Boeing released Q3 results Wednesday which although not as dire as Q2 which has seen the Chicago based company record an Annus-horribilis $3.4 billion loss made miserable reading with a reported 21% decline on Q3 revenue and 51% fall in profits. Bottom line so far is that Boeing profits have, because of the 737 MAX crisis, fallen by 95% so far this year.
Q3 results have been compiled on the basis of assumption that the Boeing 737 MAX aircraft which has been grounded since March this year will regain certification before the end of this year. From what I understand talking to US contacts that seems to be an increasingly likely prospect and while this is a couple of months later than had been anticipated just a couple of months ago it is perfectly understandable that the Federal Aviation Administration (FAA) might have taken rather longer than might otherwise have been anticipated. Even so, whilst other regulatory authorities are in constant contact with the FAA there can as yet be no certainty that others, including the EASA in Europe will immediately follow suit.
It is not for me to comment that on Tuesday Boeing announced separately that the president and CEO of the commercial airplane division, Kevin McAllister is to leave the company in the wake of the 737 MAX crisis and that he is to be replaced by Stan Deal Of note also is that Boeing admitted last week that it had failed to turn over key documents to the FAA and congressional investigative committees and that include instant messages between company pilots describing what one called “egregious” problems with the 737 Max and its new flight control system in a simulator, two years before the first of those two fatal crashes. Even so and Important in the context, Boeing contends the problem the pilot experienced was actually a glitch in the simulator software, rather than in the MCAS flight control system that investigators believe is at least partially to blame for the two crashes of 737 MAX planes.
I thought that it may be useful to reprint below one of several statements put out by Boeing this week in regard of results, management and 737 MAX progress together with two sperate articles published by Reuters – the first talking about the FAA now having the final software load and complete system description that reinforces that lifting of the grounding order remains in the Q4 timeframe:
Boeing Announcement on What the Company is Doing?
In addition to providing assistance to those affected by these accidents, teams from across Boeing and our supplier partners have been working around the clock to develop software updates and conduct related flight testing, enhance future pilot training materials, engage and inform global regulators, airline customers and our suppliers, and support the existing fleet of 737 MAX airplanes.
Support for Victim Families: These two tragic accidents continue to weigh heavily on everyone at Boeing. Boeing has established a $100 million relief fund to meet family and community needs of those affected by these accidents. Fifty million dollars has been set aside for the Boeing Financial Assistance Fund, which is designed to provide immediate financial assistance to the families of the victims of the accidents. Kenneth Feinberg and Camille Biros, renowned experts in establishing and overseeing victim’s compensation funds, have been hired to design and independently administer the Boeing Financial Assistance Fund, which has already begun providing relief to impacted families.
Software Updates & Flight Testing: We updated the Maneuvering Characteristics Augmentation Software (MCAS) on the MAX by adding three additional layers of protection that will prevent accidents like these from ever happening again. To date, we have conducted more than 800 test and production flights with the updated software, totaling more than 1,500 hours. The company is making steady progress on the second software update announced in June for additional flight control computer redundancy. Some 445 participants from more than 140 customers and regulators around the globe, including the FAA, have participated in simulator sessions to experience the proposed MCAS software update. Just last week the company successfully conducted a dry-run of a certification flight test.
Customer & Stakeholder Engagement: Boeing has conducted 20 conferences across the globe with more than 1,100 participants from more than 250 organizations to help operators and financiers prepare for return to service. The company is also conducting weekly technical calls with customers worldwide to deliver the highest quality support and fully prepare the fleet to safely return to service when the grounding is lifted. This also includes a developing a comprehensive package of training and educational resources. The company is also closely engaging with more than 900 suppliers to ensure supply chain stability.
24/7 Fleet Support: Boeing is providing around-the-clock customer support through its global operations center while simultaneously delivering the highest-quality fleet support to airlines. Teams are leveraging advanced analytics, production flights, and on-site demonstrations to ready the fleet for entry-into-service once regulators lift the grounding.
What Has Boeing Changed?
We’re also taking steps to implement previously announced actions that will sharpen our focus on product and services safety. Since announcing changes on Sept. 30, we’ve already made changes in response to our Board of Directors’ recommendations:
Governance and Oversight: A specially-appointed Board Committee conducted a rigorous, five-month independent review of the company’s policies and processes and made a series of recommendations that have been adopted. Earlier this month, the company also announced that its Board of Directors has separated the roles of chairman and chief executive officer to enable Boeing President and CEO Dennis Muilenburg to sharpen his focus full time on running the company, delivering on our customer commitments, and strengthening our focus on product and services safety.
Safety Management & Engineering Focus: On Sept. 30, Boeing announced the formation of a Product and Services Safety organization that will review all aspects of product safety and maintain oversight of our Accident Investigation Team and the company’s safety review boards. The organization’s leader has been named and the team has already begun operating under its new format. Other changes made include realigning the engineering function, establishing a formal Design Requirements Program, enhancing our Continued Operation Safety Program, partnering with our airline customers on flight deck designs that continue to anticipate the needs of future pilot populations, and expanding the reach of our Boeing Safety Promotion Center.
Additional steps taken: Boeing has taken additional measures to increase its focus on operational excellence and strengthen how it manages safety across the company, its supply chain, and the broader aerospace community in an effort to advance global aviation safety. We have broadened the use of a comprehensive safety management system and safety review boards to standardize safety policy and share best practices, led by senior company leadership for enhanced visibility. We are expanding the use of our anonymous reporting system to encourage employees to keep bringing forward potential safety issues. Boeing is also taking additional measures to address the growing need for talent, especially pilots and maintenance technicians, by further investing in STEM education. And we are investing heavily in areas such as product design, future flight decks, infrastructure, regulation and new technologies.
“We continue to make steady progress in safely returning the 737 MAX to service. Our Boeing teams are unwavering in their commitment to our customers and our values, and the changes we’re implementing now will further strengthen our approach to safety across our company and the aerospace community,” said Muilenburg.
Reuters Article 1 by David Shepardson
WASHINGTON (Reuters) – Boeing Co (BA. N)
Boeing making progress toward getting its 737 MAX aircraft in the air again but the U.S. Federal Aviation Administration (FAA) will need at least several more weeks for review, FAA Administrator Steve Dickson said on Tuesday.
Dickson said at a conference of air traffic controllers in Washington that the agency had received the “final software load” and “complete system description” of revisions to the plane, which was grounded in March after two fatal crashes. The disasters, which killed a total of 346 people, and grounding of Boeing’s top-selling plane sparked a plunge in the company’s share price and disrupted operations at some of the world’s biggest airlines, prompting a huge effort by the planemaker to try to get the 737 MAX back into the skies.
But hopes of a quick return to service have slipped to become a more than seven month grounding. The FAA is currently using “aircraft production software” in the engineering simulator. The next step is to complete pilot workload management testing and have U.S. and international pilots conduct scenarios to determine training requirements before a key certification test flight.
“It is going to be several more weeks before we go through all of that part of the process,” Dickson said. “We’ve got considerable work to do.”
Separately, Boeing said that last week it successfully conducted a dry-run of a certification flight test. Dickson told Reuters last month that the FAA would need about 30 days from the time of the certification test flight before the plane could resume flights. The system description is a “500-ish page document that has the architecture of the flight control system and the changes that they have made,” Dickson told Reuters last month.
Boeing shares rose on Tuesday after two sharp days of declines following the release of instant messages on Friday from a former Boeing pilot that the company had withheld from the FAA and which raised questions about what Boeing may have known about a key safety system. That prompted an immediate demand for an explanation from the FAA about why the messages were not turned over sooner. Boeing said on Tuesday it had “made significant progress over the past several months” in its work to return the MAX to service. Dickson said once the steps were completed ahead of the certification test flight “it is a fairly straightforward process to unground the airplane.” He reiterated he would not let the 737 MAX fly again “until I am satisfied it is safest thing out there”.
Reuters Article 2 by Eric M Johnson
SEATTLE, Oct 22 (Reuters) – Boeing Co (BA. N)
Four days after leaked internal pilot messages set off a media firestorm for Boeing Co., former colleagues have defended a former pilot who voiced concerns about unreported 737 MAX software problems two years before fatal crashes.
Chief Technical Pilot Mark Forkner described in the leaked messages how MCAS cockpit software, which has since been linked to crashes in Indonesia in 2018 and in Ethiopia in March this year, was “running rampant” during a flight simulator session. The messages fueled speculation that either Boeing or Forkner or both knew about problems with the plane’s flight control software well before the two crashes which killed a total of 346 people, sending its shares sharply lower.
But two people who worked directly with Forkner at the time he wrote the messages argued the erratic behavior he described likely referred to the software on the flight simulator he was using rather than evidence of risks in the aircraft’s actual MCAS flight control system. For example, Forkner had no way of recreating the crash scenarios – when MCAS triggered off data from a single faulty “angle of attack” sensor – because there was “no technical way” to shut off one of the two sensors in the simulator, said one of the people, a former test pilot with direct knowledge of the simulator Forkner used. “It wasn’t even something they would be looking for,” he added. The Seattle Times earlier reported that the problems were connected to the simulator rather than the plane itself. Asked for comment about his former colleagues’ appraisal of the exchanges, Forkner’s lawyer David Gerger said: “He would never put himself or his friends or a passenger in a plane if he thought it was unsafe.”
A Boeing spokesman did not immediately respond to a request for comment. Boeing had tried repeatedly to get Forkner to agree to talk to the company before it turned the messages over to FAA, a person briefed on the matter said. On Sunday, Boeing said it had not been able to speak to Forkner but that he had said through a lawyer that his comments reflected a reaction to a simulator program, not the MAX itself. “In my opinion, the messages are no smoking gun,” said the second former engineering colleague, Rick Ludtke.
Forkner wrote on LinkedIn that he and Ludtke worked closely on several “high visibility projects” for the 737. “The people who knew him and understood his role could see that he wasn’t talking about MCAS in a first-person, informed way,” Ludtke said.
“WASN’T A LIE”
The former employees also said Forkner’s language gave away that he was unaware of recent changes engineers made to the MCAS cockpit software, which was still being fine-tuned before FAA certification. At another point in the conversations, Forkner says he “basically lied to the regulators (unknowingly)”, to which a colleague responds, “it wasn’t a lie, no one told us that was the case.”
The former employees said Forkner added “unknowingly” because the information he relayed to the FAA was based on what engineers had told him and that he appeared to be unaware of changes to MCAS’ function at low speeds until he witnessed it in the simulator, rendering what he told the FAA incorrect. The world’s largest planemaker is eight months into a global crisis over the safety ban of its 737 MAX in the wake of the crashes. The messages between Forkner and a colleague discussing simulator software flaws, and another batch of Forkner’s emails related to pilot training, have emerged as crucial issues in investigations into Boeing’s development of the MAX.
The reaction to the messages was harsh and immediate, with Democrat Peter DeFazio, the chair of a U.S. House committee investigating Boeing, saying the “outrageous” messages suggest “Boeing withheld damning information” from the Federal Aviation Administration. Boeing is making progress on getting the 737 MAX aircraft in the air again, but the the FAA will need at least several more weeks for review, FAA Administrator Steve Dickson said earlier on Tuesday. Boeing shares rose almost 2% on Tuesday after it put out a lengthy statement defending its actions during the crisis. Sam Graves, the top Republican on the House Transportation committee, said the leaked messages amounted to “an incomplete snapshot in time”, saying they raised a number of questions. “Most importantly, what did Boeing do with the information?” Graves said.
CHW (London – 25th October 2019)
Howard Wheeldon FRAeS
Wheeldon Strategic Advisory Ltd,
M: +44 7710 779785