By Dan Catchpole
May 30, 2019, © Leeham News: Boeing CEO Dennis Muilenburg said Wednesday steady progress is being made on getting the 737 MAX back in the air following two devastating crashes within a few months of each other. He stopped short of giving a specific time frame, though.
However, a spokesman for the International Air Transport Association said the same day that the trade group does not expect the MAX to be back in service before mid-August.
Speaking at the Bernstein Strategic Decisions Conference, Muilenburg struck an upbeat tone overall and called the crashes a “defining moment” for Boeing. However, he did not indicate that Boeing intends any major changes as a result, and he expressed confidence in the company’s design and certification processes. Though, he did not shut the door to making changes as a result of lessons learned in the wake of the crash.
Muilenburg insisted that the MAX challenges will not affect entry into service for either the 777X in 2021 or the New Midsize Airplane (NMA) in 2025. He also discussed changes to the 737 supply chain, resumption of deliveries and future production rates for the popular single-aisle airplane.
Muilenburg said the 737 MAX crashes have been a defining moment for the company, but he did not elaborate on how the moment has defined—or redefined—Boeing. Indeed, his comments sounded much as the same as those made before the Lion Air and Ethiopian Airlines crashes or by his predecessor, Jim McNerney.
For more than a decade, comments by Boeing’s C-suite leaders have followed a now familiar script: Everything is great—until it isn’t. Company leaders have been loathe to acknowledge or have been unaware of the full extent of challenges. For example, repeatedly, they assured investors, analysts and reporters that the company had the 787 or KC-46 production challenges in hand. Those assurances were time and again followed by acknowledgements some months later that there were further delays.
That said, Boeing does appear to be making progress on addressing safety concerns with the MAX. The company has conducted more than 200 test flights totaling about 360 flight hours for the MCAS fix, according to a research note from the investment firm Cowen & Co.’s aerospace and defense analysts.
“We continue to express our deepest sympathies for the loved ones and the families of those that were lost in the Lion Air and Ethiopian Airlines flights,” Muilenburg said at the investment conference. “We know more broadly that the public’s confidence has been hurt by these accidents and that we have work to do to earn and re-earn the trust of the flying public, and we will do that. And we are taking all actions necessary to make sure that accidents like those two accidents that have occurred never happen again.”
The company has completed the engineering testing and flight testing of a fix for the MCAS software, and it is in the process of applying for a final certification from the FAA.
“We are finishing that dialogue with the FAA, working through a series of questions and answers with them,” he said. “Once that’s complete, we will schedule the certification flight and that would be the next step to returning the airplane to service.”
The two MAX crashes have raised questions about the design and certification processes and the FAA’s reliance on company employees to inspect and certify certain work.
“I have a great deal of confidence in that process and how it works,” Muilenburg said, replying to a question during Wednesday’s conference. “It’s a way for the FAA to exercise its independent role, its regulatory role as it should, but also tap into the deep technical expertise in our company.”
During the decades since FAA adopted that approach, there has been a steep decline in the number of fatal accidents in commercial aviation, he noted.
Boeing is participating with the FAA on a number of “independent reviews” of the certification process, he said.
In addition, Muilenburg has “set up a separate board committee, as well, inside of Boeing to take a look at the certification processes,” he said. “So, if we see some improvement opportunities there, we’ll make them, but that process today I think is a solid process.”
As LNA founder Scott Hamilton previously noted, when Muilenburg announced the internal committee’s formation, he said it “will confirm the effectiveness of our policies and processes” and “recommend improvements to our policies and procedures.”
Muilenburg continued Wednesday to strike a tone of self-assurance that has become a defining feature of Boeing leadership
Boeing already is working to get the grounded MAX fleet flying again and to resume deliveries. The company is taking a very intentional and customer-focused approach designed to appease airlines and operators, and to minimize the risk of putting planes that have been in storage since March back in the air.
Boeing is approaching each 737 MAX on the ground individually and treating its return to service “as an entry-into-service event,” Muilenburg said. “So, each airplane by tail number will get individual attention with individual customers tailored to the condition of that particular airplane, how it’s been stored, where it’s been stored, the condition of operation” and so on.
To that end, company representatives have been meeting with customers and regulators around the world, and Boeing is “making clear and steady progress,” he said.
Boeing hopes regulators abroad will follow the FAA’s lead, “there may be some international authorities that will operate on a different schedule,” Muilenburg said.
The FAA held a meeting May 23 with Boeing and regulators from 33 countries. Acting FAA director Dan Elwell has declined to give a timeline for the MAX’s return to service.
Cowen & Co. analysts expect FAA approval seems possible by late June, with deliveries resuming in July. Even after the FAA signs off, Boeing will have to integrate input from non-FAA experts on the technical advisory board.
Foreign regulators will lag to some degree. Sign off by regulators in China, which accounts for about 25% of MAX orders, could be affected by trade negotiations with the U.S.
The grounding has affected airlines’ summer flight schedules.
“We know that’s painful for them,” Muilenburg said.
“Some of them, as a result, will want to move airplane deliveries out. We’ve had other customers who said, they’d like the airplanes earlier, they need lift sooner, so they’d like to accelerate in the skyline,” he said.
Until deliveries resume, storage is not a concern. The company has stashed MAX airplanes around Puget Sound at Everett, Renton and Seattle, and at its San Antonio facility. Boeing has two additional “commercially-viable options for additional storage capacity that we’re preparing as well if we need them,” he said.
Boeing has used the past few months to address concerns in its 737 supply chain, such as fuselages from Spirit Aerosystems and engines from CFM.
“We’ve made good solid progress with both of them over the last couple of months,” Muilenburg said.
While Boeing has idled back production to 42 airplanes a month, it has had some supplier, including CFM, remain at the 52/month pace.
CFM has “made a lot of progress on that over the last month. So, we’re now getting to a point where they’re recovering to our production schedule, but we’ve also asked them to ensure that we’re beating the engine spare pool, as well,” he said.
That way there are enough spare parts to meet customer needs once flights have resumed.
Boeing still expects it can deliver the NMA by 2025, based on Muilenburg’s comments. In April, he seemed to leave some room for the EIS date slipping. Not so during Wednesday’s conference.
“We’re continuing to make progress on NMA,” he said. “Our overall timeline—broad timeline for that program has not changed. We still see it as a 2025 entry into service kind of airplane.”
Boeing continues to work on the NMA business case, and still aims to get an “authority to offer decision this year and an authority to launch decision next year,” he said.
Likewise, the company continues to make progress on the 777X program. The first two flight test aircraft are out of the Everett factory and are involved in integrated system tests on the ground.
So far, “the airplane is performing very well. It’s a very clean airplane,” Muilenburg said.
The next two flight test aircraft are in final assembly, and the structural test plane is in static test now. Boeing continues to work through engine tests with GE.
Muilenburg said he expects flight tests to begin later this year, followed by first delivery in 2020.
The fallout from the MAX crashes is not likely to affect that date, he said.
“I don’t see anything there right now that would significantly alter the timeline for the 777X, but it’s possible we could see something that would alter the content of the test program or how we go about certification,” Muilenburg said.