Why The Boeing 737 Max Has Been Such A Mess
Summary
TLDRThe Boeing 737 Max series has faced significant challenges, including two fatal crashes and a recent door malfunction on an Alaska Airlines flight. These incidents have raised questions about Boeing's manufacturing quality and safety practices. The company has struggled with production issues and is under investigation by the Department of Justice and the FAA. Despite management changes and commitments to improve, Boeing's reputation and stock performance have been affected. The company's future hinges on its ability to regain trust through enhanced safety and quality control measures.
Takeaways
- 🚨 Two fatal plane crashes involving the Boeing 737 Max 8 model occurred five years ago, resulting in 346 fatalities.
- 🛫 In January, a near-catastrophic event with a Boeing 737 Max 9 plane happened when a door plug blew off mid-flight.
- 💭 Boeing has been struggling with over 20 production quality defects, raising concerns about its manufacturing process.
- 📉 The company's stock has been in decline, with a significant drop in 2024, reflecting investor concerns.
- 🔄 In response to the crises, Boeing announced major management changes, including the stepping down of CEO Dave Calhoun at the end of 2024.
- 🛠️ The FAA found numerous problems in Boeing's manufacturing process, leading to a criminal investigation into the Alaska Airlines incident.
- 🚀 The 737 Max series has been a best-seller for Boeing, with over 10,000 aircraft produced and 30 billion passengers flown.
- 🌐 The commercial aircraft market is dominated by Boeing and Airbus, who together represent over 75% of the global fleet.
- 🔄 Boeing's rush to compete with Airbus's A320neo led to shortcuts in developing the 737 Max, which contributed to the design flaws and subsequent crashes.
- 🔍 Post-pandemic workforce changes and pressure to ramp up production may be affecting Boeing's quality control.
- 🌐 Despite challenges, Boeing remains a significant player in the global market, and its recovery will take time and a refocus on quality over profits.
Q & A
What were the two fatal plane crashes involving Boeing 737 Max eight seconds five years ago?
-Five years ago, two fatal plane crashes occurred involving Boeing 737 Max eight seconds in Indonesia and Ethiopia, resulting in the loss of 346 lives. These incidents happened five months apart and raised significant concerns about the safety of the aircraft model.
What incident occurred with an Alaska Airlines 737 Max nine plane in January that nearly led to another catastrophe?
-In January, a door plug on an Alaska Airlines 737 Max nine plane blew off at 16,000 feet shortly after takeoff from Portland, Oregon. This incident could have led to another catastrophe, as the force was so strong it ripped out headrests and seatbacks from the cabin, and a child's clothes were sucked out.
How has Boeing's manufacturing quality been affected in recent years?
-Boeing has struggled with manufacturing quality, having over 20 production quality defects. This has included issues such as missing bolts, mis-drilled holes, and parts not meeting standards, which have raised concerns about the company's commitment to quality control.
What was the role of the Maneuvering Characteristics Augmentation System (MCAS) in the 737 Max crashes?
-The MCAS was a software designed to push the airplane's nose down in the event of certain extreme maneuvers to prevent stalling. However, in the 737 Max crashes in Indonesia and Ethiopia, the MCAS was activated after receiving inaccurate sensor data, causing the planes to nose-dive into the ground. Pilots were unable to override the system, leading to the fatal crashes.
What was the impact of the 737 Max grounding on Boeing and the aviation industry?
-The grounding of the 737 Max, which lasted 20 months, was the longest in aviation history. It had a significant impact on Boeing, causing billions in losses and damage to the company's reputation. The aviation industry also faced disruptions, with airlines having to scale back growth plans and adjust flight schedules due to the lack of available aircraft.
What was the outcome of the Department of Justice's criminal investigation into the Alaska Airlines incident?
-The Department of Justice opened a criminal investigation into the Alaska Airlines incident, but the specific outcomes or conclusions of the investigation are not detailed in the transcript. It is part of the broader scrutiny and response to the issues surrounding Boeing's manufacturing and safety practices.
How has the competition between Boeing and Airbus affected the development and production of aircraft?
-The competition between Boeing and Airbus has been intense, especially in the narrow-body plane market. Airbus's launch of the A320neo put pressure on Boeing to respond with the 737 Max. This competition has led to a focus on fuel efficiency and cost-saving measures, which some argue contributed to the rush in developing the 737 Max and the subsequent safety issues.
What is the significance of the Max nine door incident in terms of Boeing's reputation and public perception?
-The Max nine door incident further damaged Boeing's reputation and public perception, adding to the concerns about the safety and quality of its aircraft. It highlighted ongoing issues with manufacturing and quality control, leading to a loss of confidence among passengers and airlines that previously considered Boeing a reliable manufacturer.
What steps has Boeing taken to address the quality control issues?
-Boeing has acknowledged the quality control issues and has committed to addressing them. The company has announced major management changes, including replacing the CEO of its commercial airplane business and initiating a search for a new CEO. They have also stated a focus on quality compliance and are working to resolve the issues brought to light by the FAA and their own internal reviews.
How has the Boeing's stock performance been affected by the recent incidents and quality control issues?
-Boeing's stock has been negatively impacted, with a significant decline observed. It hit an all-time high in 2019 before the Max crash in Ethiopia and further plummeted during the pandemic. In 2024, the stock was down over 25%, reflecting investor concerns about the company's ongoing challenges and the uncertainty surrounding the resolution of its quality control issues.
What are the implications of Boeing's challenges for the future of the commercial aircraft market?
-Boeing's challenges have implications for the global commercial aircraft market, as they face competition from Airbus, which has been delivering more planes and receiving more orders. The issues with the 737 Max have allowed Airbus to chip away at Boeing's market share. Additionally, new entrants like Comac from China could become stronger competitors if Boeing does not regain its reputation for safety and quality.
What cultural changes have been suggested as a result of Boeing's issues?
-There is a belief that Boeing's cultural shift towards profitability, particularly after the merger with McDonnell Douglas, has contributed to its recent issues. Experts have suggested that management should be located closer to Boeing's biggest manufacturing sites, emphasizing a return to engineering excellence and a focus on quality over cost-cutting measures.
Outlines
🛫 The 737 Max Tragedies and Manufacturing Challenges
This paragraph discusses the tragic plane crashes involving the Boeing 737 Max eight seconds in Indonesia and Ethiopia, which resulted in the loss of 346 lives. It also highlights the manufacturing and quality control issues that Boeing has faced, including a near-disastrous incident with an Alaska Airlines 737 Max nine plane. The narrative touches on the public's waning confidence in Boeing, the Department of Justice's criminal investigation, and the Federal Aviation Administration's audit findings. It also mentions the management changes at Boeing, the decline in the company's stock value, and the historical context of the 737 series' popularity and evolution.
🚨 The MCAS System and Its Role in the Crashes
This section delves into the Maneuvering Characteristics Augmentation System (MCAS), a software feature implicated in the two fatal 737 Max eight crashes. It explains how the system forced the plane's nose downward based on inaccurate sensor data, leading to the crashes. The pilots were not initially aware of MCAS, and the planes were grounded only after the second crash. The paragraph discusses the extensive grounding period, the congressional report that revealed design and regulatory failures, and the cultural issues within Boeing. It contrasts the earlier MCAS issue with the more recent manufacturing quality control problems and acknowledges Boeing's admission of the January Max nine door incident.
🏭 Addressing Production and Quality Control Issues
This paragraph examines the manufacturing and quality control problems at Boeing, particularly focusing on the issues with the 737 Max nine, such as missing bolts and non-compliance with quality standards. It discusses the role of Spirit AeroSystems in fuselage production and the financial pressures that may have contributed to quality control lapses. The paragraph also considers the impact of the pandemic on the workforce and the challenges of ramping up production to meet the large backlog of orders. It touches on the customer frustrations, the competitive pressure from Airbus, and the historical context of Boeing's merger with McDonnell Douglas, which some believe shifted the company's focus from engineering excellence to profitability.
Mindmap
Keywords
💡Boeing 737 Max
💡Safety Concerns
💡Manufacturing Defects
💡Market Share
💡Regulatory Failures
💡Criminal Investigation
💡Management Changes
💡Quality Control
💡Financial Pressures
💡Airbus
💡Supply Chain
Highlights
Two tragic plane crashes occurred five years ago involving the Boeing 737 Max eight seconds, resulting in 346 fatalities.
A near-catastrophic event in January involved a Boeing 737 Max nine plane's door plug blowing off mid-flight at 16,000ft.
Boeing has faced over 20 production quality defects, raising concerns about the company's manufacturing process.
The Department of Justice opened a criminal investigation into the Alaska Airlines incident, highlighting the severity of the situation.
Boeing's stock has been in decline since its all-time high in 2019, dropping over 25% in 2024.
The 737 Max crisis began with the 737's popularity and demand leading to many evolutions of the aircraft.
Boeing and Airbus dominate the commercial aircraft market, representing over 75% of aircraft flying last year.
In response to Airbus's A320neo launch, Boeing rushed the development of the 737 Max, leading to design flaws and shortcuts.
The Maneuvering Characteristics Augmentation System (MCAS) was a software designed for the 737 Max, which played a role in the fatal crashes.
The FAA and Congress found numerous failures by Boeing and itself regarding the 737 Max, including a deeply disturbing cultural issue.
Boeing's reputation suffered another hit after the January Max nine door incident, revealing a different set of quality control issues.
Preliminary reports indicated the door panel that flew off the Max nine was missing four key bolts, pointing to manufacturing quality control problems.
Boeing is considering purchasing Spirit AeroSystems, the company responsible for manufacturing the 737 Max fuselage, to improve quality control.
The pandemic's impact on the workforce, including retirements and lack of experienced labor, may be affecting production quality at Boeing.
Boeing is under pressure to ramp up production to fulfill a backlog of over 6,000 orders, which has led to issues for airlines and delays in deliveries.
Airbus has been gaining market share from Boeing, delivering more planes and receiving more orders for the fifth consecutive year.
Boeing's corporate focus has shifted towards profitability since its merger with McDonnell Douglas, potentially affecting its engineering excellence.
Boeing's management changes and commitment to addressing quality control issues signal a potential path towards regaining its reputation for safety.
The return of the 737 Max nines to service and the ongoing certification process for the Max seven and ten models show Boeing's efforts to move forward.
Transcripts
Five years ago, 346 people were killed in two plane
crashes that happened five months apart in
Indonesia and Ethiopia.
Both planes were Boeing 737 Max eight seconds.
Then this past January, Boeing came inches from
yet another catastrophe as a door plug blew off an
Alaska Airlines 737 Max nine plane at 16,000ft
shortly after taking off from Portland, Oregon.
Nightmare scenario for passengers.
The clothes on one child sucked out.
This was no
surprise. Unfortunately, the company has struggled
mightily with manufacturing and we've
had over 20 production quality defects.
You know, it's hard to keep up with all of them.
No one was seriously injured in the accident,
but the blown off panel produced a force so strong
that some headrests and seatbacks were ripped from
the cabin. Fortunately, no one was sitting in the
two seats next to the panel.
I saw the picture, everybody saw the opening,
but what I really saw was the empty seat.
I imagine every human being who would see that
understands the severity and the consequence.
There was a time when people said, if it's not
Boeing, I'm not going now.
There are passengers who avoid or are scared to get
on Boeing airplanes.
The Department of Justice has opened a criminal
investigation into the Alaska Airlines incident,
and the Federal Aviation Administration said it
found dozens of problems after auditing Boeing's
manufacturing process.
It just raises issues about the production at
Boeing. What's going on? There have been a series
of problems over the last few years, and we just
need to get our arms around that.
Boeing announced major management changes.
Ceo Dave Calhoun, who was brought in to get the
company out of the Max crisis in 2019, just
announced he'll be stepping down at the end
of 2024.
We have another mountain to climb.
Let's not avoid what happened with Alaska Air.
Let's not avoid the call for action.
We will get through that. And I've committed myself
to the board to do exactly that.
Boeing's stock has also been on a decline.
It hit an all time high in 2019, before the Max
crash in Ethiopia plummeted during the
pandemic, and is down over 25% so far in 2024.
My sense is until you get an all clear, the stock
will probably be stuck in a range.
And you know, the key question, really, I mean,
the multi-billion dollar question is when does the
all clear and we just don't know yet.
CNBC explores how the 737 Max crisis unfolded, and
what the future holds for Boeing's best selling jet.
The official 737 christening ceremony took
place in the new final Assembly building on
January 17th, 1967.
The first Boeing 737 debuted in 1967.
Over the last few decades, strong demand for
the twin engine narrowbody jets led to
many evolutions. Of the 737 family, there have
been over 10,007 37 seconds made, and it's
flown over 30 billion passengers.
The plane is so popular that Boeing estimates a
737 takes off, or lands every 1.5 seconds.
If you've flown, you've likely flown at some point
in your life on a 737.
It's one of the most commonly used aircraft by
airlines around the world.
The commercial aircraft market is dominated by
Boeing and Airbus.
Together, their planes represented over 75% of
aircraft flying last year.
The two compete on various types of
jetliners, especially narrow body planes like
the 737 and A320, which account for close to 60%
of the global fleet.
In 2011, Boeing was under pressure after Airbus
launched an upgrade to its existing narrow body
plane called the A320neo, which stands for New
Engine option. The plane was more fuel efficient
and could save airlines money.
American Airlines and exclusive Boeing customer
at the time, was ready to place a big order with
Airbus and told Boeing it would have to move quickly
to win the airline over.
Boeing took a lot of shortcuts in developing
this aircraft, and those shortcuts literally bit
Boeing in its behind.
Designing a new airplane could take up to a decade
and billions of dollars in investment.
Boeing decided to re-engine the 737 with a
new engine variant, which was more fuel efficient
and called it the 737 Max.
It's a very simple reason why Boeing was looking at
Re-engining, essentially the 737, which had already
been around for decades.
It's cheaper. So instead of building a plane or
designing a plane from scratch, what they did was
made some changes to the existing aircraft to get
planes to market faster and then not to lose out
on orders to their rival, Airbus.
It offers four different sizes of the aircraft the
Max, seven, eight, nine, and ten.
The Max eight received FAA certification in 2017.
During development, Boeing engineers observed
the nose tendency to pitch up during a specific
extreme maneuver.
This led to the design of a software called the
Maneuvering Characteristics
Augmentation System, or MCAS, which would push the
airplane's nose down in the Max eight crashes in
Indonesia and Ethiopia.
Mcas was activated after receiving inaccurate
sensor data. It repeatedly pointed the
nose downward until it struck the ground.
Pilots on both flights fought to override the
system, but both ended in fatal crashes.
Pilots of all Max planes were not made aware of
MCAS existence until two weeks after the first
crash. It wasn't until after the second crash,
nearly five months later, that those planes were
grounded. The grounding lasted for 20 months, the
longest in aviation history.
A report from Congress found numerous design,
management and regulatory failures by both Boeing
and the FAA.
It detailed what it called a deeply disturbing
picture of cultural issues, and said that it
will take a long time and serious efforts to
thoroughly resolve.
In the five years since, Boeing has spent billions
trying to recover, but its reputation took
another damaging hit after January's Max nine
door incident.
It's a different set of lessons drilling holes
wrong, not putting in bolts right in.
In one one sense, the quality issues are much
more simple where the the MCAS issue, the control
system issue that they had on the max before was
in many ways more insidious, because it was
just a fundamental design flaw in the airplane.
When the first series of accidents occurred,
killing 346 people, Boeing was almost in
denial of any problems.
The most recent problem, Boeing, to its credit,
stepped up to the plate and they said, look, this
is a problem. We have to investigate it and we have
to fix it. And they've owned it.
While Boeing and the FAA have responded more
aggressively to the Max nine issue, reports and
audits of the accident are uncovering new
problems. Preliminary reports said the door
panel that flew off the Max nine appeared to be
missing four key bolts.
Boeing has also said that there is not paperwork
that has documented the door plug getting opened
and getting closed, while wrapping up manufacturing
on that plane.
The FAA production audit found multiple instances
where both Boeing and fuselage maker spirit
AeroSystems allegedly failed to comply with
manufacturing quality control problems.
The fuselage of the 737 Max aircraft is made by a
company in Wichita called spirit AeroSystems.
No relation, by the way, to Spirit Airlines.
There were issues beyond what happened on the
January 5th flight. There were planes with mis
drilled holes. There were parts of the fuselage that
were not up to standard.
Spirit AeroSystems used to be Boeing.
Wichita. Boeing spun off its Wichita unit as spirit
AeroSystems to improve profitability.
That puts the financial squeeze on spirit
AeroSystems to build the fuselages for the lowest
possible cost.
Clearly, this has come with some intangible cost
in terms of quality control.
About 70% of Spirit's revenue last year came
from making parts from Boeing. It's their biggest
customer, and then about 25% is coming from Airbus.
Boeing is now looking at purchasing spirit.
Some say like it'll give them a little bit more
control or a little bit more visibility into its
supply chain.
Experts also suggest the change in workforce
post-pandemic could be affecting.
Quality. And it's not a Boeing specific issue,
particularly post-Covid getting experienced labor.
There was a lot of retirement. You think,
well, you have a workforce that maybe
wasn't experienced where there are several
variables going on within an experienced workforce
where, you know, quite innocently, they just left
something off and it wasn't caught by the
system. That's where you worry, because that should
have been caught by the system. And then the big
question is, if that wasn't caught, what else
hasn't been caught?
Boeing has also been under pressure to ramp up
production. The company has delivered 1,462 Max
aircraft, but has 4,752 unfulfilled Max orders.
This has caused a number of issues for the
airlines.
Some of Boeing's biggest customers are having to
scale back their growth plans a little bit.
United is pausing pilot hiring for a couple of
months. Southwest Airlines is having to cut
some of its flight schedules for 2024 because
the planes are arriving late.
I'm disappointed that the manufacturing challenges
do keep happening at Boeing. This isn't new.
I'm disappointed in that.
Southwest and United have the most Boeing 737 Max
planes in their fleets, so the grounding of these
planes has had a ripple effect.
Airbus, meanwhile, has been slowly chipping away
at Boeing's market share.
Boeing had a big increase in net orders from 774
planes in 2022 to 1,314 planes in 2023, but Airbus
had over 2,000 orders last year.
It has delivered more planes and received more
orders for the fifth consecutive year in a row.
In the late 1990s, Boeing merged with McDonnell
Douglas. It was an aircraft manufacturer
which made commercial planes like the MD 11 and
MD 80, as well as space and military aircraft.
There is a belief that the focus at Boeing has
shifted since this merger with McDonnell Douglas to
profitability, as opposed to, uh, engineering
excellence.
I think one of the big, you know, indicators of
that was moving the corporate headquarters
away from any of the big manufacturing sites.
After the 1997 merger, Boeing moved its corporate
headquarters after 85 years in Seattle to
Chicago and more recently to Arlington, Virginia.
27 years later, experts and CEOs are still blaming
that merger for the more recent issues.
My assessment is, you know, this goes all the
way back to the McDonnell Douglas merger, and it
started a change in culture.
If I were.
Making recommendations to the company, I would say,
yeah, sure. Management should be located in the
Puget Sound region, their biggest manufacturing
site, and in fact, they should be sleeping on the
factory floor at this point to get everything
kind of back in order.
Many of Boeing's other programs have also faced
problems. They've faced cost overruns, and they've
faced quality control problems.
Profitability, of course, matters, but you're not
going to be a profitable company if your customers
don't believe you have the products they need to
buy. And airlines have been opting for Airbus
airplanes a lot more recently than Boeing.
Boeing had already been under pressure to deliver
more airplanes.
It has a backlog of over 6,000 total orders, and
its leaders don't want to lose more market share to
Airbus, which had a backlog of over 8,000
planes at the end of 2023.
You really only have two suppliers of large
commercial airplanes, and Airbus can't do it all.
Will Boeing turn itself around? Yeah.
Most certainly it will.
Um, it's going to take time, though.
The eyes of the airline world are focused on
Boeing and the FAA to make sure the 737 Max's in
production are produced without flaws.
Two months after the Alaska Airlines panel blew
out, the National Transportation Safety
Board chair criticized the company for its lack
of cooperation in the Max nine probe.
Boeing CEO has said that he's very serious about
addressing the quality control problems and that
it's their main priority right now, but customers
are waiting for their airplanes.
The 737 Max nines have returned to the skies, but
the Max seven and ten have yet to be certified
and are years behind schedule, facing more
rigorous testing requirements. After the
other Max issues.
We've considered multiple manufacturers.
We look at every aircraft. Other
manufacturers are also having issues with
aircraft and delivery. And so Boeing having some
production issues. We've enhanced our oversight of
Boeing's production process. In fact, we did
that in 2022.
And so that will continue. And we might
even bring it up a little bit.
I'm disappointed. And especially because Boeing
is they're not only our most important partner,
they're one of the most important companies in the
country. They're important to the United
States.
Some of Boeing's best customers have expressed
frustration at the company for the delays.
We've heard from United Airlines, for example,
saying, you know, stop building the Max ten, a
plane that isn't even certified yet and build
the ones that you can deliver to us, and we can
fly tomorrow.
Southwest's CEO.
This is a CEO that runs an all Boeing 737 airline,
one of Boeing's best customers, saying that
Boeing needs to become a better company.
That's very strong language coming from
Southwest Airlines.
Boeing has replaced the CEO of its commercial
airplane business, Stan Deal, with Stephanie Pope,
and will now begin a CEO search to replace outgoing
CEO Dave Calhoun.
I want somebody who knows how to handle a big, long,
long cycle business like ours.
It's not just the production of the
airplane, it's the development of the next
airplane. It'll be a $50 billion investment.
Despite significant management changes,
experts still say it will be a long road for Boeing
to get back to its once excellent reputation for
safety over profits.
Product life cycles can be decades, and you have an
investor base that wants returns.
You know, maybe this week, if not this quarter,
and the two are misaligned. So I think
investors have to be willing to take a little
back seat while the company is focusing on
quality compliance.
You can't force the financials on top of
everything else. So how long does it take?
My guess is it's going to take a while.
What's a while? Probably a couple of years.
Boeing has a very proud history.
I certainly hope to see Boeing regain the mojo,
the magic that the company once had.
Because to be very honest, if Boeing doesn't
regain that focus, not only is Airbus going to, I
think, win more orders, but Boeing becomes
potentially weaker against other new entrants
such as Comac from China.
We are at the early stages of responding to, in my
view, an Overexercised supply chain and an
Overexercised Boeing factory, and we're going
to calm it down. We're going to get ahead of all
of the issues that either the FAA and way more
importantly, our own people bring to our
attention, and we'll get ahead of it.
That will happen.
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