The Supply Chain Matters blog provides a further update on the rapidly evolving global developments involving the recent Boeing 737 MAX aircraft tragedies and an initial perspective on product design and supply chain implications.
In yesterday’s commentary, Ethiopian Airlines 737 Max Tragedy Adds Urgency for Boeing and Air Safety Regulators, we initially addressed what would likely be the overall business, product design or supply chain management implications of the latest tragedy involving this aircraft. In a matter of another 24-hour news day, events are cascading at a rapid pace. 
Rapidly Evolving Developments
Since our original blog posting, additional global-wide aviation regulators and respective airlines have called for the grounding of this aircraft. A number of European countries including the United Kingdom, have now banned the aircraft from local airspace, reportedly forcing in-flight 737 MAX aircraft to be diverted back to destination or alternative cities.
The latest significant development came mid-day today when Canada’s transportation minister, citing available satellite-tracking data and pilot communications, called for the grounding of the aircraft in that country’s airspace.
According to the New York Times, safety regulators involving 42 countries have now banned flights utilizing this aircraft. That is in a matter of three days since the accident.
In the U.S., The Allied Pilots Association, representing upwards of 15,000 American Airlines pilots, broke from flight attendants and mechanics labor unions in backing operation of the aircraft. The pilots’ group stated that they “have the necessary training and experience to troubleshoot problems and take decisive actions on the flight deck to protect our passengers and crew.” The United Airlines pilots labor union, the Air Line Pilots Association, issued a somewhat similar statement.
Then, at mid-afternoon today, Eastern Time, President Trump announced at the White House that U.S. regulators are now grounding all U.S. flights of both the Boeing 737 MAX 8 and MAX 9 aircraft models. Mr. Trump indicated that until the cause is determined, “the planes are grounded” In essence, the President overrode prior statements from his Transportation Secretary indicating that the FAA had no meaningful basis to ground the aircraft at this time.
Regarding the black-box recorders on the ill-fated Ethiopian Airlines aircraft, multiple reports now indicate that the recorders were damaged by the accident and local Ethiopian government and airline officials have determined that the devices need to be sent to another overseas flight safety agency to recover critical data. Authorities reportedly prefer the United Kingdom’s Air Accidents Investigation Branch and are exploring other European safety agencies as-well.
The Wall Street Journal reported that intense behind-the-scenes discussions were held among U.S. air-safety investigators and their Ethiopian counterparts as to where the recorder data will be extracted and downloaded. The issue, according to the report, seems to be a desire for objectivity for both symbolic and practical reasons.
Norwegian Air Shuttle which has a large MAX presence in its fleet, is the first airline to publicly declare that it would seek compensation for lost revenue and extra costs after grounding its 737 MAX fleet and subsequent flight cancelations. The airline operates low-cost service between U.S. and European cities utilizing the 737 MAX aircraft and now has to ground all 18 of its aircraft.
And finally, in this rapid 24-hour news cycle, Bloomberg, citing informed sources, reported that Lion Air whose 737 MAX 8 aircraft went down five months ago, plans to drop a $22 billion order for additional 737 MAX aircraft and instead switch to rival Airbus, reportedly as the rift between the companies widens, and after the news of the Ethiopian incident. Lion Air has since declined to confirm to other news outlets on the accuracy of the Bloomberg report. However, this afternoon the WSJ reported that Lion Air today did indicate that it would delay deliveries of any further 737 MAX aircraft until the Indonesian investigation concludes.
Thus far, the ongoing crisis has shaven $26.65 billion from Boeing’s market value.
Software and Potential Other Fixes Underway
Today, The Wall Street Journal reported that Boeing is making an extensive change to the flight control system of this aircraft, more so than many industry participants expected. According to this report, the design change was apparently in the works as a response to the prior Lion Air tragedy of similar circumstances and involves a major shift as to the original design of the stall-prevention features of the aircraft. Boeing released details of the update on Monday evening which indicated the software update would factor multiple sensor readings in the MCAS system as contrasted to a singular sensor reading in the existing flight control software.
The WSJ report, citing informed sources, further notes that a software fix for the MCAS system had been planned in early January, but was delayed: “partly over differences of opinion about technical and engineering issues.” Noted was that: “Officials from various parts of Boeing and the FAA had differing views about how extensive the fix should be.” Another concerning statement in the WSJ report: “Government officials indicated that the recent U.S. government shutdown had halted work on the fix for upwards of five weeks.”
Supply Chain Matters Perspectives
We share from our lens, some brief additional product design and supply chain management perspectives.
Regarding the reported software design change, questions are invariably going to be raised regarding why the original design included data from a single sensor vs. multiple sensors. Some airline pilots are already weighing-in on that perspective. The other important tone that permeates from this series of tragic incidents are the assumptions related to skill levels among different pilots of different nations. The debate seems to be on the weighting of automatic or autonomous software actions over that of aircraft pilots. This has to take special consideration since the bulk of this particular’s aircraft sales are weighted beyond North American based carriers. That might explain why so many overseas regulators have elected to take, out of an abundance of caution, aircraft grounding actions and not wait for the FAA to weigh in. There is an obvious tone of mistrust, even related to objectivity in the crucial black box readings and sharing.
A further troubling theme is why are U.S. air safety regulators were not previously inclined to ground the aircraft given both inherent knowledge of Boeing’s pending software fixes or potential cockpit control systems design changes.
The other growing concern is invariably what these developments imply for the overall 787 MAX program and its supplier networks.
The obvious answer is that it is too early to speculate.
Obviously missing at this point are Boeing executive leaders interacting with global and industry media regarding these ongoing developments and what Boeing’s plans are to address this situation. Perhaps that will come, soon.
A lot of additional investigative efforts need to be completed in a rather timely and objective manner. Boeing itself needs to pay extraordinary attention to its ongoing relationships with impacted carriers and somewhat less to Wall Street stakeholder interests. The Bloomberg report of a potential Lion Air response, if proven to be accurate, has a distinct tone of frustration with the aircraft manufacturer. There may be other similar airline customer frustrations yet to come.
In the meantime, manufacturing and operational teams in Renton will again be very creative in securing added parking space for completed MAX aircraft until the groundings are eventually lifted. Past learning from days of the Boeing 787 groundings when lithium battery issues led to a four-month grounding resulted in upwards of 50 aircraft having to be parked and stored, echo once again. However, the 737 number could potentially be far more, depending on how events transpire. The good news is that Boeing has recruited a lot of military veterans who know how to improvise in times of crisis and limited real estate.
Finally, all stakeholders need to cognizant of the global-based flying and aircraft crew community who deserve assurances that after root causes are objectively linked and fixes are implemented, that this aircraft model is indeed safe to operate and fly.
As in past incidents, this will take added time, patience and ongoing efforts to weight decisions based on an abundance of caution and aircraft safety.
Bob Ferrari
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