Boeing CEO to Tell Congress: 'We Know We Made Mistakes'

Boeing Chief Executive Dennis Muilenburg is under pressure to put on a star performance this week, when he testifies before two congressional committees about the design and certification of the company’s 737 MAX. The aerospace giant is under massive amounts of scrutiny for possibly cutting corners in developing the jetliner, decisions that contributed to two crashes that killed a combined 346 people over the past year.

According to Muilenburg’s prepared testimony, which Fortune has obtained, Boeing’s CEO plans to acknowledge that the company made mistakes when he testifies Tuesday before the Senate Commerce Committee and Wednesday before the House Transportation Committee. In addition to the scrutiny from Congress and regulators around the world, the Department of Justice launched a criminal investigation following the crash, a rarity in civil aviation disasters.

“We can and must do better,” Muilenburg’s testimony says. “We have been challenged and changed by these accidents, and we are improving as a company because of them.”

The Boeing hearings are just the latest turn in a months long Odyssey for the aerospace company that began a year ago. Most recently it was revealed that Boeing withheld texts between two company engineers, messages that seemingly show the company knew there was a serious problem with one of the airplane’s flight-control systems.

The messages are “disturbingly consistent with what we’ve seen so far in our ongoing investigation of the 737 MAX, especially with regard to production pressures and a lack of candor with regulators and customers,” Rep. Peter DeFazio (D-Ore.), the chair of the House committee, said in a statement on Oct. 18. “This is not about one employee; this is about a failure of a safety culture at Boeing in which undue pressure is placed on employees to meet deadlines and ensure profitability at the expense of safety.”

Adding to the hearings’ drama, Tuesday marks one year since Lion Air Flight 610 slammed into the Java Sea, just 13 minutes after takeoff. Muilenburg’s statement acknowledges the anniversary straightaway.

“We carry the memory of these accidents, and of your loved ones, with us every day,” the Boeing CEO plans to say. “They will never be forgotten, and these tragedies will continue to drive us to do everything we can to make our airplanes and our industry safer.”

Plenty of blame to go around

According to the Indonesian investigators’ final report released Friday, design flaws in the MAX, weak regulatory oversight by the U.S. Federal Aviation Administration, pilot error, and shoddy maintenance work all played a part in the Lion Air crash. Indonesia’s National Transportation Safety Committee issued withering criticism of Boeing, but it also was sharply critical of Lion Air. It also called attention to how the FAA’s sometimes anemic oversight contributed to the disaster.

“If I were Muilenburg, I would repeat that report word for word” on Capitol Hill, aerospace analyst Richard Aboulafia tells Fortune.

The report apportions blame all around, and, more importantly for Muilenburg, it does not tell a “story of corporate greed and malice,” the vice president of the Fairfax, Va.-based Teal Group says.

Following the report’s release, Boeing issued a statement Friday saying that the company is addressing the safety concerns and recommendations outlined by investigators. Boeing has spent months developing and testing software changes and new pilot training to prevent the MAX’s flight control system known by the acronym MCAS from causing another crash.

After the crash of Ethiopian Airlines Flight 302 on March 10, the 737 MAX was grounded around the world. It is still unclear when regulators will allow the plane to fly again. Muilenburg told reporters and financial analysts on Wednesday that he still expects FAA approval for the MAX to resume flying by the end of the year.

Getting the plane back in the air, though, has taken months longer than the Chicago-based company first expected. Boeing has thrown cash and resources at solving the problem, something it is well regarded for in the aerospace industry. The MAX crisis has cost the company more than $9.2 billion so far—and likely will cost billions more.

On Thursday, Boeing told white-collar workers and managers they would not receive annual bonuses come February, the Seattle Times reports. Due to how the company structures its incentive programs, Boeing executives will still get bonuses, albeit smaller ones.

Boeing has been sharply criticized for its clumsy, aloof public relations during the crisis. Industry analysts and many rank-and-file Boeing employees tell Fortune that they can’t yet tell if recent high-profile actions by company leadership are real changes or window dressing.

Arrivals and departures

In August, the company’s board of directors created a new safety committee to review how Boeing designs and develops airplanes. On Oct. 11, the board stripped Muilenburg of his role as Boeing’s chairman, replacing him with David Calhoun, a former General Electric executive.

Last week, the head of Boeing Commercial Airplanes, Kevin McAllister, was fired. Company officials have declined to say why. The move was seen by many industry analysts as a sacrificial offering. McAllister, though, joined Boeing at the tail-end of the 737 MAX’s development.

Boeing announced Friday that recently-retired U.S. Navy Adm. John Richardson is joining its board. Richardson was elected to energy giant Exelon Corp.’s board in September, about two weeks after leaving the Navy.

The chairmen of both Boeing and Exelon praised Richardson’s deep experience with nuclear reactors in announcing his appointments. The 59-year-old has a master’s degree in electrical engineering from the Massachusetts Institute of Technology. Adding engineering expertise to the board is a step in the right direction, Aboulafia says.

Muilenburg’s prepared remarks do not mention the changes that have occurred in the boardroom or the C-suite.

The MAX crisis has shaken Boeing’s decades-old reputation for safety, says Henry Harteveldt, an airline analyst and president of Atmosphere Research Group. On Capitol Hill, Muilenburg “has to be contrite, he has to be transparent and he has to accept Boeing’s responsibility” in the crashes, he says.

In black-and-white, at least, it appears that Boeing’s chief is prepared to hit those marks, not only acknowledging the criticism of the company and its culture, but also that “we understand and deserve this scrutiny.”

An April survey conducted by Atmosphere Research Group found that U.S. flyers are deeply hesitant about boarding a MAX within six months of its return to service. Muilenberg’s testimony acknowledges that sentiment, saying “Regulators around the world should approve the return of the MAX to the skies only after they have applied the most rigorous scrutiny, and are completely satisfied as to the plane’s safety. The flying public deserves nothing less.”

The MAX crisis has aggravated airlines’ relationship with Boeing, which promised carriers the new airplane was so similar to the previous generation that pilots would not need extensive—and costly—training. But these two MAX crashes show that—at best—that Boeing fatally underestimated just how different the new airplane was from its predecessor. And now, Muilenberg appears poised to say the company knows better.

“When the 737 MAX returns to service, it will be one of the safest airplanes ever to fly,” Muilenberg will tell Congress Tuesday. “We know we made mistakes and got some things wrong.”