Today marks a noteworthy milestone in the now turbulent history of the Boeing’s 737 MAX single-aisle aircraft.

After almost 20 months of being grounded by global air regulatory agencies as a result of two tragic accidents and 346 deaths, this aircraft was today cleared by the U.S. Federal Aviation Administration (FAA) for flight operations.

Boeing issued a statement from CEO David Calhoun indicating the following:

We will never forget the lives lost in the two tragic accidents that led to the decision to suspend operations. These events and the lessons we have learned as a result have reshaped our company and further focused our attention on our core values of safety, quality and integrity.

While the U.S. agency has cleared this aircraft for eventual operational flight, other global agencies have indicated they will follow with added stipulations regarding the completion of additional aircraft modifications and pilot testing requirements.

Today’s announcement comes after a number of false expectations and or assumptions by Boeing as to when this aircraft would be able to fly once more. This clearance was once optimistically expected by Boeing to be a year ago.

The grounding has led to the dismissal or resignation of two senior executives including the former CEO, deep financial and reputational losses for the company as well as ongoing Board level and investor scrutiny.

Even with today’s announcement, there will be many months before the bulk of the previous operational fleet begins to return to service, and even more months before produced aircraft assembled during this overall grounding timeframe make their way to flying commercially.

There are likely other consequences to future new product development, the termed mid-market aircraft which industry watchers believe has now been ceded to Airbus.  More rigorous oversight being placed on Boeing and this industry is a further consequence in the area of self-certification of component flight systems.

Prior to the COVID-19 pandemic, a 20-month long disruption of a major global aerospace manufacturer’s supply and demand network would have been characterized as extraordinary.  The overlap and now concurrency to the global-wide commercial aircraft industry’s broader disruption in impacts to overall new aircraft demand make the timing of the 737 MAX crisis incredibly unfortunate and the subject of business case study for many months hence.

The ongoing and cumulative impacts to both Boeing’s Everett Washington manufacturing complex, and the broader supply network ecosystem,  from both of such overlapping disruptions will be a further unfortunate consequence of these events.

In its statement, Boeing outlined the following:

In addition to changes made to the airplane and pilot training, Boeing has taken three important steps to strengthen its focus on safety and quality.

Organizational Alignment: More than 50,000 engineers have been brought together in a single organization that includes a new Product & Services Safety unit, unifying safety responsibilities across the company.

Cultural Focus: Engineers have been further empowered to improve safety and quality. The company is identifying, diagnosing and resolving issues with a higher level of transparency and immediacy.

Process Enhancements: By adopting next-generation design processes, the company is enabling greater levels of first-time quality.”

Sadly, organization realignments and process enhancements are not likely to resolve challenges of inherent on corporate culture and leadership.

Boeing 737 MAX

Reputations Damaged and Careers Ended

In late September of this year the U.S. House of Representatives Committee on Transportation and Infrastructure released a 238-page investigative report which concluded that Boeing prioritized profits over safety and that the FAA provided grossly insufficient oversight to ensure safety of the flying public. Committee chairperson Representative Peter DeFazio addressing the two fatal accidents indicated at the time:

This is a tragedy that never should have happened. It could have been prevented, and we’re going to take steps on our legislation to see that it never happens again.”

A portion of the Committee’s report indicated:

They (accidents) were the horrific culmination of a series of faulty technical assumptions by Boeing’s engineers, a lack of transparency on the part of Boeing’s management, and grossly insufficient oversight by the FAA — the pernicious result of regulatory capture on the part of the FAA with respect to its responsibilities to perform robust oversight of Boeing and to ensure the safety of the flying public.

Five categories of findings outlined in this report related to aircraft design and pressures to compete with Airbus, achieving production goals and cost cutting as taking a higher priority, flawed assumptions relative to the aircraft’s MCAS flight control system design, withholding critical information from the FAA and other specific findings as-well.

Today, widely followed industry watcher Dominic Gates, a columnist at The Seattle Times wrote:

As details of the causes of the crash tragedies surfaced over the past 20 months, Boeing’s reputation for engineering excellence has been shattered, while the FAA’s position as the world’s arbiter of safety has been seriously undermined. The investigations have opened an unprecedented window into Boeing’s design, marketing and testing of the plane, shedding an unflattering light on many of the participants.

This aircraft must now overcome inherent skepticism by many regarding the safety of this particular aircraft, regardless of any rigorous improvements that have since been implemented and retrofitted.

One likely positive step in that direction was a statement issued by the U.S. based Airline Pilots Association, International (ALPA) indicating in part pilots believe that the engineering fixes to critical flight systems are sound and that expected fixes in aircraft certification processes expected in legislation will lead to a safe return to service for the MAX.

The original plans for market re-entry called for a large marketing campaign directed at ensuring travelers that the aircraft is now one the safest planes to fly. That included Boeing and airline executives participating in flights as well as other noted celebrities. This was before COVID and the consequent current collapse of business and personal air travel.

While airlines may well prefer to fly the more fuel-efficient and larger capacity MAX aircraft, air travelers will initially have there own perceptions. With so many commercial airline operational fleets now having excess aircraft, there are options available if air travelers do balk.

 

Massive Logistics and Supply Management Challenges Remain

As noted, the overall logistics of returning over 400 previously operational 737 MAX aircraft to service was already deemed to be logistically challenging.

By the time Boeing ultimately suspended monthly production of this aircraft in spite of its grounding, an estimated additional 450 aircraft have been produced. Regarding the latter category, industry trade publication Aviation Week indicates that more than 60 of the produced aircraft are now estimated to be in order cancel status and not having an assigned customer. They are in-essence, rather expensive finished goods inventory.

Boeing Executive Vice President Greg Smith has indicated to analysts that he anticipates the delivery of one-half of the 450 MAX aircraft that Boeing has parked to be delivered in 2021 with the remaining likely delivered in 2022.

With initial priority on returning previously operational aircraft within a now global environment of a second significant wave of COVID-19 infections adds to the challenge. Industry watchers indicate that some if not many global airlines will be in no rush to receive said aircraft with global-wide flight demand levels as low as they have been. After nearly 20 months of storage for initially grounded aircraft,  technicians and mechanics will have a rather extensive set of procedures to follow in performing mechanical, MCAS and other software upgrades and retrofits, along with required checks of all of the aircraft’s operating components.

Bottom-line, with today’s milestone announcement, the saga of the 737 MAX enters another chapter and a subsequent set of new challenges.  For the sake of all of Boeing and supplier ecosystem employees and contractors, we certainly hope that the next chapter will be more uplifting.

 

Bob Ferrari

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