraft structure that leaves our facilities,” Spirit said in a statement Wednesday.
Spirit is far less well known than Boeing, its biggest customer. It was spun out of Boeing in 2005 and now makes parts for several manufacturers, including Airbus, Boeing’s main competitor. But Boeing and Spirit remain closely intertwined and, along with engine companies, it ranks among the aircraft giant’s most important suppliers.
“They’re not making 737s without Spirit,” said Ronald J. Epstein, an analyst at Bank of America.
Spirit has struggled in the past year with a string of manufacturing problems that have delayed deliveries of the Boeing 737 Max, a series of midsize single-aisle passenger planes. The troubles have prompted a shareholder lawsuit alleging it was slow to disclose the issues.
The in-flight fuselage breach last week has put the Kansas company under scrutiny at a time when analysts say it was trying to rebound after a pair of crashes that previously grounded the Boeing 737 Max and the coronavirus pandemic shook the aviation industry.
Spirit was not implicated in the problems that caused the crashes of two 737 Max jets in 2018 and 2019, killing 346 people. But in January 2020, with the planes still ordered out of service by aviation authorities around the world, Spirit sent layoff notices to about 2,800 employees at its Wichita plant. They said at the time that the move was “a necessary step given the uncertainty related to both the timing for resuming 737 MAX production.”
As the coronavirus spread, the company took another major blow. It reduced its global workforce by 6,600 employees and cut pay for salaried workers, according to a November 2020 securities filing detailing its response to the pandemic.
“They were hit harder than any company in the business,” because of its heavy dependence on the 737, said aerospace analyst Richard Aboulafia. Grounding the Max, and the pandemic, he said, were “the makings of a huge crisis.”
The company struggled through, shifting to producing sorely needed ventilators for covid-19 patients at one point and taking $75 million in federal aid. Despite struggles to rebuild its workforce, analysts said it had appeared to be on a good path heading into 2024. In October, the company switched chief executives, hiring longtime Boeing executive Pat Shanahan and striking new financial terms with its biggest customer.
Boeing declined to comment on its relationship with Spirit or its role in the installation of the door plug. Spirit declined to comment on its relationship with Boeing.
In a sign of the Spirit’s importance to their home state, Rep. Ron Estes (R-Kan.), who sits on a key tax committee and leads an aerospace-focused caucus, and Sen. Jerry Moran (R-Kan.), who serves on one of the top transportation committees in the chamber, have long have been public advocates for Spirit.
Moran said Tuesday that he had been briefed by NTSB chair Jennifer Homendy on the Alaska incident and would continue to monitor the investigation.
“For the thousands of Kansans who work in aviation, their jobs depend on passengers feeling safe to fly,” Moran wrote on X.
The Max was cleared to fly again in late 2020. In recent years Boeing has been racing to fill orders for the plane from airlines around the world. But the discovery of manufacturing problems last year slowed deliveries.
Last April, Spirit notified Boeing that it had discovered problems with fittings on the plane’s vertical fin, the company disclosed in SEC filings. It said the issue was not an immediate safety threat, a finding that was confirmed by Boeing and the Federal Aviation Administration.
Spirit spent months fixing 737s located at its production facility in Wichita, at a cost of more than $30 million, according to an SEC filing.
By August, then-chief executive Tom Gentile declared in a filing that the costly repair work was “behind us,” adding “we look forward to executing on our customer commitments for the rest of the year.”
The same month, Boeing and Spirit disclosed that improperly drilled holes had been found on a rear bulkhead, causing more disruptions. In both cases the problems were uncovered before the planes carried passengers and the FAA said they did not pose an immediate safety risk.
In a complaint filed in December, lawyers for Spirit shareholders alleged that the company had known about the problems much earlier than when they were disclosed to investors. It also alleges the company ignored employees’ warnings about defects. The lawsuit cites an internal complaint filed by a former inspector at Spirit in early 2022 who alleges the company’s products “frequently contained defects” due to its “rushed production process.”
Gentile and his attorney did not respond to requests for comment.
“The company is schedule-driven, not quality-driven,” said the former employee, who worked at Spirit for more than a decade and spoke to The Post on the condition of anonymity because he still works in the aviation industry.
Company managers repeatedly discouraged the former employee and other inspectors from logging defects, the former employee said. “I’ve been saying for years that it was just a matter of time before something was going to happen.”
The suit also cites the account of another former employee who said auditors discovered in 2019 that torque wrenches were miscalibrated, an issue that could lead to parts being over- or under-tightened, threatening their structural integrity.
The shareholders’ complaint alleges that Spirit suffered repeated quality failures because it had not hired enough workers to meet demand and “prioritized production numbers and short-term financial outcomes.”
Spirit has not filed a response to the allegations in the lawsuit, which is still in its early stages. Buccino said the company disputes the allegations.
“Spirit strongly disagrees with the assertions made by plaintiffs in the amended complaint and intends to vigorously defend against the claims,” he said. “Spirit will not comment further as to the pending litigation.”
The aviation industry has struggled across the board with labor issues, seeing waves of job cuts at the beginning of the pandemic before scrambling to rehire workers as demand bounced back much quicker than many had expected. The result at a manufacturer like Spirit has been a loss of experienced employees who can help get new hires up to speed, analyst Aboulafia said, and which could contribute to quality problems.
In June, Spirit manufacturing employees, who had agreed to continue working under an old contract during the pandemic, briefly went on strike. The two sides soon reached a deal on wages, drug coverage and overtime, but company executives said the walkout caused another disruption to production.
Gentile was replaced as chief executive in October, and the company’s board turned to Shanahan to help chart the company’s path forward. He had worked at Boeing for three decades and served as deputy secretary of defense during the Trump administration. Shanahan quickly made a deal with Boeing to help stabilize the company’s finances and address manufacturing problems. Aboulafia said he was the right person to step into the role because “he can read reality to Boeing.”
A month into the job, Shanahan was clear about the challenges the company had faced. In a November earnings call, he used a military term to describe his approach to the job, saying he was at the company to “take charge and move out.”
“I recognize we have disappointed our stakeholders,” Shanahan said. “We want to restore confidence in the company.”
Alaska
Opinion: No one wants debt, and Alaska students are proving it
No one wants debt. This was the top finding of students and parents recently surveyed by the Education Trust of Alaska.
The Trust commissioned focus groups and a survey of current University of Alaska students and parents of University of Alaska students and eighth graders to gain a better understanding of existing awareness about the Alaska Performance Scholarship, Alaska 529 and University of Alaska scholarships; their college planning strategies; and motivations for attending the University of Alaska. Respondents in each group were clear: No one wants debt. They also shared that planning is overwhelming when the future seems so uncertain. Those who chose the University of Alaska were satisfied with their decision. Here’s a further, more detailed analysis:
Confusion and uncertainty can lead to decision paralysis: Investing in a 529 plan early can help alleviate future debt. However, awareness about how funds can be used, uncertainty about their child’s interest in future education after high school and the inability to save enough are barriers to planning or saving in advance. Many parent respondents said they avoid investing because they don’t think it will yield enough to cover the costs of education and training. Parents are worried about the portability of 529 accounts if their child attends an out-of-state school, doesn’t go to college or pursues a trade.
The truth about modern 529 plans: 529 accounts have become increasingly flexible; now, qualifying expenses include trades, apprenticeships, vocational training, college, professional credentialing and more. Every dollar saved is $2 they won’t have to pay back later, including interest, so any amount saved can help reduce future debt. 529s can be used at most colleges and universities nationally. Any earnings grow federal tax-free and as long as the funds are used for the qualifying expenses, they remain tax-free. If the account has unused funds, a solution is available thanks to recently enacted legislation that allows for rollovers into Roth IRA accounts. Most families don’t save for the full cost of attendance in- or out-of-state. Participants in Alaska’s state-sponsored Alaska 529 education savings plan have an average account balance of just over $17,000. Investing in a 529 plan early can help alleviate future debt, but it is not a standalone option for financing education.
Current University of Alaska students expressed satisfaction with their decision to attend UA: Students who chose to attend a school in the University of Alaska system were primarily responsible for covering the costs of their college education and debt avoidance was a major factor. The UA students were blown away by the diverse academic opportunities available to them in-state. Some respondents had applied to and were accepted to schools Outside. When they compared the costs of attending an out-of-state school with the options available in-state, it became clear that the financially prudent and responsible choice for them was to attend an in-state school. Students attending UA found that it was not only affordable but also that they had additional money on the table through the Alaska Performance Scholarship because they had taken eligible classes in high school, met the minimum GPA requirement and completed the FAFSA. Survey respondents indicated that they didn’t realize there were so many scholarship options in Alaska. They wished they had paid attention to information about Alaska scholarships earlier in high school. The real financial pie has many pieces. At UA, that might include a 529 plan, federal aid, the Alaska Performance Scholarship, the UA Scholars Award and other scholarships available to students from all academic and economic backgrounds.
Parents face pressures, information gaps and conflicting emotions in their efforts to support their students: In the survey, parents of eighth graders and current UA students said they want to help their child succeed, want to avoid debt but expect the student to pay their own way for education and training after high school. Parents of current UA students felt a strong sense of pride in Alaska and hoped that their child would live and work in Alaska after college. During the college search process, they felt some peer pressure to send their child out of state but felt satisfied with their child’s decision to attend an in-state school. They wished they had learned earlier, in eighth grade, about Alaska-based scholarships so they could have helped coach their child on high school course selection. When they were shown the Alaska Performance Scholarship planning worksheet available at acpe.alaska.gov, most didn’t recall seeing it before but thought it was the perfect planning tool.
Parents of eighth graders found the prospect of college planning, including the courses required to attain the Alaska Performance Scholarship and the requirements of the UA Scholars Award, to be overwhelming. They did not feel ready to learn about these scholarship programs or college planning. Parents were primarily focused on helping their middle schooler navigate the early teenage years, feel connected to activities and manage the stressors of middle school. They also expressed uncertainty about traditional college pathways, leaning more toward vocational training and trades.
The bottom line: Planning is key; however, it can be overwhelming, leading to decision paralysis. Seeking information and support starting in junior high and throughout high school is key to setting a student up for future success. Avoiding debt is doable. The numerous financial tools available in Alaska can help our kids start strong, debt-free and equipped with the training and education needed to secure fulfilling Alaska jobs.
Lael M. Oldmixon is the executive director of the Education Trust of Alaska.
• • •
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Alaska
Rounding to the nearest nickel for cash purchases proposed by Alaska lawmaker
HB 281 mirrors legislation in other states due to shortage of pennies resulting from Trump administration’s halt in production
Suzanne Cohen says she hasn’t had trouble coming up with enough pennies when making cash purchases. But since the copper coins are no longer being minted she doesn’t object if future purchases are rounded off to the nearest nickel.
“If they’ve gotten rid of it it seems like it’s only a matter of time, so this is probably the right thing to do eventually,” she said during the noon hour on Monday at Rainbow Foods.
A hour earlier and a block away at the Alaska State Capitol, a bill was introduced rounding cash purchases to the nearest five-cent sum by Rep. Dan Saddler, R-Eagle River. House Bill 281 is similar to legislation introduced in other states following the Trump administration’s decision last year to stop making new pennies.
“After the U.S. Treasury decided last fall to stop minting pennies, they’re disappearing from circulation faster than they expected,” Saddler stated in an email to the Juneau Independent on Monday. “As pennies get more scarce, we should make sure businesses can’t round transactions up or down to their advantage. My HB 281 simply sets consistent, fair standards for how cash transactions should be rounded to the nearest nickel, to protect Alaska consumers and businesses.”
Practically applied, it means a shopper handing $2 to a cashier would get no change back from a $1.98 purchase, but a nickel back from a $1.97 purchase.
“If the total ends in one cent, two cents, six cents, or seven cents, the total is rounded down to the nearest amount divisible by five cents; (2) if the total ends in three cents, four cents, eight cents, or nine cents, the total is rounded up to the nearest amount divisible by five cents,” the text of HB 281 states.
Dyoni Smith, a section manager at Rainbow Foods who was working at one of the registers on Monday, said there hasn’t been a noticeable shortage of pennies yet either at the store or for the cash purchases she still makes regularly.
“We have a few people who actually pay to the penny with cash,” she said. “And then we have some, like one guy who comes in and he’ll pay cash, and he’ll put the remainder in the donation jar. And then another guy who comes in and sometimes he’ll pay to the penny — sometimes he’ll get change out of the change jar. So there’s quite a few people who I see who use cash.”
President Donald Trump last February ordered the U.S. Treasury Department to stop minting new pennies — something long discussed by other policymakers since the coins cost more to make than they are worth. The U.S. Mint reported that a penny cost about 3.7 cents to make in fiscal 2024, up from 3.1 cents the previous year.
Among the factors to be considered in states implementing rounding laws are possible legal challenges, impacts to retailers and what happened when Canada stopped distributing its penny in 2012, according to a policy summary by the National Conference of State Legislatures. But generally the organization states such laws are worth supporting.
“While states may approach this issue differently due to their own unique circumstances, there is a growing consensus among retailers, economists, and other stakeholders, recognizing symmetrical rounding, (up or down) to the nearest nickel, as the fairest method to all parties when applying to cash transaction,” the policy summary notes.
• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.
Alaska
TSA is now accepting Alaska Mobile IDs at select airports
ANCHORAGE, Alaska (KTUU) – The Transportation Security Administration has begun accepting Alaska Mobile ID’s at security checkpoints in the Anchorage and Juneau airports. The digital ID’s, which were introduced in the state about a year ago, are just starting to catch on, according to Lauren Whiteside, Division Operations Manager for the Alaskan DMV.
Whiteside said the Division has been working closely with partners for months to prepare Alaska’s Mobile IDs for use at TSA checkpoints in both airports.
“This is a really modernized movement that we are really excited to be a part of,” Whiteside said.
The IDs are obtained through an app that can be downloaded for free. The DMV website has links to the app stores as well as other information on how to obtain a mobile ID.
Whiteside said there are lots of advantages to having your state approved identification on your phone. At the airport, she said, it’s convenience.
“You know sometimes you have your kids with you, sometimes you are balancing carry-on luggage, and if you can do all of your check-ins just using your phone, that’s really appealing to people.”
But Whiteside said the main appeal is privacy. No information can be shared from a mobile ID without the user’s consent, and people can select how much information they wish to share depending on the circumstances.
“I can opt to send everything, which you would likely always want to do with law enforcement, but you have all these options on what you choose to send and what you don’t choose to send,” she said.
Whiteside said it’s important to remember that mobile IDs don’t replace physical IDs, instead, they’re considered a companion to a regular ID and people will need to carry both in case a physical ID is requested.
Although TSA acceptance is limited to just the Anchorage and Juneau airports, Whiteside said she fully expects the program will expand to other airports and other industries.
“As time goes on it’s going to become more and more common, so we recommend anyone who wants to have it- it is not a requirement -but anyone who wants it, we encourage you to go ahead and download,” she said.
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