Japan airlines has already lost an estimated $15 million due to the grounding of the Boeing 787 Dreamliner aircraft in its fleet. See the recent news story here: http://www.usatoday.com/story/todayinthesky/2013/01/31/ana-tab-for-dreamliner-woes-stands-at-15-million-so-far/1880647/

What’s more, the damage to Boeing’s reputation is likely to last for some time and will be perhaps far more costly. The essential thing is for Boeing to take responsibility–even if the batteries which seem to be the culprit–were manufactured by another party. What else can or should Boeing do to ease consumer fears?

Boeing's 787 Dreamliner jet

18 thoughts on “The Cost of Negative Publicity

  1. Its important that battery problems should be handled efficiently, regardless of what the situation is. However I think that ANA may be at stake and loose business if flights are getting cancelled domestically and internationally. If this continues than, ANA, may loose customers, and Boeing’s reputation may be at stake.

    Depending on how established ANA is, I think its good that battery problems were discovered early so no further problems would arise for consumers because safety is important for ANA fliers, and Boeing. Depending on the options available for Boeing and ANA, ANA should seek some compensation from boeing for its loyal customers.

  2. While reading this article it brought me back the quote, I forgot which company said this but ” We can afford to lose money, but we cannot afford to lose our reputation”. It’s true Boeing have a long way to rebuild its’ reputation, as well as coming up with an answer on what really happened to their 787 Dreamliner. There are many issues they need to deal with their internal public and external public, other than just the 787 Dreamliner itself. I was watching a YouTube video on this issue, and the 787 Dreamliner was actually postponed 3 years back to accurately test the plane out, however, the batteries was not an issue during the testing. I also wonder if anyone who was working on the 787 Dreamliner saw a problem but did not want to tell the rest of the people because it was already mass produced? However, it will take a while to earn peoples trust again. Also I know some people who work for Boeing, so I hope they make it through!

    1. That quote “We can afford to lose money, but we cannot afford to lose our reputation” is from Warren Buffet about Berkshire! This quote has resonated with me throughout all the time I’ve taken business classes at PSU and it just seems so true. Losing money is short term, but losing reputation, you lose goals in the long term. Long-term goals is what keeps a company going like Boeing! Whats 15 million to the billion they’re going to make in the long run? Good quote Shauba!

  3. I am pretty shocked at how Boeing seems to be bumbling through this disaster. From the information provided in the article link and the post, it seems Boeing has remained fairly mute in responding to airlines concerns about how they will be compensated for their profit loss due to the Dream liner’s battery malfunction. I think this will prove to be an opportunity for Boeing to prove their commitment to the quality of its products and brand by listening to the expectations of their customers.

    Another point of disappointment for me is an apparent oversight in quality control. The overheating of the battery, to the point of causing fire, is pretty major and seems like a mistake that would be made a company far less experienced than Boeing. If the Company doesn’t find a solution that is satisfactory to its stakeholders (especially the airlines who buy Boeing planes) it could tarnish the company’s reputation and brand to the point where no longer are industry leaders.

  4. The 787 journey has been rough since the start. Production of the planes were greatly delayed to a massive fastener shortage. After that there’s been one problem after another. Within the airline industry the reputation of Boeing’s 787 has been poor from the very beginning. On the outside the dreamliner does in fact look like a dream, but internally it’s a nightmare.

    The problem with the batteries is that they are packed in a metal box and are prone to overheat. Boeing developed a computerized system to fix this and if that system failed the smoke/flames were supposed to be channeled outside of the aircraft.

    The main issue I see here is that Boeing knew these batteries were prone to overheat. The first thing I would expect from Boeing is a public statement of apology and reasoning for choosing a product that was known to be hazardous. I think the most important damaged control Boeing can do is educate the consumers on why they chose the route they did. Also apologizing shows that they are aware that this is a problem and they know they need to fix it. Following would be a recall of the product and replacement from another manufacturer… even if it would result in a lost of profit.

  5. The 787 journey has been rough since the start. Production of the planes were greatly delayed to a massive fastener shortage. After that there’s been one problem after another. Within the airline industry the reputation of Boeing’s 787 has been poor from the very beginning. On the outside the dreamliner does in fact look like a dream, but internally it’s a nightmare.

    The problem with the batteries is that they are packed in a metal box and are prone to overheat. Boeing developed a computerized system to fix this and if that system failed the smoke/flames were supposed to be channeled outside of the aircraft.

    The main issue I see here is that Boeing knew these batteries were prone to overheat. The first thing I would expect from Boeing is a public statement of apology and reasoning for choosing a product that was known to be hazardous. I think the most important damaged control Boeing can do is educate the consumers on why they chose the route they did. Also apologizing shows that they are aware that this is a problem and they know they need to fix it. Following would be a recall of the product and replacement from another manufacturer… even if it would result in a lost of profit.

    1. Allison, I agree with you, Boeing should issue a public apology and also a recall of the product and a replacement is a great idea. Even if it results in a loss of profit, it could be much worse if they don’t address the issue. Having previously done a project on Boeing for another class makes you very knowledgeable about the company. I believe it was Warren Buffet who said, “You can afford to lose money, but you can’t afford to lose your reputation.”

      1. I also think there should be a recall. I don’t remember which aircraft manufacture it is, but over the weekend I head a short report about a big airline manufacture that has been working on a new line of commercial airplanes and they have decided to remove the use of the lithium-ion batteries and use the previous battery model for their new planes. In the meantime Boeing has proposed a redesign of the lithium-ion battery in the 787’s, here’s the NYTimes link: http://www.nytimes.com/2013/02/21/business/boeing-to-propose-battery-fixes-to-faa.html?_r=0

    2. You brought up an important point that in addition to a public apology they should explain the “reasoning for choosing a product that was known to be hazardous”. As consumers we can understand that companies of all sizes make mistakes, and you can never foresee every potential outcome or problem with a design or strategy. In this case since the publics now know that the battery issue was a known problem, it leads (me) to the belief that Boeing’s purpose for using the faulty construction was to save money in some way.

      This feels like a knee-jerk response in a way, but since they were not forthright with their reasoning it just feels like they were going to try it and see if they got away with it. If Boeing had issued an apology and explanation as to why the particular battery and metal box configuration was selected, it would give them more credibility.

    3. Allison: Great response! I agree, Boeing should be as straight forward and honest as possible. A public statement of apology is a must and I think that they should recall all of the dream-liners so that they can be fixed, fully reexamined, and then considered for rerelease. Like with the Tylenol case, being as up front as possible works with easing public opinion. This is especially important for an air plane manufacturing company, because so many people (myself included) already have fears associated with flying. If they are given reason to feel unsafe on their planes, they might be less likely to fly with companies that use their planes.

  6. I think Boeing needs to address the issue and let their publics know they are looking in to the issue. They should also release a statement of what they have found thus far in their research of the problem, and perhaps provide some insight as to why the released the plane with the current design. The more transparent they can be with the problem, the better it will look. As Casey mentioned, they have been very quiet on the matter, leaving a lot for people to assume or speculate. They should really start to get ahead of this problem.

    1. Yes, every time a company have some kind of crisis happened, things should be taken seriously and quickly. The longer you wait the more people are going to complain. Like I mention for the Cruise Line tragic, more planning should have been done for unexpected events. I know Boeing have deadlines to reach but what should have come first in their company is that safety should be the number one thing on their agenda. You can waste time, but you cannot waste a life. And so what if they went over their dead line, they should have came out saying, hey our 787 dreamliner have been postponed because we want to make extra sure that everything is working properly and that we cannot take pride in our business if anything was to go wrong. And people safety is our number one concerned. I think people would be skeptical but after a while if there is no problem, people will know Boeing did the right thing.

  7. I think I was so luck because I actually took Boeing 787 jet from San Diego to Tokyo in last Christmas holiday. I didn’t realize it was a dreamliner until I was on broad. There were lots of passengers especially guys keeping taking photos to the Boeing. It was one of the best experience while I was sitting in 787. Everything was so new and fansy inside of this jet, including ANA’s excellent services and delicious food. It was sad to hear the great jet had battery problem, and it causes both Boeing and ANA are losing money. But I still feel confident to both of the companies. Boeing is one of few big aircraft companies, most great aircrafts are made by this companies. Their technologies and products have huge influence in the aircraft industry, transportation, or even more areas. It is difficult to be take place in the short-term. I think Boeing still have time to fix the problems inside of the company, also strength communication in public. The public should also understand that it is almost impossible every great technology products are created in perfect. We should give Boeing time to solve the problem. I also think the company is honest to the public. They didn’t try to hide the battery problem, instead they are trying telling people their news in time. At least, I feel the company is doing things very ethically. It is very important in building good reputations.

  8. I think that boeing has to be as transparent as possible on this problem and show all the researches and effort they are making to solve this problem. The company has to show their concern by reacting very quickly. If the company waits too long people will loss trust in the company. This can be very dangerous especially for boeing, since the company reputation about safety is the most important dimension. The company has to show to the customers that they are reliable and that they have to situation under control.

  9. I love how they blame the “volatile lithium-ion technology” as the the scapegoat for Boeing’s problems (this was mentioned in the most recent article I read http://www.nytimes.com/2013/03/15/business/boeing-presents-fix-for-787s-battery-problems.html?_r=0). As someone who works for a lithium-ion battery manufacturer, Tesla Motors, a company that’s never had any of their batteries catch fire, I think that Boeing needs to take full responsibility for their planes and not blame one of the components. Also, I think it’s pretty funny how Boeing isn’t even sure that the battery is the problem they just decided to blame that. It could be something entirely different and I think that Boeing needs to just admit that they messed up and continue to work on it diligently. With all the testing to be done, that must be approved before the tests can be implemented, I think Boeing is going to be tied up in this fiasco for a while and the longer they draw out admitting it’s their fault the worse it will get for them. I’m not too sympathetic because I think big corporations have big egos and think they’re above making mistakes so they’ll blame the suppliers or the reporters (BPI “Pink Slime”), whoever seems most convenient.

  10. The company should communicate the issues with the batteries and explain the causes and remedial plan. They must be able to regain the trust of their customers, and the only way to do this is be honest about what happened and what will be done to correct it. Their brand image will be negatively affected for a while, but consumers will soon forget once the dreamliners are back in business.

  11. I think Boeing should promote its nearly flawless safety record over the past fifty years and promote the safety of flying, which is still viewed by some as a dangerous activity in complete ignorance of the statistics.

  12. The idea of passing the buck of the battery malfunctions to the producer is ludicrous. Boeing contractually agreed to use these batteries, therefore they should be held responsible for their malfunctions. Boeing should’ve hired a crew of engineers to inspect these batteries before using them on their planes, therefore, Boeing should be held accountable for not inspecting their equipment prior to boarding the flight. One thing we must all consider is Boeing’s history of producing great airplanes, their long standing reputation will definitely overcome this issue and I think after proper inspection and adjustment, the dreamliners will soon fly again.

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