Recent reports are that Boeing may be at risk of having to completely stop production of its most lucrative aircraft until the aircraft is re-certified, due to logistical reasons. This could mean significant layoffs and serious repercussions for its huge number of sub-contractors
Boeing, America’s mighty aircraft manufacturer, is in deep trouble. The controversy surrounding the best-selling 737 MAX has refused to go away. The Federal Aviation Administration, the US aviation regulator, has spent over 110,000 hours addressing inquiries about the Max and appears to be inching closer to a final certification package as this is being written in September.
This will come as a huge relief to the manufacturer, the many airlines who have bought (and paid for) MAX aircraft already and of course Boeing’s investors.
For readers who have been in hibernation for the last few months, Boeing’s problems began when a brand-new 737 MAX operated by Lion Air, an Indonesian low cost carrier, had a fatal crash in October 2018. The accident investigators focused on a little known piece of software known as MCAS (manoeuvring control augmentation system) that was unique to the MAX. MCAS was a mystery to pilots who were experienced in the older 737 variants, as Boeing had chosen not to inform crews about it.
Initially the problem did not seem too acute. Boeing issued an Emergency Airworthiness Directive advising pilots of the new system and flights continued uninterrupted. So did the MAX sales juggernaut, with 248 orders for the aircraft being placed between November 2018 and March 2019. The success of Boeing’s oldest commercial airline type (the original 737 was first delivered to Lufthansa in 1968) was unquestioned, with over 10,000 being delivered already.
Then came the second catastrophe. Ethiopian Airlines flight ET302 crashed in Addis Ababa on 10 March in circumstances eerily similar to Lion Air 610. By 13 March, the world’s entire fleet of MAX’s had been grounded, with the FAA being the last regulator to do so.
Since then the issues have been compounded by a social media frenzy the like of which the industry has never seen. Previous aircraft groundings have occurred, as reported in this column. The travails of the DC-10 and A320 were in the days before social media existed. Even the Boeing 787’s short grounding was not as the result of a fatal accident, so the denizens of Twitter were barely awakened. With over 360 fatalities however, the MAX has been grist to their collective mills.
When the first accident happened, Boeing undertook to have a fix to MCAS ready within a few weeks, but this has not transpired. Since then it has been revealed that Boeing had essentially self-certified the MAX. The FAA had been forced to abdicate its responsibilities due to budgetary constraints and political pressure. This lack of oversight has cost the industry a small fortune. It must be adequately addressed before the public will regain confidence in the aircraft.
Lipstick on a pig?
The 737 is the last production aircraft type that is based on 1950s technology. By contrast, Airbus’ suite of aircraft is now completely digital ‘fly by wire’ with integrated fault analysis systems and electronic checklists. Boeing’s two other market-leading models (the 777 and 787) have similar digital systems that are controlled by software that is fully integrated to the design.
In its fifty-odd years of existence the 737 has increased in length by almost 50% (from 29 meters to 44.8m in length) and passenger capacity has gone from 124 passengers to 230. In order to carry this huge increase, the engines too have been upgraded with the MAX having the latest CFM Leap-1B, which are much bigger and more powerful than the previous engines.
With flat-panel displays, keypad controlled computer systems and electronic checklists, the flight deck of the MAX looks similar to its larger siblings. But this is the ‘lipstick’ – beneath the skin it is a completely different animal with mechanical flywheels, cables, bungee cords and ratchets providing a direct link between the pilot’s control-wheels and the flight control surfaces on the wings and tail-plane. There is no digital computer system sitting between the pilots and the controls to keep them safe. Despite some software such as MCAS, the MAX has the same ‘steam punk’ 1950s architecture as the original 737.
At the end of the day, the MAX can be a ‘pig’ to fly when something goes wrong, demanding that its pilots fly the aircraft by the ‘seat of their pants’ if necessary. It appears that this skill-set seems to have been sadly eroded. Pilot over-reliance on the autopilot and computer systems could be fatal, as has been proven in these two fatal crashes.
What is likely to happen?
Boeing, one of the most successful corporations in the USA with a supply-chain stretching right across the world and a reported $ 10 billion war chest, has its back to the wall. Already it has stated that a $ 4.9 billion accounting charge for the repercussions of the MAX grounding will be made. The MAX production line has continued to run, but with no deliveries possible, Boeing is running out of space to store completed aircraft.
Recent reports are that Boeing may be at risk of having to completely stop production of its most lucrative aircraft until the aircraft is re-certified, due to logistical reasons. This could mean significant layoffs and serious repercussions for its huge number of sub-contractors.
Already many companies have disclosed financial losses due to the grounding. Ryanair, Europe’s largest airline, has announced pilot layoffs and closure of bases due to lack of aircraft plus the Brexit uncertainty. So far unknown, is the number of aircraft that could become eligible for cancellation due to the delivery being delayed beyond the period of contractually agreed delay. This would leave completed ‘orphan’ MAXs with no customers sitting on the ground, further worsening Boeing’s balance sheet and the market values of the model.
Where will this end?
The FAA is working frantically to re-certify the MAX, but this is not proving to be easy. Further complications are reported to have arisen, delaying the process. It is imperative that this be done only after a comprehensive review, as any further problems could prove to be fatal to the type. In addition to this, the US regulator is seeking consensus from other national regulators in order to ensure that the public’s confidence in the MAX is assured. Recent reports suggest that the European regulator (EASA) will certify the MAX independently of the FAA’s licensing, an unprecedented move that could lead to further delays.
While re-certification needs to be thorough, it also must be expeditious. It is quite likely that if it is not completed as expected, Boeing will be facing a financial crisis. Talks of a US government bailout are already being floated, which is alarming to say the least.
The Federal Reserve has recently cut interest rates, a sign that the good times for the US economy are over. A slowing economy already embroiled in a trade war with China would be badly hit by more turbulence at Boeing. This could easily tip the US economy into recession, an outcome that the Trump administration clearly wishes to avoid.
All eyes will be on the FAA’s HQ in Washington DC in the coming weeks, as the airline industry and the travelling public await a decision on the re-certification of the MAX.