🔒 US outlier as huge question mark hangs over the Boeing 737 Max

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LONDON — Roughly two-thirds of the world, including South Africa have grounded the Boeing 737 Max as airlines see a connection between the crash of an Ethiopian Airlines jet that killed 157 people and a similar disaster involving the same plane last October in which 189 people were killed when a Lion Air flight crashed into the Java Sea in Indonesia. Yet, America’s Federal Aviation Administration decided not to take action and said it had no basis to order the grounding of the aircraft. This is despite pressure from several senior politicians in the US and two unions representing flight attendants calling for it. The New York Times says there is a very cosy relationship between Boeing and the FAA, and Boeing could even choose its own employees to sit on the authority and help to certify planes. President Donald Trump initially tweeted that he thought aeroplanes were becoming far too complex to fly, “Pilots are no longer needed, but rather computer scientists from MIT”, he tweeted after the Ethiopian crash. He has a very close relationship with Boeing and the FAA decision on standing by the safety of the Boeing 737 Max came after a telephone conversation between President Trump and Boeing Chief Dennis Muilenburg. This raises the question whether Boeing’s influence at the FAA is the reason for the United States’ decision to keep the Boeing 737 Max in the air raising serious safety concerns for passengers who are likely to choose not to fly on the jet. Bloomberg’s Jim Alice explains to Carol Massar how important the Boeing 737 Max is to Boeing’s profitability… – Linda van Tilburg

This is always the nightmare for any airframe manufacturer. It’s not just for the airlines themselves, but also for the company that’s made the plane and it’s always the boo ha that we get whenever we have a tragedy. However, this has been made worse simply because this is the second time this has happened on the same model within five months and the 737 MAX is a very important plane for Boeing. The current plan is to get this up to the production cycle to make about $30bn in sales per year spreading after this year. So, it is the most successful jet in history. It is also the biggest selling jet at Boeing. This is a narrow body jet. The 737 has been around for a long time, but the MAX version is a very fuel-efficient version that airlines are crazy about having right now.

They want it because you can put more people into the plane and get about 15% better fuel economy. You put that together and all of a sudden people who thought they couldn’t operate a route because they were a low fare carrier or because they just needed some way to compete against low fare carriers, they run to this. So you’ve seen people like Lion Air in Asia, people such as Spice Jet in India, here in the US Southwest is making a really big bet on this plane, Air Canada. I mean this is a truly global success story that all of a sudden has a cloud hanging over it and so that’s one reason that investors have been very spooked by this. They’re saying if this plane which is right now the big future of Boeing can’t make it or might have to be grounded for a while, who knows what that means for the profitability for the company long-term.

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What’s interesting too though, this is mostly a plane that’s outside the United States at this point. Give us some perspective on that.

Well, at this point, many of the units are outside the US, but also there are many US buyers, American United and Southwest. Delta is not on the plan for this, but others are. However, especially outside and in emerging markets this is going to be a huge seller. People like Spice Jet, which is going to be a very large airline, Lion that is betting a lot of its future. It is an Indonesian airline, but it has units in other parts of Asia like Thailand and so right now from the current deliveries, many of the deliveries are outside the US, including in China. All three of the Chinese-owned carriers: Air China, China Southern, and China Eastern, all have this plan in their fleets and that’s one of the scary things for many people in the airline business or in the airframe business, is that China has now grounded all 737 Max’s in China and that’s almost a hundred planes already delivered.

To be fair and we should point out that they’ve recovered the cockpit voice and flight data recorder, so that will go a long way in piecing together what exactly happened.

That’ll go a long way in explaining what happened, but that takes a while and so right now many people have been piecing together. Our investors have been trying to piece together what might’ve happened and there are some similarities to the Lion Air crash that based on the way that the site of impact looks, it looks as a nose down crash like the Lion air flight and that is leads one to the question whether there’s a similar problem to the software that we discovered went wrong with this plane during the Lion air crash that’s forcing the nose down and it forces the pilots to fight that. Now Boeing had given guidance on ways to disable those automatic systems, but the question always comes up whether there’s been enough training and whether there’s been enough information spread around the world for a plane that’s already deployed as widely as this one.

Especially when it happens so soon after take-off.

Correct, it’s happened just minutes after take-off exactly like the Lion plane.

And to prove the US Government’s support of Boeing, American Secretary Elaine Chao who earlier stated that the US government was taking the accidents very seriously and reviewing them very carefully, took a flight in a Boeing 737 Max aircraft from Austin, Texas to Washington. Meanwhile the investigations are ongoing in Indonesia, but aviation experts point out that the  similarities between the Ethiopian air crash and the Lion Air flight does seem to point to a problem with the aircraft, its software programme or the training of the pilots. Bloomberg Intelligence Senior Airlines Analyst, George Ferguson told Carol Massar and Jason Kelly that Boeing needs to react quicker to address the concerns about the Boeing 737 Max’s computer programme and it probably needs a new clean sheet Boeing 737…

Where we are is, we still don’t even have the Lion air crash investigation fully completed and so, I think there’s still a lot to learn about what’s happened but we definitely see thing centring some of the changes to the flight computers to the airplanes where the airplane…the nose is pushed over to keep it from stalling, keep the wing angle from being at too high of an angle of attack. I think that what we’re learning from the marketplace as this comes out, is that we’re going to have more and more participants in the marketplace that are concerned about this computer program, which does push the nose over. The concern about a pilot’s understanding of how to disable it…and that’s creating this situation where it’s contributing to these two accidents. Clearly, it seems like something has been built into the flight computer here. It is concerning. It’s creating workloads in the cockpit that can’t be fully managed all the time.

Is it a case of not being fully managed or is it a case of potentially also the pilots not fully trained?

Yes, I do think there’s a training component to it and I think that’s why you’ve seen most airlines operated the airplanes safely but I think we’re starting to hear – as ell -from some of the US pilot unions and stuff that their concerns is that the aeroplanes are getting pushed over  during stages of flight that are critical – take[off – where you’re managing a lot of other things in the cockpit a so even these US unions are concerned about the level of workload in the cockpit so I think there’s a training issue here but there’s also a  bit of a design  issue where pilots just said ‘this is was designed incorrectly, perhaps’.

George, help us understand the decision-making that’s happening at the airlines and at the regulatory level in terms of whether to fly these planes, which obviously, many allow these planes in air space in various countries and various regions. Have you been surprised at the way that this has played out so far?

I have bee, you know. I really thought that when the FAA came out last night and said, ‘look, we’re not going to ground the airplane but we want the software fixed by April’. I thought that would be enough for the rest of lookout in the world but clearly, not. I think the FAA may be looking at US airline experience and again, we’re not having a problem with it and a lot of these airplanes have been slowing in the US at carriers like South West and they seem to be managing the challenge with the flight system fine. I think there’s a little bit of a quick reaction globally where some countries just don’t want to deal with it. They don’t have to manage the fact that they don’t know what’s going with this airplane yet. The citizens don’t want to fly it and I think it’s a little bit easier for them to say (because there’s not as many operating in their markets) – ‘hey, we’re just not going to let this airplane fly in our market. It’s not good news for Boeing.

Right. How long has this plane been out there?

The airplane’s been delivered into fleets since mid-year last year. South west was one of the early customers. They’ve been flying it for (I think it’s at least six or seven months) and it went through flight programs before that so Boeing flights test these airplanes well before they go into initial fleets. So, it’s been flying for well over a year or more.

And so, this obviously feels rather unprecedented. Where does it go from here, do you think? What does Boeing do? What does the FAA potentially do, given that its counterparts around the world are making essentially the exact opposite decision they did?

Yeah. I think there’s probably growing pressure on the SAA right now and I think that Boeing really needs to get ahead of the curve on this. They’ve got to get in and figure out how responsible this [inaudible M-cast? 0:04:02.1] system is to these incidents. If it’s a software fix, they’ve got to get on the software fix and get it deployed so that they can restore confidence in the airplane. But yeah, I think it’s a really big challenge right now. I think the pressure is growing at the FAA.

You know, it’s interesting. We did have the President Tweeting about planes becoming increasingly complicated. There’s an upside to that right, because planes have become safer as a result but they have become complicated because of more intricate systems.

I think it’s also worth bearing in mind that part of the reason this complication occurred…the reason they had to add the safety system, is because they increased the size of the engines and they pushed them forward in the airplane because the Boeing 737 has a lower wing than the Airbus A320 and the new world for jet engines is about bigger fan sizes for more efficiency, That’s part of what created this and I think it reinforces the idea that Boeing needs a new 737 – a clean sheet 737 – maybe sooner rather than later.

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