Boeing Board in Pre-Earnings Panic Mode After Concerning 737 MAX Revelations
Updated: Jan 11, 2020
Reuters reported last night that Boeing’s board and top executives would be holding high level meetings in San Antonio, Texas on Sunday and Monday, in the wake of disturbing revelations about internal 737 MAX development concerns.
This October, the news at Boeing has gone from bad to worse and is unlikely to get any better before the end of the month. With anemic quarterly orders, an abysmal earnings report expected on Wednesday and congressional hearings on October 29th and 30th, the situation looks grim. Boeing President and CEO Dennis Muilenburg has been stripped of the chairmanship and airline customers continue to express doubt about when the 737 MAX will return to service. Late Thursday, Boeing provided a document to the Federal Aviation Administration (FAA) which relayed internal electronic communications, as early as 2016, expressing deep concerns about an “egregious” runaway trim condition experienced in simulator exercises. On Friday, FAA Administrator Steve Dickson sent a terse letter to Boeing CEO Dennis Muilenburg stating,
“I understand Boeing discovered the document in its files months ago. I expect your explanation immediately regarding the content of this document and Boeing’s delay in disclosing the document to its safety regulator.”
In response to the administrator’s letter, Boeing issued a press release Friday explaining that Mr. Muilenburg had called FAA Administrator Dickson to address his concerns stating,
“Yesterday, we brought to the attention of the Department of Transportation a document containing statements by a former Boeing employee. Earlier this year, Boeing produced this same document to the appropriate investigating authority. Boeing has also been voluntarily cooperating with the House Transportation & Infrastructure Committee’s investigation into the 737 MAX. As part of that cooperation, today we brought the document to the Committee’s attention as well. We will continue to cooperate with the Committee, and all other authorities, as they move forward with their investigations.”
On Saturday, Reuters reported that Boeing’s board of directors would be meeting in San Antonio, Texas on Sunday and Monday with their top commercial airplane and supply chain executives. According to Reuters, unnamed industry sources speculated that the company may be considering substantial job cuts related to the 737 MAX grounding and Boeing’s inability to deliver the airplanes. There is also speculation about potential supply chain disruptions if Boeing is unable to keep current and future narrow-body production level estimates, as the company burns cash.
As we approach the first anniversary of the tragic crash of Lion Air flight 610, which occurred on October 29, 2018, killing all 189 passengers and crew, clarity on the return of the aircraft to worldwide fleets remains elusive. Grounded since last March, after the crash of Ethiopian 302, where an additional 157 passengers and crew perished, the only thing we know is that Boeing’s Maneuvering Characteristics Augmentation System (MCAS) was deeply flawed, both in software and structure, including Angle of Attack (AoA) sensors and flight deck reporting. We believe it is important to remember that this is first and foremost a needless human tragedy caused by an inadequate human-machine interface. While there will be no relief for the families and friends of the 346 accident victims, we are confident that the FAA, Boeing and their airline customers won’t rest until the 737 MAX is beyond safe.
Naturally, Boeing and their customers have a sense of urgency about the airliner’s return, but we owe it to the victims to ensure that neither time nor cost, political pressure or lobbying efforts will influence the safe return of the aircraft. Perhaps, rather than making a flurry of announcements about the projected return date of the aircraft, it would be far more useful for airlines to simply say, “The Boeing 737 MAX will return to our fleet when its is ready and not a day sooner.”
Source(s): FAA, Boeing, Reuters
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