Oct. 21, 2019, © Leeham News: New York: The grounding of the Boeing 737 MAX was expected to be a hot topic of conversation on the sidelines of the Wings Club event here Friday as well as two aviation conferences in town at the same time.
And it was.
How long would the grounding last? What’s the long-term impact on MAX values? How many cancellations might there be?
And then the media frenzy began and the Twittersphere went wild.
Reuters reported that a pilot at Boeing experienced, in 2016—two years before the Lion Air crash—the symptoms of a runaway MCAS in a simulator.
The pilot texted a colleague about this and observed he may have unintentionally previously “lied” to the FAA about MCAS.
Boeing discovered the pilot’s text messages in February—after Lion Air but before Ethiopian’s MAX crash—and subsequently turned the messages to the US Department of Justice, but not the Federal Aviation Administration until last Thursday.
The media chased Reuters (and me), the analysts chased the media (and me) and people at Wings and the conferences (still processing initial information) couldn’t understand why Boeing withheld information from the FAA and why the pilot’s messaging didn’t raise all kinds of red flags.
There’s been plenty of reporting about why Boeing didn’t turn over the text messages to the FAA until now.
More to the point, and as yet unanswered, is why red flags internally weren’t raised and where in the Boeing chain of command the messages stopped. I would be flabbergasted (though it wouldn’t be the first time in the MAX saga) if the texts made the way to the Chicago HQ or, perhaps, even to the top at Boeing Commercial Airplanes in Long Acres.
Regardless, the revelation is not good news for Boeing. With Congressional hearings this week, at which CEO Dennis Muilenburg will testify, the sharks will be in the water and Muilenburg has a huge gash in his leg.
This is going to be another bad week of news cycles for Boeing.
Before the above news blew up, my key takeaway from talking with people at these events is that it looks like the earliest MAX will be recertified by the FAA in December or possibly January. There is a general consensus Europe’s EASA won’t be concurrent and neither will China’s CAAC.
It’s still unclear just how much and what kind of pilot training will be required by the various regulators.
There is a growing consensus that MAX may not truly reenter revenue service until March—one year after the grounding.
While in New York, I finally was able to get confirmation of something LNA’s Bjorn Fehrm first heard in September on the sidelines of a conference in Berlin: Boeing’s opening compensation offers to airlines and lessors affected by MAX pretty much sucks.
To airlines, Boeing’s opening position is to offer credits for work by Boeing Global Services and discounts (described as steep) on 787 orders. (The 787 skyline falls off a cliff in 2022.) But no discounts on 737 or 777 orders.
Airlines are not, to put it mildly, very receptive.
Boeing’s initial offer to lessors is to reschedule MAX deliveries to 2023/24 (lessors were finding a supply-demand imbalance even before the grounding)—but pre-delivery payments and price escalations still have to be paid.
The lessors are less receptive than the airlines.
Finally, as LNA reported months ago, Boeing is also taking the position that the grounding is an “excusable delay” that protects Boeing against compensation claims. Go ahead and sue if you disagree.
Boeing also takes the position that once the FAA recertifies the MAX, this stops the clock on any claims because the FAA, not EASA, CAAC or any other agency, is the governing agency.
I picked up a lot more information but I’m still processing this.