In the aftermath of the second crash with the Boeing (BA) 737 MAX, Boeing’s CEO has been slammed for not speaking out in the days following the crash, and some even wanted the CEO to depart or at least be stripped of his role as the chairman of the board of directors. One thing that we continuously hear from Boeing are the words “we own it” (mentioned three times during the Q1 earnings call) and “safe ” or “safety” (mentioned 49 times during the Q1 earnings call). It gives the impression that Boeing is taking responsibility and putting safety first unconditionally. At the same time Boeing, but also Muilenburg, is adding words and statements that run completely anti-parallel to the “we own it” statements.
In this report, we have a deeper look at how Boeing’s attempt to be transparent is currently hurting the company as they walk a fine line between restoring confidence and taking responsibility, and are tending toward a stance that doesn’t satisfy anyone. That fine line is “downplaying the critical role MCAS had in the crashes.”
Before we start…
I’ve been writing for six years and following the industry for well over a decade now, and writing about the Boeing 737 MAX from a technical perspective on an investment research platform has been one of the most complex things I have done so far. When lives are lost it’s always tragic and it’s hard to discuss things purely rational. The result is that there’s a lot of emotion in the discussions in the comment section regarding the Boeing 737 MAX further amplified by people being financially invested as well. Those familiar with my coverage know that my coverage is somewhat unique in the sense that I discuss things from an engineer’s point of view and connect it to finances. Obviously, I also have that human and emotion element and what I observed lately is that those things collide. In the comment section people are being dismissive of the engineering side of the story, and vice versa. I think everybody should be able to express themselves in a constructive way that adds value to the discussion and that means that comments that try to ridicule usernames’ knowledge, but also the emotion of others should not be posted here and promoted. The discussions about the Boeing 737 MAX already are highly complex -don’t add the dimension of attacking others (readers but also contributors) personally or dictating what can or cannot be written.
In my latest reports of which the MAX was not the subject matter, the comment section has been filled with talk about the MAX (some more constructive than others). That’s something that I regret as it completely destroys any discussion about the subject of the report that would normally take place. I have written various reports about the MAX which have received hundreds of comments with thoughtful input, and I’d prefer that in the same way the MAX reports had the discussions in the comment sections focused on the MAX, the other subjects that I deal with in my coverage are given that same treatment. I’m aware of the importance of the MAX and how much this keeps investors busy, but it’s my humble request to keep the discussion primarily focused on the subject and content of the reports I write. For me there’s no purpose in writing and trying to have constructive conversations if readers already decided they are going to use any report I write to simply repeat or continue discussions that they already had in comment sections of previous reports. The discussions in the comment section are a great good of which I appreciate the value tremendously and I hope that everybody who reads and comments can help me with preserving the value and uniqueness of that discussion.
A quiet CEO
One thing that many people haven’t liked is that Boeing’s CEO went mute after the second fatal crash with the Boeing 737 MAX. It’s common that after accidents no detailed comment is provided as investigations are still taking place. However, in the aftermath of the Lion Air crash, Muilenburg was quick to point out that the crews had all information needed to fly the plane, putting much, if not all, of the blame on the flight crew. I have continuously believed that with the knowledge I had and have about Boeing’s Maneuvering Characteristics Augmentation System that putting the blame on the pilots is a huge misstep. By that time, unfortunately, many investors already had put blame on Lion Air and that sentiment didn’t really change until the second crash would occur. That likely is a huge reason why Boeing’s CEO didn’t speak out for a long time after the second crash. He did it in the aftermath of the first crash and at that time I already considered his statements premature, and with the knowledge we have now, I strongly believe most people will find these early statements from Muilenburg premature and out of place.
For a long time Muilenburg has enjoyed a lot of praise from shareholders. Under his leadership, financial results improved significantly and that translated in solid gains for investors. Currently share prices gained over 160% since Muilenburg became CEO and even hit >200% gains for a while. So, shareholders had a lot of confidence in him, but that confidence has been eroding recently. At the same time, it painfully shows that high returns don’t mean that everything is going as it should.
MCAS and minimal redesign
By now everybody knows what MCAS does and we know that the design of MCAS has been lacking robustness (MCAS design didn’t even meet industry standards) and Boeing fell short in training and informing customers about the system. This is something that I already pointed out in December in discussions with readers and subscribers, but at that time there still was a strong believe that crew handling resulted in the first fatal crash of the Boeing 737 MAX.
Since then it was found that Boeing hadn’t informed the FAA about the extent to which the system would point the nose down to make MCAS suitable for functioning shortly after take off and Boeing decided to change the activation rules and authority of the MCAS as part of the MCAS redesign. The redesigned MCAS already is a lot more robust, but I believe that Boeing is still trying to do the minimum effort to get the MAX back in the air. One of the optional items (I will comment on this later) has become standard to increase awareness, the angle of attack sensor data is now used from both sides of the aircraft (detection of erroneous data) and the training material and documentation will be updated (information) and we are still missing things in the redesign, namely simulator training and a standby angle of attack sensor that can be used to verify data. What Boeing is not fully aware of it seems is that this isn’t something where they have (or should have) the possibility to cut corners. The last time they did this, two aircraft literally crashed and Boeing’s approach to safety and design might have contributed to that. The FAA has determined additional simulator training is not required, but Boeing should have recognized that at this stage they better put a bit too much of redesign effort in product and training than too little.
Boeing says “we own it” and emphasizes “safety” as their utmost priority, but during the redesign they didn’t go “all the way.” That’s something that’s frustrating, Boeing says “A” and does “B.”
During the shareholder’s meeting, Muilenburg stated that they are sorry for the lives that were lost in the 737 MAX crashes before taking questions. Almost exemplary was that Muilenburg said they are sorry, yet continued to say that the MCAS design was designed and certified according to the Boeing standards. He also said that there was a common link in both crashes, namely the MCAS activation due to erroneous angle of attack data, but refused to label it as a mistake, because the investigations are still ongoing and Boeing respects the integrity of the investigations. Given how fast Muilenburg was with slamming Lion Air, you don’t need to be a rocket scientist to know that Muilenburg’s answer fits in a tight legal frame in which Boeing has to take responsibility but does not admit to being responsible for the crash. During the shareholder’s meeting that clearly became visible as Muilenburg said they are responsible for the link in the chain of events, but not saying they are responsible for making any mistakes. Boeing continues to claim MCAS meets the design and certification standards, while it’s almost certain it does not meet basic engineering standards for critical systems controlling axis motion. The only way in which MCAS really meets standards is if you assign a low risk of catastrophe if the system fails, which doesn’t seem to be an accurate risk assessment.
Another moment where taking responsibly for design improvements but not for the accidents clearly showed was when Muilenburg said that the crew did not completely follow procedures. With that statement Muilenburg reverted to blaming the crew once again, while it’s clear that a properly-designed MCAS system operating within reasonable limits could possibly have prevented fatal crashes and then we haven’t even considered appropriate MCAS related training.
Pilots as part of the development process
Due to the statement from Muilenburg about crews having all information to fly the plane, shareholders initially believed that Boeing wasn’t to blame whatsoever and the Boeing 737 MAX aircraft crashed due to inexperience or lack of training. Reality is that due to erroneous data input you have a system that’s pushing the nose down, which increases the workload of pilots during an already complex phase of flight. You can indeed identify erroneous MCAS activation as a runway stabilizer, which has memory items to solve the problems. But as an engineer I can imagine that if multiple disagrees and alarms are thrown at a flight deck crew of two with a constant nose down pitching, it can be highly confusing, especially if you don’t know what system could be causing it. Boeing’s design philosophy has always heavily emphasized the pilot flying the aircraft, not so much the machine. At times that you want to have full control, it’s crucial to know what system can be causing certain behavior and for what purpose.
Shortly after the MAX crash, because the experience or possible lacking training standards of crew was being assumed to be the main cause of the crash, I pointed out that pilots are an important part of the development of aircraft. They are the ones having them fly them each and every day. Boeing also knows who they are selling the aircraft to, so they should involve airlines and pilots from all regions and experience ranges in the development process.
To me it came as a complete surprise that The Wall Street Journal reported the following:
Boeing Co. limited the role of its own pilots in the final stages of developing the 737 MAX flight-control system implicated in two fatal crashes, departing from a long-standing practice of seeking their detailed input, people familiar with the matter said.
As a result, Boeing test pilots and senior pilots involved in the MAX development didn’t receive detailed briefings about how fast or steeply the automated system known as MCAS could push down a plane’s nose, these people said. Nor were they informed that the system relied on a single sensor, rather than two, to verify the accuracy of incoming data about the angle of a plane’s nose, they added.
If those statements are true, then it’s a very bad thing. Engineers are often highly capable people and do understand what they design, but to an engineer a lot of things might seem straightforward that aren’t straightforward or logical to many others. So, having pilots actively giving input in the development of the aircraft for optimal human-machine interaction is crucial. If Boeing did not give detailed briefings, pilots testing the aircraft might not have even known some of the features of the aircraft and could never have properly tested the functionality. It’s a big deviation from Boeing’s philosophy that the pilot flies the plane and that they should also be an important part of the development program.
Boeing pushed back on the report saying that their chief pilots are involved from the earliest day of the aircraft program:
The big question you should ask yourself is, if this is true and Boeing doesn’t give its own chief pilots all information, how are pilots around the world supposed to fly the aircraft? Part of what Boeing does not encounter or fix via input from its own pilots will come from day-to-day airline operations, and tha’s really undesired, because for no good reason some risk is being transferred to flight crew, cabin crews, the flying public and people on the ground.
Optional and standard items
Boeing also has been slammed for making some “safety features” optional that customers can buy. These features are an angle of attack indicator, indicating the exact angle of the aircraft body with respect to the wind, and an angle of attack disagree light which illuminates if there’s a threshold difference between the left and right sensor is reached. This gives the impression that if you want to operate the aircraft safely, you need to buy optional items. It’s not fully true, because if MCAS functions correctly (which it didn’t), then you can fly the aircraft using the primary parameters which are velocity, altitude, vertical speed and heading and power setting. That fits right in the “pitch and power” principle to fly the aircraft where stick shaker and pitch limit indicator on the flight display are important warning signals. So, in that regard the AoA disagree light and indicator are not crucial safety features, but they do increase awareness significantly. As an engineer, I think having the angle of attack information is crucial and at least the disagree light should have been standard from the start. The indicator, whether you select it or not, depends on who is flying the aircraft. In some countries young people are flying without military experience and they will feel comfortable with pitch indications while former military pilots will find the angle of attack more useful. So, it depends on what type of pilot is flying the aircraft and so the customer should select what fits their pilots best and train them accordingly.
When Boeing presented the redesigned MCAS it said the disagree light would become standard. Up until that point everybody had believed that the disagree light was optional. It turns out that the AoA disagree light should have been a standard item as it was on the Boeing 737NG, but due to incorrect linking the disagree light was linked to an optional item, and unless a customer selected the optional item, the standard item wouldn’t work. Boeing knew about this issue since 2017.
It greatly discounts the notion that Boeing tried to sell “safety alerts” as optional items, but it does mean that this has been a misstep in the design and Boeing hasn’t not even addressed this when giving updates on the MCAS redesign. Boeing continues to say that there was no adverse impact on safety, but that’s not the main problem. The problem is that Boeing found a standard feature wasn’t standard and didn’t tell customers about it, while customers thought they had a feature installed and operating while it was not. There’s very little being more eroding to confidence than not telling crews about this. Once again Boeing provided a statement on this after media reports, and that’s not the way to be transparent, because it means that Boeing only provides transparency until media finds something.
The statement contains the following line:
Senior company leadership was not involved in the review and first became aware of this issue in the aftermath of the Lion Air accident.
That line says a lot about Boeing. They are currently shielding their company leadership, but if leadership didn’t know then who at Boeing can still be trusted, because somewhere people who have made decisions without informing superiors are going unnamed and unpunished and Boeing leadership who hasn’t been informed properly has the task of restoring confidence in the company and Boeing 737 MAX.
At this point you can add questions to the list of many questions you have about the Boeing 737 MAX and Boeing:
- How do you not find such a linking issue during tests?
- Why do you not inform customers in a timely manner about this?
- Is Boeing even aware of what they designed or what they asked others to design for them?
Things already haven’t been looking good for Boeing, but it does seem that it’s going from bad to worse. Almost weekly, new details on Boeing’s handling emerge and that’s an information drip to the public that often even surprises those who buy and fly the aircraft. That information drip and Boeing coming clean directly after news reports are being released does not do anything in restoring confidence in the Boeing 737 MAX, and what’s even worse, it erodes the confidence customers, airline employees and the general public have had in Boeing as an extremely-capable company.
For Boeing employees, such as talented engineers and the people actually putting the aircraft together with passion, it’s extremely unfortunate that this is happening. There’s an extremely weak oversight given that Boeing leadership was not informed about the issues with standard equipment not being activated, and somewhere in the managing ranks a chain of various links (people, possibly events and schedules) has led to bad decisions regarding system design and information supply being made. Boeing is now trying to break the chain of events that could lead to accidents by bolstering the MCAS they say they are responsible for that link and “they own it.” Somewhere across Boeing’s leadership there also should be the realization that within Boeing there’s a chain of missteps from risk assessment to design to information supply to certification standards that needs to be broken. This is not a game – lives depend on Boeing’s work, and especially now they don’t have the possibility to cut corners. And the last thing they should do is trying to use its PR and legal team to make wrong things sound right. It’s a waste of resources as it doesn’t solve clear problems and does not improve safety in the industry.
I believe that the Boeing 737 MAX with a good MCAS design would have been a phenomenal product. It’s often said that the Boeing 737 MAX has been rushed. I don’t completely agree. Boeing had six years to design the MAX, and it seems that they rushed the take-off part of the MCAS functioning more than the entire 737 MAX design. During flight tests it was found that MCAS also was required for the take off and initial climb away from the airport, and it was found that more MCAS operating range was required. It was at that point that Boeing should have realized the MCAS was now functioning during a critical phase of the design and evaluate the MCAS design. Likely to keep the program on schedule they didn’t, and they are paying the costs for it now, not only financially… confidence in Boeing’s engineering capabilities and ethics is being eroded.
I believe what has played a role is Boeing trying to meet the wishes of customers to have minimal transition training going from the Boeing 737NG to the Boeing 737 MAX and keeping the Boeing 737 MAX certification under an amended Boeing 737 certification. This would reduce the need for additional pilot training and flight testing. What hit the Boeing 737 MAX extremely hard is not the MCAS, it’s the thick layer of toxic decision making for which nobody takes responsibility that went unchecked and covered the Boeing 737 MAX, eventually leading to safety being compromised, leaving many stakeholders with less information than desired.
Boeing is currently trying to put blame on others and play with words so it can avoid full responsibility, but that doesn’t solve the problems and it’s almost an unethical practice that can only be justified in the legal framework. Boeing has a big responsibility, but currently they are trying to take that responsibility for one link in the chain while avoiding the legal consequences. Boeing knows like no other that it will be extremely difficult in court to prove that Boeing is fully responsibly. So as long as they don’t assume full responsibility for the crashes and point at the chain, it’s hard to make a case against the company.
The problems with the Boeing 737 MAX go a bit deeper than one particular system. Digging deeper there is an approach to safety where risk analyses seem to fall short and nobody is taking responsibility for that for the simple reason that taking responsibility for the MCAS redesign is easier and cheaper than taking responsibility for a bad safety culture. From all the news and statements coming out lately, nothing really radiates that Boeing had safety in their mind as their utmost priority despite them claiming otherwise now. It’s not to say that Boeing workers don’t care about safety, but the oversight seems to be weak.