Leeham News and Analysis
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Leeham News and Analysis
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Culture change needed at Boeing; labor contract talks begin in March and could lead the way
A Leeham News Editorial
Jan. 29, 2024, © Leeham News: If Boeing is to emerge from its latest crisis unscathed, it will need to commit to a culture change. That’s the consensus of industry watchers, and it’s one that we whole-heartedly endorse.
CEO Dave Calhoun will have a chance to show his commitment to that change starting in March, when Boeing Commercial Airplanes top management sits down with the bargaining team for its largest touch-labor union, IAM District 751.
For 20 years, Boeing has prosecuted a scorched-earth fight against its unions, in the name of cost-cutting. It has outsourced work all over the globe. It has built a whole new campus in union-hostile South Carolina, primarily to escape the “hostage” situation it faced before, with all of BCA’s deliveries at the mercy of one unionized labor force.
But while Boeing has won every battle in this long labor war, the result has not been a strategic victory. Instead, in 2024, the company finds itself badly trailing Airbus in both orders and deliveries, with little chance of catching up in the near term. This is in large part due to a series of high-profile self-inflicted failures, of which the near catastrophe on Alaska Flight 1282 on Jan. 5 is just the latest.
Boeing needs a top-to-bottom change of culture, and it can start by rebuilding its relationship with its touch-labor union.
- This year’s talks are the first in a decade.
- Boeing has zero leverage.
- Dropping union animus may be too much to ask.
Instead of progress, Boeing must deal with new crisis of Alaska Flight 1282 on Wednesday’s earnings call
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By Scott Hamilton and Judson Rollins
Jan. 29, 2024, © Leeham News: Twenty-twenty-four will be a crucial year for Boeing.
A door plug blew off a Boeing 737-9 MAX Jan. 5. The company must deal with the fallout on its 2023 year-end earnings call Wednesday. Credit: Capt. Chris Brady.
An unexpected twist is the crisis from Alaska Airlines Flight 1282, in which a door plug blew off a 737-9 MAX at 16,000 ft. Nobody died, and injuries were light. But the MAX 9 fleet was grounded in the US by the Federal Aviation Administration. The FAA launched a formal investigation into the “quality escape” that is believed to have led to the accident. Last week, the FAA put a freeze on current production rates of the 737 and, for now, killed Boeing’s plans to add a line at its Everett (WA) plant.
Beyond dealing with the 1282 aftermath, Boeing hopes this year to clear its inventory of 737 MAXes and the 787. Clearing the inventories brings cash and some profits. But will this move to the right while Boeing is under even more scrutiny by the FAA?
Boeing planned to be positioned for 2025 to pay down debt incurred during the MAX grounding and the COVID-19 pandemic. Progress toward free cash flow targets of $10bn per year by 2025/26 was forecast at its Nov. 2, 2022, investors day. This is almost certainly inoperative.
Leadership changes required at Boeing, say conference delegates
By Scott Hamilton
Analysis
Special Coverage of the Boeing Crisis
Jan. 26, 2024, © Leeham News: At the first commercial aviation conference following the Alaska Airlines Flight 1282 Boeing 737-9 accident on Jan. 5, much of the conversation was about the fallout to Boeing. Spirit AeroSystems was a topic of less conversation, even though the problem with 1282’s door plug appears to have originated with Spirit.
Aviation Week’s supplier conference was supposed to begin with a fireside chat with Boeing’s Ihssane Mounir, the head of Boeing’s commercial supply chain. Unsurprisingly, Mounir canceled the week before as the Alaska accident—in which there were no fatalities and only a few minor injuries—expanded into a full-blown crisis for Boeing.
News that the Federal Aviation Administration dropped the hammer on Boeing by freezing current 737 production rates and killing, for now, expansion of the airplane’s final assembly to the “North Line” in Everett (WA) brought disbelief that Boeing has fallen so far from what was once considered the Gold Standard of American engineering.
And, with contract negotiations beginning in March with its touch-labor union, the IAM 751, aerospace analyst Ron Epstein of Bank of America predicted that 751 has more leverage now than in recent years and Boeing will be in the weaker bargaining position.
David Calhoun, CEO of The Boeing Co.
Other than consultant Richard Aboulafia, a vociferous critic of Boeing CEO David Calhoun, speakers were willing to definitively call for changes in Boeing’s leadership. But in sideline talk, consensus was clear: “leadership” at Boeing headquarters and in Seattle with Commercial Airplanes has to go.
But there was no agreement, or even suggestions, about who should replace Calhoun and Stan Deal, the CEO of Commercial Airplanes.
Updated: FAA grounds expansion plans for Boeing 737 MAX production, approves path for MAX 9s to resume flights
UPDATING (2)
- Hundreds of 737s scheduled for delivery this year and in coming years affected by FAA action.
- IAM shares concerns with Boeing, FAA.
By Dan Catchpole
Special Coverage of the Boeing crisis
The Federal Aviation Administration froze Boeing’s 737 production rate at the current level (31/mo, 372/yr) and for now killed expansion of a 4th line in Everett. Credit: Leeham News.
Jan. 24, 2024 © Leeham News: The Federal Aviation Administration said Wednesday it will not approve a planned expansion of Boeing 737 MAX production. The agency also laid out a path to get MAX 9 airplanes back flying.
The jetliners were grounded on January 6 after a door plug blew out the day before from a two-month-old 737 MAX 9 flown by Alaska Airlines. The FAA investigation found significant quality lapses in the program. Inspection of the MAX 9 fleet found problems in other airplanes.
A few of Alaska’s Boeing 737-9 MAXes parked at SEA-TAC International Airport awaiting return to service. Credit: Brandon Farris Photography.
After grounding the 171 MAX 9 airplanes operated by Alaska (65) and United Airlines (79), the FAA “made clear this aircraft would not go back into service until it was safe,” FAA Administrator Mike Whitaker said Wednesday in a public statement (Emphasis added). “The exhaustive, enhanced review our team completed after several weeks of information gathering gives me and the FAA confidence to proceed to the inspection and maintenance phase.
“However, let me be clear: This won’t be back to business as usual for Boeing. We will not agree to any request from Boeing for an expansion in production or approve additional production lines for the 737 MAX until we are satisfied that the quality control issues uncovered during this process are resolved,” he said.
“The quality assurance issues we have seen are unacceptable,” Whitaker said. “That is why we will have more boots on the ground closely scrutinizing and monitoring production and manufacturing activities.”
Culture key to latest Boeing MAX crisis: panelists
By Scott Hamilton
Special Coverage of the Boeing crisis
Jan. 24, 2024, © Leeham News: What began as a non-fatal accident with an Alaska Airlines 737 MAX 9 on Jan. 5 has blown into a full crisis for Boeing. The company was once considered the gold standard of commercial aviation.
Today, 171 737-9s remain grounded in the US by the Federal Aviation Administration (FAA). There is no end in sight as the FAA and National Transportation Safety Board (NTSB) investigate the accident of Flight 1282 in which a door plug (an inactive emergency exit) blew off the 10 week old Alaska MAX 9 on climb out from Portland (OR).
It is the second time the MAX has been grounded. All MAX 8s and MAX 9s were grounded from March 2019 for 21 months. This grounding only affects the MAX 9.
Evidence points to Boeing quality assurance flaws in final assembly. An anonymous Boeing employee posted on LNA a detailed scenario how Boeing failed its own processes in final assembly of the Alaska plane. (His post follows this article.)
The FAA is booting more inspectors on the ground at the 737 Renton factory. On Jan. 24, Boeing shut down the 737 assembly line for a “safety stand down.” CEOs of Alaska and United airlines, the two US carriers with the 171 MAX 9s on the ground, publicly eviscerated Boeing.
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At the first aviation conference following the Alaska incident, the Aviation Week suppliers event, some speakers called for leadership changes at Boeing.
Pontifications: Boeing turns to US Navy Admiral for second time in MAX crises
Special Coverage of the Boeing crisis
Jan. 23, 2024, © Leeham News: When in trouble, Boeing turned to a retired US Navy Admiral for the second time.
By Scott Hamilton
Last week, CEO David Calhoun announced that Adm. Kirkland Donald was named as special advisor to Calhoun. “Donald and a team of outside experts will conduct a thorough assessment of Boeing’s quality management system for commercial airplanes, including quality programs and practices in Boeing manufacturing facilities and its oversight of commercial supplier quality,” Boeing said in a statement.
It’s the second time Boeing turned to an admiral in connection with 737 MAX crises. In September 2019, the company turned to one of its Board of Directors members, Adm. Edmund Giambastiani, to head a new board-level safety committee to review a plethora of safety items in Boeing Commercial Airplanes. Then-CEO Dennis Muilenburg asked the Board the previous April to establish a Board committee to review Boeing’s safety practices and recommend next steps.
At the time, the MAX had been grounded for six months, with no end in sight. (Another year and two months would pass before the Federal Aviation Administration recertified the MAX.)
Donald and Giambastiani came from the nuclear navy, where safety measures are among the world’s best. Since the creation of the nuclear navy, there have been only two instances where ships were lost—and neither of them was directly related to nuclear power.
The submarine USS Thresher was lost on a test dive in 1963. The submarine USS Scorpion was lost in 1968. The Thresher’s loss was traced to disastrous flooding at a depth from which the sub could not overcome the flooding to surface. The Scorpion’s loss remains controversial to this day. Some believe it was sunk during the Cold War by a Soviet submarine. Others believe a torpedo suffered a “hot run” accident in the torpedo room and blew up before it could be disarmed.
Certifications of MAX 7 and 10 may take hit from 737-9 grounding
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By Scott Hamilton
Jan. 22, 2024, © Leeham News: The grounding of the Boeing 737-9 MAX is likely to delay certification of the 737-7 and 737-10, customers fear.
At a minimum, certification of the 737-7 is likely to shift by months, customers suggest. Certification of the MAX 7 has been repeatedly shifting. Boeing hoped that certification would be achieved in 2022 or 2023. It’s now 2024. In December, Boeing asked the Federal Aviation Administration (FAA) for an exemption to safety standards for a deicing of the leading edge of the composite engine nacelle. There already was opposition from some pilot unions to this request. Now, with the Jan. 5 grounding of the MAX 9 due to the Alaska Airlines Flight 1282 decompression, some believe this exemption won’t be granted.
Flight testing for the MAX 7 is all but done. Boeing hoped to deliver the first MAX 7s to launch customer Southwest Airlines this year.
Flight testing for the MAX 10 is in its early stages. Certification processes were suspended during the MAX grounding, which ended in November 2020. Testing has been slow since because there are only a few MAX 10s available for testing, and due to the slow certification process for the MAX 7. One MAX 10 customer fears certification will be delayed 6-12 months. This would shift deliveries from early 2025 to later in the year or into 2026.
“Unplanned” removal, installation inspection procedure at Boeing
By the Leeham News Team
Jan. 15, 2024, © Leeham News: It’s not supposed to happen.
The door plug on the Boeing 737-9 MAX isn’t supposed to separate from the airplane in flight, as it did on Alaska Airlines Flight 1282 on Jan. 5 this year.
There is conflicting reporting whether the emergency exit or door plug is opened on the Boeing 737 final assembly line for access to the interior. Examining Google images, two photos show the exit or plug closed while over-wing exits are open. Credit: Unknown.
The investigation by the National Transportation Safety Board (NTSB) is in its infancy. Early evidence suggests four bolts intended to prevent the door plug from shifting in its attachment brackets either failed or weren’t installed. Inspections after the 1282 incident by Alaska, and United Airlines found loose bolts in other MAX 9s. The Federal Aviation Administration (FAA) on Jan. 6 grounded the 171 MAX 9s operated by the two carriers until inspections and repairs, if needed, are completed.
This photo of a Boeing 737-900ER for Turkish Airlines shows a door plug closed on the 737 final assembly line. The over-wing exits are open. Credit: Unknown.
Boeing CEO David Calhoun, while telling CNBC that he wasn’t pointing fingers, did precisely that. He said Spirit AeroSystems had a “quality escape,” adding that Boeing failed to catch it, so it also had a quality escape.
How could this happen? The NTSB probe will presumably figure this out. Spirit ships the 737-9 fuselages with the door plug installed. Conflicting reporting suggests that Spirit is supposed to install the door plugs in the final, secure condition; or these are shipped with the plugs in place but in a condition that Boeing would later secure. The NTSB will sort this out, too.
Regardless, Boeing should have inspected the door plugs and assured these are in final condition prior to delivery. The Seattle Times reported on Jan. 14 that contrary to other reports, Boeing doesn’t open or remove the door plug when the MAX 9 is in final assembly. A retired Boeing safety employee with assembly line experience says Spirit ships the door plugs in a temporary condition, expecting that Boeing may remove them during final assembly.
FAA boosts oversight of Boeing; undelivered MAX 9s have discrepancies
By the Leeham News Team
Jan. 12, 2024, © Leeham News: The Federal Aviation Administration today announced it is boosting its oversight of Boeing production and manufacturing on the 737-9 MAX.
The FAA’s been overseeing Boeing deliveries of the MAX since recertifying the airplane in November 2020. Following the discovery of production issues of the 787 in October 2020 that resulted in Boeing suspending delivery for more than a year, the FAA also assumed certification by an FAA official.
With today’s announcement, the FAA said it will add “new and significant actions to immediately increase oversight” to audit the MAX 9 production line and its suppliers to “evaluate Boeng’s compliance with its approved quality procedures.
The FAA also will increase monitoring of MAX 9 in-service events and assess the safety risks of delegated authority. The full announcement is below.
Alaska 1282 isn’t a “737 MAX” story; it’s about quality assurance at Boeing or Spirit
Update: The Federal Aviation Administration today notified Boeing it is under investigation for potentially failing to ensure the door plug was properly installed.
By Scott Hamilton
Jan. 11, 2024, © Leeham News: Alaska Airlines Flight 1282’s (AS 1282) decompression last Friday on a Boeing 737-9 MAX understandably brought new focus and doubts about the MAX program.
The MAX was grounded by the Federal Aviation Administration for 21 months after the March 2019 crash of an Ethiopian Airlines 737-8 MAX. This followed an October 2018 crash of a Lion Air MAX 8 under similar flight conditions. The two accidents were traced to the root cause of a mis-designed Maneuvering Characteristics Augmentation System, or MCAS.
Note: This data is based on October 2023 information. Full year 2023 data is not available at this writing.
When a door plug for an inactive emergency exit blew out of AS 1282 at 16,000 ft minutes after departure from Portland (OR), it meant trouble for Boeing and confidence in the MAX. Fortunately, no fatalities and only a few minor injuries resulted from the decompression. The flight returned to Portland and landed safely.
Alaska grounded its fleet of 65 MAX 9s within hours. United Airlines followed the next day. It has more MAX 9s—79—than any other airline. Shortly after United’s action, the FAA made it mandatory: the MAX 9s would remain grounded until inspections and fixes, if required, could be completed. A few other international airlines followed suit.
But as information emerged through Tuesday of this week, it became clear that this story is not a “MAX” story. It’s a story about quality assurance at Boeing or Spirit AeroSystems, the maker of the 737 fuselages and the plug door.