Boeing's problems are mounting and things are going to get worse before they get better
AP Photo/Elaine Thompson
- Boeing has been through a tough month as it faces a bevy of lawsuits and investigations.
- However, it may have even more serious and fundamental issues to confront such as fixing the design flaw in 737 Max, regaining the trust of passengers and crew, and maybe even coming up with a replacement for the 737 Max.
- The global fleet of 371 Boeing 737 Max airliners have been grounded since the crash of Ethiopian Airlines Flight ET302.
- Visit Business Insider's homepage for more stories.
It's been a tough 30 days for Boeing. In the month since the tragic crash of Ethiopian Airlines Flight ET302, the American aviation giant has seen its hot-selling 737 Max airliner grounded, its stock plunged 10%, and its reputation tarnished by the scandal.
Boeing admitted last week that a faulty sensor triggered the 737 Max's Maneuvering Characteristics Augmentation System or MCAS on both the Lion Air Flight JT610 and the Ethiopian Airlines plane. The system's activation precipitated nose dives that likely led to both crashes.
"The 737 Max grounding and what we are learning from it shows that this is not the typical airplane accident we've seen in the past and this is not the typical airplane grounding we've seen recently," Henry Harteveldt, travel industry analyst and founder of Atmosphere Research Group, told Business Insider. "This is a very serious problem for Boeing and a big problem for the airline operators and a problem I don't think will be easy to fix."
This week, Boeing investors filed a proposed class-action lawsuit in Chicago alleging the company defrauded its shareholders by failing to reveal potential safety shortcomings of the 737 Max airliner after two fatal crashes in five months.
Lawyers representing the 346 victims of Lion Air Flight JT610 and the Ethiopian crash have filed multiple suits against Boeing.
Boeing's troubles are mounting and things are going to get worse before it gets better.
The US Department of Transportation has commenced an audit on how the Federal Aviation Administration managed to certify the 737 Max to fly with substantial control issues.
Boeing and the FAA's cozy relationship has come under scrutiny from members of Congress.
Certification issues aside, Boeing will have to answer for the design flaw that is at the heart of the controversy surrounding the 737 Max in the coming weeks and months.
To fit the Max's larger, more fuel-efficient engines, Boeing had to position the engine farther forward and up. This change disrupted the plane's center of gravity and caused the Max to have a tendency to tip its nose upward during flight, increasing the likelihood of a stall. In response, Boeing created MCAS as a software fix to automatically counteract that tendency and point the nose of the plane down when the plane's angle-of-attack (AOA) sensor triggers a warning.
"MCAS was a band-aid that infected the wound instead of healing it," Ross Aimer, an aviation consultant and former Boeing 787 training captain, said in an interview with Business Insider.
"Since you have two (AOA sensors) in order to get certified, why not use them, I just don't understand it," aviation consultant and former aeronautical engineer Robert Mann told Business Insider in an interview.
"From a design perspective, it doesn't make any sense."
Pilots and passengers don't trust the 737 Max
One of the 737 Max's greatest selling points was the idea that it could be easily integrated into existing 737 fleets with minimal additional training. Since the 737 has long been one of the most dependable airplanes in the world, this congruency helped make the 737 Max a hot seller.
However, the 737 Max is a very different plane from the 737NG it replaced. It has new engines mounted in a different location, redesigned wings, and new avionics. These are all things the pilots knew about.
What they didn't know was that MCAS had been installed on the 737 Max. Pilots found out about MCAS being on the plane after the Lion Air 737 Max crash into the Java Sea on October 28.
Aimer, who is the CEO of Aviation Consulting Experts and a retired United Airlines Captain, feels like Boeing put money ahead of the well-being of passengers and crew.
"Boeing kept that from us purely because they didn't want to bother the airlines with some extra training," he told us. "This was purely a monetary decision on behalf of Boeing and the airlines themselves to keep this away from the pilots and the result was disastrous."
And then there's the traveling public.
A poll conducted by Business Insider a week after the Ethiopian crash showed that 53% of American adults would not want to fly on a Boeing 737 Max even after the FAA clears the aircraft for service.
"The 737 Max has stained Boeing's brand reputation," Harteveldt said. "This can't be denied."
Business Insider reached out to Boeing for comment on the matter. A Boeing spokesperson noted that company CEO Dennis Muilenberg made a speech on Thursday touting the need to regain public trust.
"We know every person who steps aboard one of our airplanes places their trust in us," Muilenburg said in the speech. "We'll do everything possible to earn and re-earn that trust and confidence from our airline customers and the flying public in the weeks and months ahead."
"We take the responsibility to build and deliver airplanes that are safe to fly and can be safely flown by every single one of the professional and dedicated pilots all around the world," the Boeing CEO added.
Boeing might need a replacement for the 737 Max
The Boeing 737 Max is the fastest-selling plane in Boeing history. It's the latest generation of Boeing's money-making 737 family of airliners.
The various versions of the Boeing 737 currently account for 80% of Boeing's 5,800-plane order backlog.
It's going to be an uphill battle for Boeing to restore confidence in the grounded jet.
"You can't hide the 737, you've got thousands of them of all types flying worldwide today for airlines," Harteveldt said.
As a result, you can't simply rebrand the plane.
MARK RALSTON/AFP/Getty Images
MARK RALSTON/AFP/Getty Images
Therefore, Boeing is going to either have to convince people to fly the 737 Max or come up with a replacement.
"Yes, (737 Max) is the last iteration," Teal Group aviation analyst Richard Aboulafia told Business Insider in March. "They ran out of steam in terms of range and capacity."
That means whichever aircraft Boeing chooses to replace the 737 will be a clean sheet design.
It's not all gloom and doom for Boeing
The situation Boeing finds itself in is not insurmountable.
Aimer said Boeing's engineering team should be able to come up with an effective fix for the 737 Max.
"They can fix this issue, right now they need to be honest and forthright and try to fix this issue to the best of their ability," Aimer said.
Stephen Brashear / Stringer / Getty Images
Stephen Brashear / Stringer / Getty Images
"Boeing has to become a bit more of a consumer-facing organization to reinstill confidence in its brand so that the saying 'if it's not Boeing I'm not going' can be said again with pride by travelers," the analyst said.
On the other hand, Mann believes Boeing won't have to do much to get people to return to the 737 Max.
"Once the airplane routinely does what it's designed to do and safely, all of this goes away. And it's crass to say it, but the fact is the traveling public has a very short memory," Mann said.
Get the latest Boeing stock price here.