Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Boeing, IAM reach tentative agreement on new contract September 8, 2024
- Bjorn’s Corner: New engine development. Part 23. Development risks. September 6, 2024
- If a strike occurs, here’s what Boeing can do September 5, 2024
- China banks on C919, but numbers say it still needs Boeing September 2, 2024
- Bjorn’s Corner: New engine development. Part 22. High Turbine technologies. August 30, 2024
FAA, Boeing meet; “They must follow through on corrective actions.” Update 3: Boeing’s issues its statement
Update #3: Boeing released its own press release. Here it is:
Boeing’s plan is based on findings from FAA audits, recommendations from the FAA’s ACSAA panel review and feedback from our employees. This Safety and Quality Plan generally fits into four categories of actions:
- Invest in workforce training
- Simplify plans and processes
- Eliminate defects
- Elevate safety and quality culture
Statement from Dave Calhoun: “After the Jan. 5 accident involving a 737 airplane, we took immediate containment and mitigation actions to ensure airplane safety. We also made the decision to slow production as we took a hard look across every facet of our operations. We listened to our employees, engaged transparently with our regulator, welcomed the findings and recommendations from the FAA’s ACSAA panel review, and invited scrutiny from customers and independent experts. Based on that feedback and oversight, today we presented to the FAA our comprehensive plan to strengthen our safety management, quality system, safety culture and ODA responsibilities.
Many of these actions are underway and our team is committed to executing on each element of the plan. It is through this continuous learning and improvement process that our industry has made commercial aviation the safest mode of transportation. The actions we are taking today will further strengthen that foundation.
We thank Administrator Whitaker and the FAA team for their feedback today and we will continue to work under their oversight as we move forward.”
Statement from Stephanie Pope: “Our plan is built on the feedback of our employees who know best how to design, build and deliver safe, high-quality airplanes. We also incorporated the requirements and feedback from our regulator and welcomed the recommendations from our customers and industry experts.
Based on that feedback, our roadmap includes major investments to expand and enhance workforce training, simplify manufacturing plans and processes, eliminate defects at the source, and elevate our safety and quality culture, along with specific measures to monitor and manage the health of our production system.
We are confident in the plan that we have put forward and are committed to continuously improving. We will work under the FAA’s oversight and uphold our responsibility to the flying public to continue delivering safe, high-quality airplanes. We are also grateful for our customers’ patience as we implement this plan and return to predictable deliveries.”
From: Stephanie Pope
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Update #2: The FAA issued the following press release in the wake of its meeting with Boeing. Boeing is expected to release its own statement today. Additional updates will be made as developments occur.
FAA Continues to Hold Boeing Accountable for Implementing Safety and Production Quality Fixes
Agency meets with company on next steps following submission of their safety roadmap
WASHINGTON – The Federal Aviation Administration (FAA) will continue to hold Boeing accountable after reviewing the company’s roadmap to fix its 
systemic safety and quality-control issues, Administrator Mike Whitaker said Thursday following a three-hour meeting with senior Boeing leaders at FAA headquarters.
In February, Whitaker directed Boeing to develop a comprehensive action plan to set a new standard for safety and how the company does business following the January 5 Alaska Airlines Boeing 737 MAX door plug incident. This roadmap is necessary to reset the safety culture at Boeing, as well as address the findings of the FAA’s special audit and the expert review panel report.
The company has developed this proposal over the last 90 days, with detailed input from the FAA throughout the process. Boeing senior leadership met with the FAA this morning to present the roadmap and discuss future implementation. Boeing is also now required to have a mandatory Safety Management System, which will ensure a structured, repeatable, systematic approach to identify hazards and manage risk.
“In the immediate aftermath of January 5, the FAA took unprecedented steps to increase oversight on Boeing. Over the last 90 days, that has meant everything from more safety inspectors in the facilities to halting production expansion. Today, we reviewed Boeing’s roadmap to set a new standard of safety and underscored that they must follow through on corrective actions and effectively transform their safety culture,” Administrator Whitaker said. “On the FAA’s part, we will make sure they do and that their fixes are effective. This does not mark the end of our increased oversight of Boeing and its suppliers, but it sets a new standard of how Boeing does business.”
Whitaker met Thursday morning with Boeing President and CEO David Calhoun and other senior leaders to discuss next steps to ensure effectiveness.
“I made clear once again that we need to see a strong and unwavering commitment to safety, which must always come first,” Whitaker said. “Systemic change isn’t easy but in this case is absolutely necessary, and the work is never really done when it comes to the safety of the flying public – from Boeing, airlines, or the FAA. But we will hold the company accountable every step of the way to make sure these changes happen.”
The FAA communicated with Boeing officials throughout the last 3 months, including 30- and 60-day check-ins, to ensure they clearly understood the agency’s expectations and were making real-time progress.
The agency required Boeing to provide a detailed update on completed actions as well as mid- and long-term actions Boeing will take. These actions include:
- Strengthening its Safety Management System, including employee safety reporting
- Simplifying processes and procedures and clarifying work instructions
- Enhanced supplier oversight
- Enhanced employee training and communication
- Increased internal audits of production system
Additionally, Boeing had to identify the results of completed actions and how it will monitor those and future actions to validate progress and sustain the changes.
To ensure long-term success, the FAA will actively monitor review Boeing’s progress in a variety of ways, including:
- A team of FAA subject matter experts will continually review Boeing’s progress and the effectiveness of the changes in addressing the audit findings and expert panel recommendations
- Senior FAA leaders will meet with Boeing weekly to review their performance metrics, progress, and any challenges they’re facing in implementing the changes
- They also will conduct monthly reviews to gauge Boeing’s progress
The FAA will continue its enhanced oversight of Boeing and its suppliers. This includes:
- More safety inspectors in the Boeing and Spirit AeroSystems facilities
- More conversations with company employees to gauge the effectiveness of changes
- Additional inspections at critical points of the production process and auditing of the production process
- Monitoring quality system metrics to identify any areas of concern
Additional actions the FAA has taken as part of its aggressive oversight of Boeing and its suppliers include:
- Immediately grounded 171 Boeing 737-9 MAX aircraft operated by U.S. airlines or in U.S. territory.
- Increased onsite safety inspector presence at Boeing’s facility in Renton, Washington, and Spirit AeroSystems’ facility in Wichita, Kansas.
- Halted production expansion of the Boeing 737 MAX.
- Administrator Whitaker visited to Boeing’s factory floor in Renton, Washington, to see the 737 production line and hear directly from Boeing engineers, mechanics, and others about quality control processes. He has actively encouraged all whistleblower complaints, and the FAA investigates every single one.
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- Concluded an audit of Boeing’s production line that went above and beyond FAA’s standard inspection process. The FAA identified non-compliance issues in Boeing’s manufacturing process control, parts handling and storage, and product control. Our audit is complete but it is part of an ongoing investigation, and we cannot release further details.
- The FAA continues to issue airworthiness certificates for every newly produced Boeing 737 MAX.
Original story:
FAA appears poised to grant Boeing extension on safety report; FAA issues denial (Update)
Update #1: The FAA today said it has not granted an extension for Boeing to submit its report. This story will be updated as developments occur.
By the Leeham News Team
May 29, 2024, © Leeham News: The Federal Aviation Administration (FAA) appears poised to give Boeing a 90 day extension on the 90 days required to come up with an actionable plan to improve safety on its production lines, LNA is told.
Then, according to this information, Boeing will be given three years to implement whatever is finally approved by the FAA.
Boeing CEO David Calhoun is scheduled to deliver the 90-day plan to the FAA tomorrow.
LNA reported on April 18, 45 days into the 90-day mandate, that Boeing would unlikely meet the FAA deadline.
Related article
Safety plan spurred by Alaska accident
In our April 18 post, we wrote, “The Federal Aviation Administration (FAA) on Feb. 28 gave Boeing three months to address ‘systemic quality-control issues,’ a move sparked by new safety concerns following the Jan. 5 accident of Alaska Airlines flight 1282. A 10-week-old 737-9 MAX was minutes into climb-out from the Portland (OR) airport when a door plug blew out, prompting explosive decompression of the cabin. Nobody died but there were injuries and damage throughout the cabin.
“’FAA Administrator Michael Whitaker told Boeing that he expects the company to provide the FAA a comprehensive action plan within 90 days that will incorporate the forthcoming results of the FAA production-line audit and the latest findings from the expert review panel report, which was required by the Aircraft Certification, Safety, and Accountability Act of 2020,’ the FAA said in the Feb. 28 press release.”
It’s unknown if the FAA will publicly release the Boeing proposal.
Boeing seems to have dropped the overused “Safety is our No. 1 Priority” and replaced it with Nothing is more important than safety.
“Take all the time you need, Boing; we got your back.”
Looks like Boing has the right friends in the highest places. Does this mean Boing does *not*- contrary to some media reports- have to deliver on safety now? And that the FAA
is, in fact, a toothless tiger?
#unsurprised #moarPR
I guess they really couldn’t agree on a new toilet paper supplier in 90 days, let alone come to a consensus on a change in company culture.
I wonder if it has to do with the top slot and trying to line up the next person in the hot seat. Was Boeing able to convince them that it was best to wait until they had someone under agreement and then to proceed forward with the new Chief’s vision?
So it appears that the US DoJ *will not prosecute* Boing for their
being grossly out of compliance with their previous [sweetheart] Boing 737 MAX Deferred Prosecution Agreement, according to the NYT today.
Knock me over with a feather, I’m so surprised! Odd, too, that there is so little media coverage -in any venue any venue any venue- of Boeing’s recent travails.
Almost like that concentration of power has Friends in all the significant places.. such poor theatre even for the Rubes.
Three years for implementation?
That could give them 2.5 to do nothing?
I hear ya.
Moar theatre..
Better to have a high quality outcome than an artificial deadline.
Who says there’ll be a high-quality outcome?
The re-certed MAX was supposed to be “the most scrutinized plane in history”…but we now know how low-quality that scrutiny was, don’t we?
this..
“Who says there’ll be a high quality outcome?”
Oh, this indeed: “We’re Boing, and We Do Whatever the Phuck We Want”- with the bought-and -paid-for gub’mint fig-leaf apparatus providing cover.
What a world.
I understand that they have a monumental task at hand, and it can’t happen overnight. However, I would expect that within that 3 year timeframe, there must be some hard milestones that have to be met. Possibly so more in the early days, and then fewer as time progresses. And if those are not met, there should be some dire consequences.
But then again, those lobbyists certainly will make sure that it won’t be that drastic.
Yes, take all the time you need Boeing. Keep shoveling that free cash flow out to the shareholders and execs. Then when the company collapses in a heap only the taxpayers will be left holding the bag.
Take the money from the Boeing executives. Make it hurt them personally, not the company that hands them golden parachutes.
I get itchy when I read those sentences like “Safety is our No. 1 Priority” and “Nothing is more important than safety”.
For most normal companies, being in business in 10 years is the most important item on the agenda. And how to be in business in 10 years (and thereafter)? To have a good safety reputation. How to deal with safety in the particular company is therefor the most important, IMHO.
That is why I always advice to rewrite the safety policy in terms of how the world wants to see your company in ten years.
I mean, what even means “We strive for first-time quality” (see the safety policy of Boeing)? Wouldn’t it be better to state that no aircraft leaves the factory with any quality deficiencies? It is perfectly acceptable if you fix mistakes later in the production process before the aircraft leaves the factory, on the basis of vigilant workers that can report any quality escapes they see, feel and hear down the line.
I wonder how these generous extensions/exemptions will affect (foreign) airlines’ appetite to place orders at McB.
“Three years to get the basics in order? God only knows what new screw-ups will materialize in that time. No, thanks, we’ll take our chances elsewhere…slots or no slots”
What exactly will they do? Wait until Airbus has a free slot sometime in 2030s ? Ironically, COVID has been a blessing in disguise for Boeing. If not for the production disruption it caused worldwide, Airbus would be probably pushing out 85 planes per month right now easily grabbing the lion share of narrowbody market. And Boeing would still have the same problems caused by their safety and quality problems.
I suspect that many slots are going to appear in Airbus’ order book in the coming years as a result of economy-driven deferrals.
American Airlines gave a gloomy outlook just a few days ago, Lufthansa and AF-KLM made recent losses, Bonza in Australia is in receivership…all at a time when consumer savings have been depleted, inflation isn’t yet under control, and a hard landing scenario may be on the cards for the US economy.
Didn’t UA recently manage to find relatively early A321neo slots? If you look at the recent Saudi A321 neo order, there are also some relatively early slots there. I suspect that the “lack of slots argument” may be a (predominantly) Boeing marketing ploy, to frighten customers who are thinking of defecting.
‘ I suspect that the “lack of slots argument” may be a (predominantly) Boeing marketing ploy, to frighten customers who are thinking of defecting.’
Pretty weak strategy. All it requires is to pick up the phone and call AB.
Saudia is getting A321’s from 2026 to 2032.
But I think it’s window dressing for investors, so that they’re under the impression that any new orders from airlines seeking aircraft can only order from BA, if they want them early.
In theory there is a lack of slots, if you look at the orders vs production that is blatantly obvious and also obvious its stuff that Leeham has posted on.
But if Airbus wants to get slots, then they can negotiate with the other buyers. Parts, services, discounts, they can and obviously do anything.
Right now slots are dear, people want aircraft as opposed to Covid and don’t want them.
So Airbus is going to use their in play orders in a way that takes airlines not just orders (American) away from Boeing.
Saudi was clearly an order Airbus wanted so they used their leverage to get them. What it cost them? Only Airbus knows.
But just ask Airbus and they need free lunch money for the next airplane!
Can Boeing deliver any earlier IRL? Appears Boeing 737 MAX built rate hovers around mid-teen.
Commenter ‘JS’ appears to be saying “fly Boing- ‘cuz you have No Alternative’. I’ll pass on that, myself.
While McB takes 3 years to get its house in order (cosmetically, at least), what will line rates be doing?
“Boeing delivers 11 MAX aircraft so far in May, says Barclays” (dated May 22)
“Barclays analyst David Strauss tells investors in a research note that Boeing has delivered 11 MAX aircraft so far in May, consisting of a mix of aircraft that were produced prior to the grounding being lifted in late 2020 along with aircraft that have been produced since then. The firm estimates 27 MAX deliveries so far in Q2 and that 105 of the MAX aircraft that are still in inventory are aircraft that have been in storage since the grounding. ”
https://www.tipranks.com/news/the-fly/boeing-delivers-11-max-aircraft-so-far-in-may-says-barclays
Yes, you read that correctly: 27 MAXs in 2 months. And some of those were taken from the corroded outcasts in storage — so there was no profit on those ones. No wonder Bloomberg expects $8B in cashburn in H1.
https://www.bloomberg.com/news/articles/2024-05-30/boeing-set-to-provide-action-plan-to-address-faa-safety-concerns
That means that, of the extra $10B that McB borrowed just a few weeks ago, 80% will be burned off before July.
Chapter 11, anyone?
p.s. McTanker deliveries have been at zero for the past 2 months, due to a new probleem with the boom (surprise!)…so there’s no revenue coming from that program, either.
If it walks like a financial wreck, and quacks like a financial wreck, it’s probably safest to assume that it is a financial wreck.
It’s interesting because for any kind of company action plan to be credible, there does have to be high confidence that the financial aspect of that plan is realistic too. Plans that are obviously not compatible with the company’s financial condition cannot (by definition) be delivered; one may as well close it down straight away. Whereas plans that are compatible with the company’s financials are suspect, where those financial conditions are dire.
Bottom line was the post I made yesterday that a financial analyst still thought Boeing was below market value.
Technically its true, but the big truth is only the defense side could be sold off.
Who would buy the BCA division (55-60% of Boeing). ?????
Not an operation in the world (well Comac) that could pay for let alone manage BCA.
What financial “analyst”?? 🤔
Why 3 years?
Is it that they expect it to be done in eg 18 months but don’t want the publicity of Boeing requesting another extension?
Does it tie in with specific personell changes, stock schedules etc.?
Does it allow BCA to go as slowly as possible without compromising commercial contracts?
Is it based on experience with some other enterprise(s)?
Is it just a random “we went for 3 months to create the plan, what’s say we g with 3 years to action it?”
I wonder the same as Abalone what airlines will think of a horizon so far out.
I think most people do not understand what the FAA goal is.
They are not working to put anyone out of business, as much as many would like to see that happen.
Regulatory wise what they want is a plan and then a process of implementing that plan.
The FAA has been informed of the steps etc.
Is it enough? Have to see.
But even with best intentions (and yes we have to questin Boeing on that) it takes time to correct a messed up company. The FAA wants Boeing to build aircraft the way the regulations say.
Its not their job to kill a company. It may be the end result but that is not the FAA brief. Legal actions for crimes are the DOJ and the company health is per the market.
Playing with fire, and the FAA knows it !!!
Are there any Boeing Retrofit companies around that I can invest in?
Company’s that can bring 737 NG’s into refurbished new status? Or is the fuel efficiency that much of a determent between a 737-NG and an Airbus 320 economically speaking?
Changing the process is one thing while changing the culture is something that requires a new CEO from the outside. However neither the board nor the shareholders want this change of culture.
That is hard to argue with and clearly when the investors voted to keep Calhoun on the board they made a statement.
That was in the face of a recommendation to not only him but (two or three) others.
I am writing with the benefit of the update to this article – that the FAA has flat out denied that it’ll give Boeing more time.
So, Boeing has run out of time. This, as they say, is it. Either the company has been *phenomenally* convincing, or the FAA has (seemingly) girded itself and is ready to impose a proper, stinging safeguarding action.
I just hope that the FAA has been careful to involve its peer regulators as much as possible around the world.
If the FAA gives the plan a thumbs down, I really, really hope the US politicians back them up. Otherwise this thing is going to get politically messy pretty quickly, and will start involving overseas governments. The FAA personnel would be in the middle of that ****storm, and that wouldn’t be fun.
In theory Boeing met the requirement to HAVE A PLAN, not to have it implemented and fixed.
The FAA now gets into the part of Boeing implementation of that plan and assess it as happens or fails to.
Can the FAA (or the DOJ) make it painful enough for Boeing execs (claw back pay or stock options) that they’ll get off their tails and actually do something besides re-arrange the deck chairs? Something that threatens to crash the stock price might just do the trick…
The FAA has no legal authority to do claw back. In fact the DOJ does not, the board does.
The FAA can impose restrictions on production, stop production completely if they think its failed that far.
So as a knock on yes the FAA can wind up impacting a company, but that is not the basis of what they do.
Its to correct issues (in this case) with mfg certification that are not being met.
Congress is looking over the FAA’s shoulder:
“Whitaker is scheduled to brief the House Transportation and Infrastructure Committee on Boeing’s plan on June 4.”
https://www.upi.com/Top_News/US/2024/05/30/boeing-faa-quality-control-plan/3261717088596/
Keeping in mind who controls the House of Representatives no matter how tenuously.
All Boeing has to do is slip certain people some nice campaign contributions and …….
Nothing is going to happen until the election and then it depends on how said election goes.
Granted for the first time in history we get to vote for (or not) a felon for president (officially, granted many should have been convicted in the past)