Pontifications: Muilenburg’s departure wouldn’t go far enough

By Scott Hamilton

Oct. 7, 2019, © Leeham News: A recent call for Boeing CEO Dennis Muilenburg by my friend Ernie Arvai to resign or be removed has a litany of woes at the company that occurred under the CEO.

These mostly relate to the 737 MAX crisis, but also include the policy of returning free cash flow to shareholders rather than investing in new airplanes. Other issues are also cited.

Arvai makes many good points, but he doesn’t go far enough.

If Muilenburg deserves to go, so does Greg Smith, the Chief Financial Officer and Executive Vice President, Enterprise Performance & Strategy.

The emphasis on cost control, which have become part of the focus of the MAX development, emanates from Smith. The strategy for new products ultimately falls under Smith, who vehemently opposes investment in the New Midmarket Airplane.

If these two deserve to go, so do the Board of Directors.

It’s the Board of Directors who set the shareholders’ value policy that Muilenburg carries out.

Long-serving board members

In particular, if Muilenburg goes and Smith goes, those long-serving Board members who were there at the beginning of the MAX program launch should be on the list to go.

This list includes lead director David Calhoun (2009); Arthur Collins (2007); Adm. Edmund Giambastiani (Ret.) (2009); Lawrence Kellner (2011); Ed Liddy (2010); Susan Schwab (2010); Ron Williams (2010); and Mike Zafirovski (2004). This is eight of the 13 members, which includes Muilenburg (2015).

Where was the Board when it came to asking about safety and the safety culture? We outsiders don’t know. Board deliberations are confidential and only lawsuits with discovery would be able to access the meeting notes from the era.

I’ve no doubt that if the questions were asked, the Board members relied on the answer given by the executives.

But financial and shareholders’ value policies and approvals for new airplane programs rest with the Board. Exercising oversight on management rests with the Board.

Good old boys club

Boeing’s Board has a reputation on Wall Street of largely compliant with management. This may not be entirely fair, but it sure seems to have circled the wagons in this case.

Calhoun, the lead director, repeatedly expressed full confidence in Muilenburg when asked. Of course, to some degree, he could hardly do anything else under the circumstances. Besides, it is not Boeing’s way to push executives (or even mid-level officers) out during a crisis. They either leave, retire or get transferred after the crisis is over.

Exceptions were the public executions of Phil Condit (over the 2004 air force tanker scandal in which CFO Mike Sears and a former USAF procurement officer hired by Boeing went to jail; Condit resigned); and the forced departure of Condit’s successor, Harry Stonecipher (over an internal sex scandal).

Condit previously barely survived being ousted in connection with the 1997 financial scandal over hiding financial charges at Boeing and a production meltdown at the time the McDonnell Douglas merger was being negotiated. Boeing later settled a lawsuit for $97m in connection with this.

MAX era execs are gone

The problem with holding people accountable in the MAX crisis is that the key executives are already gone.

Jim McNerney, the CEO of The Boeing Co., retired. McNerney greenlighted the MAX in July 2011. (Muilenburg wasn’t named president until December 2013. He became CEO in July 2015.)

James Bell, CFO when the MAX was launched, claimed doing MAX would cost 10% that of a new airplane. He retired in April 2012. (According to our information, the MAX development cost was not the $1bn Bell initially touted, or even the $2bn internal budget that was set, but closer to $4bn. The latter figure is unconfirmed.)

Jim Albaugh, the CEO of Boeing Commercial Airplanes at the time the MAX was launched, retired in October 2012, although he was replaced in June by Ray Conner. Conner retired at the end of 2017.

Pat Shanahan was SVP of Airplane Programs from 2008 until he left in 2016 to become deputy defense secretary under President Trump.

Keith Leverkuhn and Beverly Wyse served as general managers of the MAX program during the era involved. Leverkuhn is still with Boeing. He was sent to Rolls-Royce in May 2018, before the first MAX accident, to help RR solve engine problems on the Trent 1000, which powers the 787. It’s unclear if he’s still there; his LinkedIn still lists him as VP/GM of MAX. Wyse left in 2017.

About the only current executive who has clean hands is Kevin McAllister. He was named in November 2016 CEO of Boeing Commercial Airplanes. The first flight of the MAX was the preceding January and certification was the following March.

Thus, Muilenburg, Smith, the named Board members and Leverkuhn would seem to be the only ones in authority during the MAX development remaining.

No immolation

If Muilenburg or Smith leave, it undoubtedly will be with a hefty retirement package. What compensation departing Board members might receive is a question for which I don’t have an answer.

MAX crisis aside, the longevity of the Board smacks of entrenchment. Good governance should include term limits.

But don’t hold your breath.

You can bet there won’t be any immolation at Boeing.

100 Comments on “Pontifications: Muilenburg’s departure wouldn’t go far enough

  1. As I think everybody knows, I think the entire Board of Directors need to go.

    The new Board should set up a policy of investing in people, particularly engineers. If it needs subsidy from the US taxpayer, so be it. I’ve always supported subsidy for the purpose of renewal.

    Let’s hope it happens. The world needs a competitive Boeing!

    • Good point on subsidies for launching a new aircraft for Boeing The industry needs to get over that an OEM like Boeing can self fund $20-30 billion huge investment when they are competing with a nation state like China who subsidizes it commercial aircraft industry (infant industry argument doesn’t apply anymore)
      A new large aircraft agreement between US, EU and China (Boeing, Airbus and Comac) for subsidies that are from domestic and international governments (risk sharing partner countries) like 50% of aircraft launch cost can benefit the industry for creating innovation and giving the flying public newer aircraft models that provide a better travel experience.

      • Boeing could have developed 3 new aircraft on its shareholder buy back program.

        The other programs prove nothing other than once you wallow up to the public tough you think that there is no other way.

        • TransWorld

          Nothing like being optimistic, given that the 787 cost over $50billion even with very large subsidies from the US taxpayer.

          It will be interesting to see the bill for the 777X even with the $8.7 billion tax breaks (subsidy) from Washington state.

          I think the big profit days are gone, unless the US taxpayer is willing to throw caution to the wind.

          As it stands, I think it will cost the US taxpayer a fortune to bring Boeing back to health. But it needs to be done. But renewal means change. Change can be hard for some.

          • The A220 launched mid 2008 and entered into service mid 2016. Development was budgeted at 4 billion and ended up at 6.5 billion.

            It is often presented as a very poorly run program. On that basis yes, Boeing would have easily been able to launch a NSI mid 2011 for EIS mid 2019 and been able to fund it out of 737 cash flow.

            Of course much better would have been to commit earlier. Say in 2010 when a decision on the NSA was deferred.

          • jbeeko,
            Do you have any sources for the statement that the Bombardier C Series or A220 “is often presented as a very poorly run program.” I would like to find out more about it besides the Wikipedia entry.

          • They’ve been outsourcing jobs for long time they should ask foreign countries to rescue them.

    • Governance is served if they all are relieved. They failed their mission. It’s was especially compounded because they failed a trust position to the FAA. A lesson in humility and refocus is due.

  2. The linked Editorial above https://airinsight.com/editorial-it-is-time-for-muilenburg-to-go-at-boeing/ has describes another issue with the MAX (and NG?):

    “The recent revelations that the 737 MAX single rudder cable does not meet F.A.A. guidelines for protection against an un-contained engine failure and could potentially result in loss of control of the aircraft has serious implications,but is not a part of the current MAX investigation. ”

    How are single points of failure assessed and accepted in aviation? Is this another leftover from the sixties?

    • Grandfathering Design & Requirement Certification.

      FAA (under congress pressure) agreeing todays requirements do “not commensurate with the costs necessary to comply.” (FAA DER people that are Boeing employees too).

      Do that for 50 years, rebuild the aircraft meanwhile and safety goes South. Everything complies to rules no longer effective and exceptions being granted to remain competitive.

    • So far as I know the routing of the rudder cables, and the protection afforded to them by that routing from damage caused by a blade escaping from an engine during an uncontained failure, is unchanged since the 1960s. That was fine for the engines fitted then, but with the MAX’s engines being larger, further forward and mounted higher, they’re now exposed.

      It’s a fairly big job to redesign the routing of these cables.

      If this is wrong, corrections most welcome!

      • If it’s been statistically proven by long reliable service, why can’t airbus just ignore this regulation as well?

  3. The lack of proper direction through this debacle is sufficient reason for sacking the top two. I can’t believe that they believe even now that playing the MAGA card and browbeating the FAA is still the way forward. Muilenburg’s press conferences show he is out of his depth and the CFO has that steely eyed and supercilious glare of someone who cares about the paycheck ahead of all else. Are they still pursuing a wholly software approach? Are they still ignoring the EASA? Do they really think this will work.

    This team had every opportunity to come clean and work cooperatively with the regulators from late last year onwards. Their approach of attempting to contain the problem by obfuscation and strong arm tactics has been the problem. If they had truly worked with the regulators this whole matter would probably resolved by now with most of the MAX’s flying. Regardless of what is said it is not regulator nationalism at work, they all have a vested interest in getting the MAX back up, Boeing does however have to play ball.

    The pity, as Scott points out, is that they will be heavily remunerated to go. Regarding the wider board, they have manifestly not done an effective oversight role. The question is how do you find such directors who can offer an independent oversight in such a concentrated industry.

    The real question must be who is the new CEO that Boeing can circle the wagons round and when will the MAX re-enter service, which year?

    • I’m not sure this is correct. I don’t think the reason the Max isn’t flying is because Boeing failed to work openly with regulators. The Max isn’t flying because there seems to be a serious problem with the aerodynamics of the airplane and the fix for that irregularity horrendously malfunctioned. I think the deep and misguided commitment to this aircraft is huge and Boeing has been trying to sort it out while using PR to make shareholders think this isn’t an existential crisis for the manufacturer. Boeing, like all aerospace manufacturers is dependent on government subsidies in one form or another. And I can foresee that something similar to the auto-industry bailout might be the only thing that will save this company. The problem is that there’s a different president in charge, so it’s difficult to guess how he will react.

      • That’s not right. You only get bad engineering if you have an ineffectual engineering process. The worst, least imaginitive engineering team will eventually come up with a safe design so long as there’s a proper engineering process and external expert review to back it up. It might take a lot of money and time, but they will ultimately succeed in producing something that is, at least, safe.

        It is the company’s senior management who are responsible for ensuring that there is a proper engineering process. Clearly, Boeing haven’t got one. By setting up their own internal board level review of How Boeing Builds Aircraft, recently reported, even Boeing have admitted as such. Laughably, despite the remit of this review originally being to “confirm” the safety of their process (difficult to do with two crashed planes and 346 dead people), it said that things had to be changed; much talk about realigning engineering practises, etc.

        Of course, aviation is regulated, but in the US it’s subject to political influence. A robust regulatory set up is the responsibility of the US administration, though in this case I think the poor state of the FAA can be laid at numerous administrations down the decades, cost cutting, etc. If that’s down to lobbying by Boeing, then they really have brought the MAX mess down upon themselves.

  4. It is normally the role of the Board of Directors to order the CEO to maximize the shareholder return but do not violate any law, gouverment/state regulation, internal standards and routines while doing so. If the board do not decide to invest enough in new Products, new technology and standards, hire top talent and fill the ranks with good eough staff it will be a long slide towards the bottom.
    The CEO should be controlled pretty hard by the competent board to deliver on all fronts, not just stock price, stock buybacks and dividends.

    • If you must stick to the rules, change them. The board worked hard to change the law, goverment/state regulation, internal standards and routines to beat the competition.

      https://www.seattletimes.com/business/boeing-aerospace/boeing-pushed-faa-to-arelax-737-max-certification-requirements-for-crew-alerts/

      https://www.gao.gov/assets/690/683649.pdf

      I think the problem on FAA aircraft certification lays much deeper. Congress, Boeing, industry should not deny their responsibilities. They forced FAA down a “streamlining” road they don’t want to remember now.

      Boeing pushes congress, congress pushed FAA, FAA delegated to Boeing. Full circle. Safety was the #4 priority.

      • US is a corporatist state at its core. democracy for the people is just a skin. It does not exist for people it exists for corporations. 🙂

        You find the same kind of disparity in other domains.
        For an in your face example look at the GFC: The same process sawed away at financial control instruments in the run up to the crisis.

      • Yes, Boeing pushes for its view of the regulations and FAA checks and finally certifies and thus take responsability that everything is done per the regulations that the Aircraft shall be certified to, even if it means regulations in force during the 737-100 certification.
        If the FAA is not funded and skilled enough over the decades then the system with time breaks apart.
        This places lots of responsability on the funding system and its knowledge and methods, similarly for the FDA approval of Medical Products and the nuclear industry regulations and certifications. All these are where historically the rest of the World has followed the US rules and certifications since WWII.

  5. This is the most insightful Pontification I have ever read. It goes to the heart of the true issues at Boeing. Scott, you did an outstanding job in this pontification.

  6. It is much to early for the fuses to be blown. The board needs the m as a front. It needs to keep these patsies available for the forthcoming inquiries and criminal cases.

  7. I don’t recall many desenting voices at the time of the MAX launch. Those who did disagree thought it was too old and didn’t cite that it was going to be bloody dangerous.Aircraft development programmes going off the rails are more common than not, the real problem is that they forced it through anyway and this is where they will probably find themselves in legal trouble.
    The launch costs(and development timescale for the 787)for every programme in the last 20 years provide clear evidence that Boeing’s management didn’t know what they were doing.Everyone (and particularly the analysts)must have known this.

    • MAX launch as such was not dangerous.

      But it carried the seed of expensiveness. Lots of indications that done right creating the MAX would be much more expensive than Airbus outlay for the NEO.

      The combination of an excessively aged design, having the FAA in ones pocket and knowing it and chutzpah in abundance made the MAX dangerous.
      Cloaking intent as lapse to get away from later liabilities in case of this foundering ..

      To repeat: not the MAX as an idea of a product as made public
      is dangerous
      but Boeing Management and the culture/society that supports it.

      • Grubbie: Could I point out China success with their programs as an fine example to follow?

      • “the culture/society that supports it”

        We must not forget that for nearly 40 years, both neo-liberal era Democrats and Republicans have blasted “regulations” as the enemy to efficiency, effectiveness and excellence and as a hamper to the all-knowing free market. Corporate executive endlessly derided the bloated federal bureaucracy. Taxes and regulations were seen as evil. Meanwhile, the budgets of regulatory agencies — from the FAA to the FDA — were gutted. And industry not only began to govern itself, but was being asked to perform he role of government.

        One cultural change might help. Call regulations what they are: PROTECTIONS.

        • As we write, everyday local and national regulations are being struck down. Especially, EPA edicts associated with water, mining and oil fracking, let alone trade and food sustainability…

  8. Why don’t the stockholders of Boeing, propose a change in the way executives are compensated, to the board to be voted on at a stock holders meeting? If a Boeing plane crashes, or a fault is found, then the executives salaries are cut by x% determined by some formula. If it’s due to the IT director, then his is cut y% etc .. That would certainly make the executives “pay” more attention to safety
    ============
    https://www1.salary.com/BOEING-CO-Executive-Salaries.html
    ===========
    Having them forced out with a golden parachute doesn’t promote safety.

    • Because the stockholders are scattered far and wide and are part of investment portfolio that the owners don’t have time nor resources to manage in person.

      Maybe when all the stock buy backs are done and its down o 10 or 12 people something can be done?

      Then there is the Bernie Madoff syndrome.

      • TW, you’re probably right. Until passengers stop flying SW Airlines (all Boeing 737 fleet), and onto Spirit (all Airbus fleet), the stockholders (70% institutions) won’t do much. By that time, it will be too late for Boeing to change. They need competition and/or an airline uprising. I guess you can hang a lot of Boeing’s problems on the airlines that forced them into this box. If Boeing came out with a totally new airplane, that pilots needed a separate type rating for. What would SW airlines do then?

        • You mis state my points.

          Many stock holders are part of a portfolio put together by an investment firm.

          I have no idea if any of the mutual funds I own (not a lot) have Boeing in them.

          If there are, its a small part of a larger grouping. I don’t tell them how to run that as I don’t have the time nor ability to monitor a hundred companies to see if they are sweet people.

          Single investor will just dump the stock if it starts to look bad.

          In the end its the board that decides what direction a company goes in.

          The fact that Boeing board has the same person as the head and the CEO speaks volumes. The split was supposed to created a line.

          In the end the only thing that will change it is if the stock tanks.

          As long as airlines operate a 737NG or MAX public is going to assume they are up to snuff – never saw an aircraft permanently grounded.

          Comet despite the structural failure crashes went on to crash a lot after (for other reasons as did a lot of the early jets) and stayed in service into the 60s.

    • The truth is, that most true professionals — most genuine aerospace engineers, doctors, lawyers, nurses, professors, journalists, etc. — would do their jobs for free. This is why they are professionals. They have professional codes of ethics. I don’t see why corporate executive have to make so much money — especially since they are mere functionaries and not owners or entrepreneurs. In fact, greed and a commitment to fourth quarter profits produced this problem as the executives vetoed, ignored, or disregarded the creative judgments of the professionals. Some people are rewarded by building a better, more efficient, more beautiful airplane — not by sticking with the same design, year after year because it sells. The golden parachute is an obscenity of corporate life.

      • No one shall do his work for free, especially true professionals, they deserve to be respected.

        • Free? Really? Wow.

          Professional and costs have nothign to do with each other (well they do, you have loans to pay off)

          And so far I have found I need to eat, kind of helpful to have a roof over your head (you tend to smell pretty bad after a few days out camping)

          • The point was rhetorical. My point is that huge cash rewards to failing executives don’t make them better at their jobs. And I just mean to say that many professionals go into their fields — and don’t pursue MBAs — because they are passionate about the work and not about money. The problem occurs when the professional lose a sense of efficacy in their work and when financial judgments undercut professional ones. It occurs where they are treated as inefficient, when they are ignored, when they are overworked, and when they are outsourced to people with no connection to the end product.

  9. Scott, McAllister needs to be held accountable for how Boeing responded after the first crash. His hands are not entirely clean.

  10. CEO Kevin McAllister…lol

    He’s sure going to feel Home Alone if everyone around him leaves.

  11. I agree wholeheartedly up to the point of saying that Kevin McAllister has clean hands–that I regard as a question mark. After the Lion Air crash, some insist that top executives and the board would not have had any involvement with decisions on the Max. Given the presence of Sinnett at the Allied Pilots meeting, that seems unlikely. He was not part of the Max program. So, one of the biggest unknowns in this remains: what was top executive involvement in the decision not to ask the FAA to ground the plane, or the approval of the bulletin that was delivered? What did they know? How were they briefed and by whom? We all know about the call to Trump by Muilenburg right after the Ethiopian crash, which violates our normative standards of protocol and indeed basic governance.

    • When you nned Donnie to tell you that what you are doing is wrong too outrageous to contemplate getting away with…….

    • I don’t disagree about McAllister’s “where’s Waldo” disappearing act after the accidents, but the context has to do with the events surrounding the design and certification of the MAX. The dies were cast by the time McAllister arrived.

      • Perhaps one thing McAllister could have done was instigate an open door policy, tell me anything in private. That would have been a good way of getting a feel for BCA after being appointed CEO of that division.

        Ok, that might have been ambitiously un-American in style. But had he done that, one wonders how long it would have taken before he was telling the Board that there were major risks in MAX operations with consequences for Boeing.

        Japanese companies like Toyota are pretty good at this – bosses yearn to hear what the shop floor has to say about how things are going, and the culture is such that no one fears raising issues; it is encouraged and rewarded.

        • I have no experience with how Toyota works, but I can tell you your description of it sounds very much not typical Japanese.

          “the culture is such that no one fears raising issues; it is encouraged and rewarded”

          The nail that sticks out gets hammered down.

          • After the passing of several key figures in the Japanese industrial engineering world and the termination of joint ventures with non-Toyota entities it was gradually revealed that much of what had been written about the Toyota [Production/Manufacturing/Management] System in the 1990s and sold to other organizations at great profit was… not exactly how things really worked within Toyota. That revelation was not sold anywhere near as hard by the training consultants for some reason 😉

  12. Agreed, when its all so corrupt there is no other answer, can the whole group and why do they need buyouts? Fire em. Isn’t it the Mantra of a certain party that you live and die on your merits (lack there of?)

    This quote had me howling

    .” Leverkuhn is still with Boeing. He was sent to Rolls-Royce in May 2018,”

    As if RR didn’t have enough problems already, bring in someone even more incompetent who knows nothign about engines and that sure solves the problem.

    Engines? arn’t those the thingies you put out on the wing to make it go?

    • Leverkuhns engineering expertise includes ‘propulsion’.
      Don’t think you should be deciding who is incompetent…were you ever. VP of a $100 bill company?

      • Good load no I was not.

        I still have nightmare of the things they did at work.

        I do know good work when I see it.

        On the other hand the best review I ever got was all 6s (max) in all areas.

        The manager had to present a summation as to why the person was rated the way they were (good or bad)

        “Due to our reorganization where Mr. X (who is solely responsible for all our mechanical and electrical systems) now reports to me (the VP) and I barley have had time to talk to Mr. X who only sees me on needs of approval above hsi limits- Mr X has been left to handle the mechanical and electrical systems with no supervision. We have had no breakdowns or failures let alone emergencies this last year and while I (the VP who wrote it) am not a mechanic, I have been supervising that department for 10 years. . That tells me that Mr X has done an outstanding job in taking care of the equipment.
        As you cannot do better than perfect, I have given him a 6 in all categories, to do otherwise would be to argue with reality. ”

        Now there was a degree of luck to that, system always fail no mater how well taken care of. But that was an accumulation of a lot of good work that paid off big time for that year.

        I have yet to see RR get a handle on their engine failures.

        Nuff said.

  13. Would the EU have a case at the WTO for the FAA imposing higher regulatory standards on Airbus than domestic manufacturers?

  14. When 737 MAX was launched everybody was ok because Boeing has to stick to Aviation rules and Requirements. FAA will make sure.

    Most weren’t aware of powerplay, lobbying rule makers to change the rules, FAA certification and requirements. To shorten time to market and reduce costs. And keep the stock price going.

    Streamlining certification, deflecting with “free cash flow”, unique accounting methods and stock buy backs.

    Now the chickens come home to roost. McNerney is gone, the rest cashed already.

    https://walletinvestor.com/static/frontend/forecast-graphs/89/stock-ba-stock-forecast.png?v=1570422997

    • As usual, took his money and ran

      But with the complicit board, they just put another same of same oh stooge in his place.

      What Boeing needs is a complete housecleaning like Ford went through with Mullaly.

      But that only happens when a company is on the ropes. Right now Boeing is playing rope a dope and one more good blow from Foreman and splat.

  15. The wagons at FAA and Boeing have circled, but these
    Editorials calling for total change of Boeing leadership
    And degraded corporate safety culture may be the breach needed
    For change to happen.

    Now is the time for large Boeing institutional shareholders, Boeing unions, Boeing suppliers and major airline customers to also step forward.
    They can run board reform candidates to clean up this mess before it’s too late.

  16. If Muilenburg or Smith leave, it undoubtedly will be with a hefty retirement package. What compensation departing Board members might receive is a question for which I don’t have an answer.

    It’s almost funny how much it’s taken for granted that people who command a ridiculously high income (salary, bonuses, stock packages, etc.), supposedly because of the responsibilit they bear for the company, its employees, etc., also get a hefty farewell package once they have actually screwed up, i.e. risked/lost the company money/jobs/reputation. No difference, either, between Boeing, Airbus, or VW.
    Mind you, I’m not saying these people don’t work hard. I just have my doubts their compensation packages are really justified considered they’re in for a pretty soft landing even if they do screw up (unless they’re not good enough at obscuring their direct involvement in e.g. Dieselgate just enough).

    MAX crisis aside, the longevity of the Board smacks of entrenchment. Good governance should include term limits.
    Indeed.

    • Well its a matter of opinion on how hard they work.

      Smoozing, sucking up, glad handing, those are really hard things (now there are some other words for it but I suspect Scott would feel compelled to smack me down) .

      Funny how we have to be polite (of course its Leeham blog and rep on line) but the high rollers can do what they want while we should be polite).

      I worked with a guy who used to say do as I say not as I do.

      I did tell him what I thought of that and its the same I think of Boeing Management and Board. Penn Central or Enron comes to mind.

    • I Think the logic is that taking a promotion to be a big shot manager complying with tons of requirements and deliver on all accounts is a big risk. Statistically around 63% will fail meeting all these requirements as they cannot mature fast enough (first year ok to make misstakes, year 2 don’t do the same misstakes, year 3 shine, year 4 get promoted again and make misstakes…), so the severance package is like an Insurance that statistically you will fail, for some reason you don’t get your old job that you performed well (to be nominated to your new position) and you are regarded as “burned out” and can leave with a big pile of cash instead of learning from the experience and some year later do another run for a top dog position in the same Company.

  17. Scott, is it known if/ when Boeing has turned in its “final” software patch for the MAX for review by FAA, EASA etc…?
    Until/unless this is in we are all sculpting clouds on the MAX.

    Perhaps the delay and lack of transparency are a reflection of the tight corner B is now in? If things were hunky dory B would be trumpeting it from the roof tops.

    The NG fork issue is just too new – albeit alarming – to evaluate properly, and for used aircraft values to move. I would think lessors are pretty nervous though.

  18. Next round in character assasination to the benefit of Boeing has been kicked off:
    https://hosted.ap.org/article/5ff095b8b9954b03925410680e8c907d/engineer-ethiopian-airlines-went-records-after-crash

    rather effective reach has been effected:
    https://muckrack.com/bernard-condon/articles

    Mr. Condon is another example of a journalist writing a strongly polarizing article on a topic in a domain he has never touched before: everything else he seems to have written is Ttweet chasing at home.
    https://www.seattletimes.com/author/bernard-condon/

    • I am baffled as to why anyone would consider it unusual, let alone improper, for an airline to ‘look at its records’ after one of its airliners had crashed. It would be most inappropriate not to: Now if the ex-engineer who is somehow seeking refugee status had evidence they were altered that would be very different.

  19. The seeds of Boeing’s destruction were sown when they decided to greatly increase the number of managers classified in the Executive series. The E-series management before that decision consisted mainly of upper level execs who make high level decisions. Because E-series execs quality for very large year-end bonuses based on the company’s profitability, expanding the E-series rolls to include lower level managers has put a lot of pressure on their making product-level decisions based on merit and not solely on cost. Time to re-think the E-series strategy, Boeing.

  20. According to the WSJ, Boeing engineers are apparently frustrated that EASA appear poised to diverge from the overall U.S. “game plan”.

    Without a swift resolution, according to those briefed on the details, EASA’s objections could set an industrywide precedent for foreign authorities publicly second-guessing determinations by the FAA, affecting aircraft initially approved as safe by the U.S.

    Boeing and the FAA are finishing testing the dual-computer system, and the final results haven’t been presented to EASA or other regulators. EASA has signaled, though, that it wants additional risk scenarios examined beyond those in the current testing plan, this person said.

    The situation remains fluid, and EASA’s position could change. The agency previously indicated it planned to perform some of its own simulator testing and risk analysis in coordination with FAA activities. But now, according to people briefed on the latest friction, European regulators appear poised to diverge from the overall U.S. game plan unless a compromise is hammered out in coming weeks. Boeing engineers are frustrated EASA hasn’t specified what additional measures might allay its objections, according to people close to the discussions.

    https://www.wsj.com/articles/friction-between-u-s-european-regulators-could-delay-737-max-return-to-service-11570527001

    • Maybe rubber stamping, lobbying out and extreme grandfathering of safety requirements on new systems is coming to an end. And that frustrates a lot of people.

      • Not a surprising development as AESA has been steadfastly demanding their concerns be addressed by B and the software fix does not do that.
        I am at a loss to understand how B might now claim not to understand the obvious. These items have been front and center for months now! What world do they live in? Or what are they smoking/vaping/inbibing?

        • EASA is clearly concenred with the sudden chagne.

          I don’t blame them. Despite it being right to make this cross talk, you also have to test the whole thing.

          Boeing pulled this out of their hat.

          It needs rigorous testing.

          The right thing MCAS – done wrong can kill people.

        • What are they smoking???
          Mexican Gold what a trip I had on that with two Native American Indian’s driving the Forrests of Oregan back in the 1980s.

    • Another informative article from a US news agency. But it only relates to using the two FCCs together. Nothing else is addressed by the article. So what about other EASA concerns. Have they gone away?

      • I think the emergency warning system, pilot workload during those conditions is an inflamable topic that showed up recently.

        https://www.abc.net.au/news/2019-09-27/boeing-misjudged-pilot-response-to-737-max-trouble-report-finds/11553188

        There only so much pilot training you can do, if pilots have to fight a emergency situation & the aircraft isn’t helping at all.

        https://www.seattletimes.com/business/boeing-aerospace/boeing-pushed-faa-to-arelax-737-max-certification-requirements-for-crew-alerts/

        • I think that is some NTSB piling on.

          Same happened with the Qantas A380 that blew the engine, a bazillion alarms went off. Uh yea, we have a problem, what is my hydraulic pressure on Circuit A (oh, that is down in sub menu 415, right under the menu that says bivy water pressure is gone)

          How do you prioritize that?

          Computer systems suck in that regard, you have all that stuff they can throw at you and sorting out what the problem really is narrows down to a few basic bits of data.

          I built up alarms in my control systems so only the critical ones that showed where the problem was.

          • QF32 also had five pilots in the cockpit to sort things out.

          • True, which did not help anything. 5 different opinions ala committee when you should just put the hing on the ground.

            They dithered in the air for 1.5 hours while the wing was falling apart and then tried to get it to land with the auto pilot.

            Truly fortunate it did not cascade into a crash while they were “assessing”

          • TransWorld

            There are numerous authoritative articles on QF32. I admit, I’ve not read all of them. Those I have read make no mention of the bazillion alerts that you alude to. Indeed all the reports I have read makes clear the the pilots quickly determined they could still fly the airplane. Indeed they decided to go through a rigorous procedure to determine the appropriate time to land, re fuel burn off.

            Can you please provide an authoritative article to read. The failure occurred in 2010. It’s all in public!

            Boeing keep secrets. It doesn’t apply to everybody.

          • QF32 happened on a well designed platform.
            The crew up front had the time to grok their situation.
            Autopilot never broke its stride. They switched it off
            just ahead of landing afair,

            Contrast that with a fickle, underhanded and super annuated “Schrödingers Cat” design like the 737MAX
            where the manufacturer carefully hid the problematic details in vein with a long stretch of similar “whittling safety margins down to microns” profit generating activities.

          • There was a lot of discussion of the alarm management problem in the process industry during the 1995-2005. With 3rd-generation fully computerized control systems coming online at process plants (including gas turbines) the “alarm flood” issue, along with poor graphics and human factors design of alarm management systems became apparently. Many industry and academic seminars were held and a few new products were introduced but to my knowledge no real solution was found. I have stood in the control rooms of process plants and watched 1000 alarms scroll by following a simple upset (and also observed operators who can watch that scroll and take exactly the correct action! – but they are few).

            I used to have a bibliography of articles and proceedings on this topic but no longer have that document. A few references I do have:
            ABB Alarm Management and Human Factors in the Control Room, 2008
            SYNOPSIS – IEE COLLOQUIUM ‘STEMMING THE ALARM FLOOD’ 17 June 97
            Controller Effectiveness: Alarm Management and High Performance HMI – Bill Hollifield [this one is a good analysis of why modern control system graphics including but not limited to alarms are often difficult to use and counterproductive. Somewhere I have a followup article in which the author states that ‘n years on the problem remains because none of the big vendors could figure out a way to make money from solving it’]

            There used to be a lot of these documents out on the ‘net, but they may have been lost to web site rot over the years.

        • Thanks keesje,

          But I think the flight deck issue has been known for a while. Somebody, perhaps it may have been you, posted an article that made clear that the FAA gave Boeing an exception with regard to the flight deck for the 737 MAX.

          The issue with the flight deck has come to the front because of what Boeing have said. Specifically, if there is an alpha vane disagreement, then MCAS will disconnect leaving the pilots in control.

          But the flight deck went into total meltdown because of alpha vane disagreement in the two MAX crashes. There was total bedlam on the flight deck.

          If, and I mean if, MCAS has been fixed then have Boeing fixed the bedlam? My reading is no. The bedlam remains. The difference? MCAS has been switched off.

          With regard to the MAX crashes. The bedlam was irrelevant. The pilots had no control of the airplane. So it didn’t matter how the pilots interpreted the flight deck, the bedlam.

          • Please read exception as exemption.

            The Times of London reported today that both EASA and Canada have told the FAA that the FCC changes are not good enough.

            It was to be expected. EASA are on record as saying dual channel, dual sensor is a minimum.

            Boeing are not doing that. They have simply linked the two FCCs for sensor disagreement. Dual channel, dual sensor requires full error logic to isolate failure modes.

            I said it a long time ago. The CPUs are not big enough to support full error logic to isolate failure modes.

            Disagreement means one or other may be wrong or both wrong. Which of those 3 answers is unknown. So the pilots have to work it out.

            Then we come to multiple conflicting alerts. The pilots have to work it out with those alerts sounding off.

            But at least MCAS gets switched off if there is disagreement. Why the pilots can’t switch MCAS off, I don’t know? MCAS can switch itself off but the pilots can’t switch it off! Doesn’t sound right to me.

            It’s going to get nasty. Boeing are sticking to the narrative. The software fixes we are doing will make a safe airplane safer.

            There will not be any immolation. Boeing won’t back-off. After all they don’t understand why the 737 MAX was grounded in the first place.

            The board needs to go.

          • There appears to be a lot of control issues between the sensors of the aircraft failing and then issuing a ton of blinking lights to the pilots, as the autopilot switches off. There needs to be high reliability, backup and clear prioritized warnings to these systems. The Air data unit seems to be indicted in a lot of cases.
            =============
            https://en.wikipedia.org/wiki/Air_data_inertial_reference_unit#Airworthiness_directive_2008-17-12
            ============
            Boeing’s idea of just adding another AOA sensor doesn’t in my view qualify as good enough. We’ve seen what confusion and chaos it can lead to. I hope EASA pushes Boeing to do the right thing. The FAA is either impotent or incompetent to be relied on.

          • @Philip

            It appears that Boeing bet everything on a simple software fix — something they’ve been successful doing on past programmes; one example being the 747-8, where eliminating the flutter issue required no physical modification to the wing and no added weight.

            What we’re witnessing IMJ is a company that for a long period of time has had an arrogant sense of entitlement and where managers share a belief in the company’s and their own infallibility — leading to a situation where warnings from the rank and file within Boeing and anyone not affiliated with the company, has fallen on deaf ears. After the first MAX crash, Boeing’s management may have thought that it wasn’t that big of a deal, since up until that point in time it had been so easy for Boeing to fix designs they didn’t get right and simple up-front, with software fixes and updates later.

            When EASA laid out its own demands for Boeing to meet before the MAX could start flying again — in a letter sent to the FAA on April 1 — Muilenburg & Co probably thought they could count on their power and standing in the industry as the “World’s leading aerospace OEM”. This meant that they were going to “fix” the MAX on their terms and that they would absolutely not going to let themselves be steamrolled by any new regulatory constraints — especially not when they were seemingly so cocksure that a simple software update was all that it was going to take to make the MAX the safest plane in the skies once it started flying again.

            If this course of action –or rather inaction, would not lead to the expected results, Boeing’s managers could always count on the POTUS helping them bulldoze their way through with with any non-cooperative foreign regulator, thanks in part to Muilenburg cozying up to the POTUS. In short, any other action than working on a software update was a non-starter. What could possibly go wrong?

            Well, for a starter; the reputation of the FAA has been going down the toilet and the POTUS only seems to be good at insulting allies and starting trade wars — not what you want to see when your company is depending on “foreigners” in order to get the MAX back into service.

            If Boeing had started working on a comprehensive re-design of the MAX — and not just on a simple software fix — right after the crash of Lion Air Flight 610, it should have been possible for Boeing to work through the issues in order to succeed in having the aircraft re-certificated by the middle of next year (i.e. 18 months). Now, even a 2nd half 2020 RTS may sound overly optimistic.

            https://leehamnews.com/2019/07/15/pontifications-boeing-cant-catch-a-break/#comment-277915

          • Thanks guys,

            The simple truth is the FCC doesn’t understand errors or failures. It not surprising. The CPUs are not big enough to process errors or failures. So everything kicks off.

            But please remember why this is now so relevant. The 737 MAX doesn’t have the necessary pitch authority. They are trying to address it using the FCC, they are trying to address it using software.

            But the FCC needs to address errors or failures. It doesn’t. So when it goes wrong there is nothing apart from the FCC banging out conflicting messages to confuse the pilots.

            So full circle. No pitch authority. No error, failure logic. People dead.

          • May I also add that even if the CPUS and software were there the pitch authority isn’t.

            Elevator authority isn’t there. Using a trim stabiliser to maintain pitch authority is daft and doesn’t work

            If it’s going to be done it needs a stabilator in conjuction with full authority flight computers that provide envelope protection.

            But I’m not a fan. Bottom line:

            Civil airplanes need aerodynamic authority in all three axis, pitch, yaw and roll.

            Perhaps the day will come when civil airplanes are unstable and controlled by computers. But not today.

  21. Is McNerney still on the board?

    He acted strongly to improve behavior of managers, but seemed to drift into being another corporate wonk.

    • Philip,

      Please decode your response for a layman. I get the gist of it, but I think I need an explanation of what you mean when you say the “MAX doesn’t have the necessary pitch authority.”

      • The 737 can use some flaps, slats, spoilers, and engine thrust to achieve pitch changes on the wing. But, the real bang for the buck is on the tail. The elevator and stabilizer. The elevator from what I know hasn’t changed size since the original 737 classic. The engines since then have become more powerful. The stabilizer has become more structurally strong, but, again, I don’t think it’s changed size. So, if a 737 is close to stall and you want to change the pitch quickly, you can push the yoke down to activate the elevators. Or, you can hit the trim switch and the stabilizer motor screw will start to turn. MCAS is an add on to the speed trim system, so it works on the stabilizer. Originally it was set at low speed .6 setting. Later on, it was pumped up to 2.5 setting, because of test pilot feedback. So, now you’re sitting in a plane with MCAS narrowly focused on the Left AOA vane. It’s saying to push the nose down, because it thinks the plane is stalling. The stick shaker is going off, the overspeed clacker is going off, you’re holding the yoke with all your force into your stomach as the elevator feel computer is adding yoke force and asking your co-pilot after going through Boeings checklist to try and use the manual trim wheel to relieve some of the back pressure you’re holding on the elevator. He can’t budge the wheel. So, what do you do? They flipped on the trim switch and because MCAS has no OFF switch, you’re hoping you can trim the plane up a bit before the next MCAS command. There really not much else you can do. Putting out flaps to turn off MCAS at that speed doesn’t sound like a good choice.
        The autopilot probably isn’t interested in flying the plane at that point. You don’t have the pitch authority with just the elevators to overcome the stabilizer. If you did, then you may have been able to brute force your nose up using the elevator.
        You’re fighting MCAS controlling the stabilizer down, with all your might on the elevator trying to get the nose up. MCAS and the stabilizer won this battle. The pilot lost pitch authority and control to one AOA sensor and some MCAS software controlling the pitch of the aircraft. If MCAS had a true off switch, or the pilot had some other means of controlling pitch (bigger elevator etc), then things might have been different.

      • Sorry Steve,

        I got all sorts of crap using pitch instability. So I inverted my terminology.

        I think it’s now agreed by most that the 737 MAX nose likes to go up towards stall. That means there is pitch instability.

        There are two ways to stop it. The elevators and the trim stabiliser. So they have authority in pitch, pitch authority, to stop the nose going up, to control the pitch instability.

        It appears MCAS uses the trim stabiliser because the elevators lose their authority at high AoA. But you need to go back to my previous posts on the matter for I developed a theory based on Boeing admission that the elevators lost their authority – didn’t work – at high trim stabiliser deflections. This prevented the pilots from pulling out of the dive initiated by MCAS using the trim stabiliser.

        I stress it is a theory that the elevators lose their authority at high AoA. But it is fact that the elevators lose their authority at high trim stabiliser deflections. Boeing have admitted it. So it’s deduced theory; if elevator authority is lost because of high trim stabiliser deflections then by deduction elevator authority should be lost at high AoA.

        • Philip,
          I have read many of your posts during the past few months. Is it part of our theory that the placement of the engines affect the aerodynamics of the tale and the authority of the elevators at a high angle of attack?

          • Thanks for reading my posts.

            It’s not the forward mounting of the engines. That is a good thing. The A350, the 330neo, the A220 and others have forward mounted engines. Why is it a good thing? The aerodynamics settle before it hits the wing.

            It’s the upward mount of the engine on the 737 MAX that’s the problem. In simple terms, airflow that should be flowing under the wing is flowing over it. It’s causing lift, but it’s forward lift. This moves the centre of lift forward. This is why the nose wants to move up. Nose up instability.

            Nose up instability. Hence MCAS. Hence the use of the trim stabiliser because the elevators don’t work above a certain AoA. One problem causing another problem.

            I know it’s one problem causing another and so on. But it’s engineering.

            Bottom line: The control surfaces on 737 MAX don’t have sufficient aerodynamic authority. Sufficient means the margins are not there. Boeing are trying to use computer/software to mitigate this.

            It’s been done on military airplanes. Modern military airplanes are designed to be aerodynamically unstable to increase maneuverability. But, this means they are controlled by computers/software.

            No civilian airplane has been certified as unstable and controlled by software/computers,

            If the 737 MAX is certified it will be a first. It’s nose pitches up. It wants to stall. It wants to leave the envelope. The only thing stopping it is computer/software.

            Let’s see whether they will certify it.

      • Steve, A rather technical, lengthy explanation can be found here. Not really for the layman per se, but, if you want to really get into the nuts and bolts. The author is a former Boeing engineer.
        ===============
        https://www.satcom.guru/2019/07/movable-stabilizer.html
        =================
        (from the above link)
        As mentioned already, the approach to stall can encounter pitch up at high incidence angles due to lift peaking, due to wing tip stalling or compressibility effects, and due to forward fuselage lift. A super stall, or deep stall can be encountered if the airplane pitches up as AoA increases and elevator does not have sufficient authority to command airplane nose down.

  22. My assumption was that the senior team would get the MAX back up flying, deal with the immediate crises linked to that and gracefully fall on their sword whilst pocketing many millions in (ha) compensation.

    The problem is that Boeing seems to be in paralysis. Week by week goes by and we seem no nearer a solution that satisfies the regulators. Are the execs in denial?

    • I don’t think anyone on the Board of Directors is a Pilot or Engineer except Muilenberg. Muilenberg is an Engineer. They all seem to be Finance folks, CEO’s, or Politicians.
      =============
      http://www.boeing.com/company/general-info/corporate-governance.page
      ===============
      So, if you’re Muilenberg, do you tell the Board that you’re going to redesign the 737-MAX or just put in a software patch and glad handle the FAA? They are now in a ‘sunk cost’ mentality. Do you say to the Board, we’re going to redesign the aircraft to raise the landing gear, move the engines back, and get a new type certificate after we test and re-certify the plane without grandfathering? Years ago, they should have started building a new plane, but, didn’t want to invest the money. So, now, years later, they are stuck with what they have. They made stock holders happy short term. Muilenberg wasn’t CEO years ago.

  23. Sowerbob, until the Board of Directors feel that something drastic has to change, I don’t think their direction in thinking will change. They usually have to be scared, pushed up against a wall, with no other options available, but, drastic action, before they really decide to change. Ford went through this recently, with the appointment of Alan Mulally, to save the company. The Ford family was facing total despair and finally was forced to do something drastic. I’ve only worked for a few firms that saw the headlights coming and made a decision early to change direction. Most managers wait until the headlights are about to hit them, before they start to turn the wheel. They don’t want to admit they are in the wrong lane.

  24. Are they still producing around 45 B737Max’es/month? Parking space must get tight, and if the ruling is there is some hardware updates required?

  25. Then Uncle Sammy’s help shall be urgently required… and forthcoming at the expense of our taxes😟

  26. @Scott
    so McAllister leaves today
    any prediction what are the remaining executives that will leave ?

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