Commentary: Boeing's Issues May Be Multiplying

This post was originally published on this site

FreightWaves features Market Voices – a forum for voices with unique knowledge of numerous transportation/logistics/supply chain sectors, as well as other critical expertise.

To an outsider, it appears that Boeing is having trouble in its Commercial Airplanes division limiting the bad news to just one aircraft type, the 737-MAX. There is no need here to recount the two crashes, the aircraft’s global grounding and a raft of articles of all the things that Boeing allegedly did wrong during the design and certification process.

Boeing‘s (NYSE: BA) 737 MAX planes might not return to service until next year because of software and other issues that still need to be fixed, according to a July 14 article in the Wall Street Journal.

Issues in getting the 737 MAX’s flight-control software ready are contributing to the likelihood that the planes might remain grounded until January 2020, according to government and industry officials cited in the article. The software also needs certification, while pilots need training on the software, the article pointed out.

A normally staunchly reliable American ally, a Saudi Arabian airline recently switched an order of MAX aircraft to Airbus. Low-fare operator Flyadeal canceled an order for 30 MAX jets with a list price of $6 billion. (Boeing and the purchaser nearly always negotiate a discount). Instead of the 737, Flyadeal is buying the Airbus A320 instead. One analyst cited in this NBC article suggested that while an order of only 30 aircraft is one that Airbus could readily absorb, the potential to take on much larger orders would necessitate a rethink of the aircraft’s production line.

Not unlike the delivery of my Tesla Model 3 whose delivery kept getting nudged back, the in-service date for the 737 MAX that was first estimated by Christmas could slip even further. The FAA has found additional data processing concerns outside the Maneuvering Characteristics Augmentation System (MCAS), which has been singled out as the likely cause of the two fatal crashes.

While in political circles the “special relationship” between the U.S. and Great Britain has been tested with the resignation of Britain’s Ambassador to the United States after being rendered persona non grata by the President, Britain’s International Airlines Group (IAG) provided a much needed boost to the MAX, placing an order for 300 of the aircraft at the Paris Air Show. A show of support to be sure, but a non-binding one that sees IAG not taking delivery until 2023 – plenty of time to make alternate arrangements should the aircraft’s return to service continue to falter.

Airplanes are notoriously expensive to manufacture – and rightly so when you consider what is demanded of them in regard to safety, operational cycles and redundancy. The push for ever-lower fares by customers correlates to less expensive airplanes and Boeing has made decisions to outsource large pieces of production. Supply Chain Brain reported that software engineers being paid $9 per hour were being hired to replace much more senior – and more expensive – Boeing engineers.

But as I wrote at the top of this commentary, the contagion has spread. Boeing’s second newest aircraft type, the 787, is in the news because the U.S. Department of Justice is allegedly expanding its investigation into Boeing’s troubled aircraft division to include its assembly plant in North Charleston, South Carolina.

For those in the aviation business, the grounding of the 787 over batteries remains fresh in their minds. Safety lapses during production discovered by the New York Times and the alleged expansion of the federal inquiry as reported by the Seattle Times come when the company can least afford an additional spate of bad press.

While fighting the rear-guard action on these two delivered aircraft, Boeing is approaching a crucial decision about what its next commercial aircraft should be. Before the MAX troubles hit, Boeing’s board was close to green-lighting the company’s first new airframe since the 787 was revealed in 2004. Dubbed the 797, the aircraft would be, according to a Supply Chain Brain article from Bloomberg, a $15 billion investment. An interesting video shared with me by an aviation colleague and enthusiast claims that one of the features that airlines would like in this new aircraft is for the cockpit and aircraft to be operated by a sole pilot, with a second on the ground, monitoring multiple aircraft, like an air traffic controller. It’s uncertain how the traveling public would receive the notion of a single pilot, especially given the number of airplane accidents which have been tied not only to hardware, but also software. 

For now, Boeing must make peace with four distinct audiences – its airline customers, its shareholders, regulators and the traveling public who will need convincing the aircraft is safe to fly when it is approved to return to service.

Image sourced from Pixabay