[Peetwo]

Flawed to the MAX - Nader to Muilenberg 

Very damning letter from Ralph Nader to the Boeing CEO...  :

Letter to Dennis A. Muilenburg, CEO of Boeing

By Ralph Nader
April 25, 2019
Dennis A. Muilenburg
Chairman, President and
Chief Executive Officer
The Boeing Company
100 North Riverside
Chicago, IL 60606

Dear Mr. Muilenburg:

On April 4, 2019 you somewhat belatedly released a statement that “We at Boeing are sorry for the lives lost in the recent 737 MAX accidents. These tragedies continue to weigh heavily on our hearts and minds….” You added that a preliminary investigation made it “apparent that in both flights” the MCAS “activated in response to erroneous angle of attack information.”

These and other remarks reflect years of mismanagement by Boeing executives, now tragically bearing bitter fruit. Your acknowledgement of the problems with the 737 MAX somehow escaped inclusion in your messages to shareholders, the capital markets and the Securities and Exchange Commission. It is now stunningly clear that your overly optimistic outlook on January 20, 2019 – after the Indonesian Lion Air crash – was misleading. Whatever the public learns, day after day about the troubles of your company, it is still far less than what Boeing knows will come out day by day, and not just about the deadly design of the 737 MAX.

Your narrow-body passenger aircraft – namely, the long series of 737’s that began in the nineteen sixties was past its prime. How long could Boeing avoid making the investment needed to produce a “clean-sheet” aircraft and, instead, in the words of Bloomberg Businessweek “push an aging design beyond its limits?” Answer: As long as Boeing could get away with it and keep necessary pilot training and other costs low for the airlines as a sales incentive.

Boeing kept on this track until the competition from its only competitor, Airbus, came along with its A320neo. The year 2011 was a crucial period for the company. Top management was into preliminary work on a new aircraft and then panicked over Airbus’s success. To compete with Airbus, Boeing equipped the 737 MAX with larger engines tilted more forward and upward on the wings than prior 737’s. Thus began the trail of criminal negligence that will implicate the company and its executives. The larger engines changed the center of gravity and the plane’s aerodynamics. Boeing management was on a fast track and ignored warnings by its own engineers, not to mention scores of other technical aerospace people outside the company. The Maneuvering Characteristics Augmentation System (MCAS) software fix or patch with all its glitches and miscues is now a historic example of a grave failure of Boeing management. Yet, you insist the 737 MAX is still safe and some alteration of the MCAS and other pilot advisories will make the aircraft airworthy. Aircraft should be stall-proof, not stall-prone. Trying to shift the burden onto the pilots for any vast numbers of failure modes beyond the software’s predictability is scurrilous. Deplorably you are still pushing to end the grounding for the 737 MAX and resume delivery of nearly 5000 orders worldwide. The Boeing 737 MAX must never be permitted to fly again – it has an inherent aerodynamic design defect.

No matter your previous safety record of the 737 series, Boeing doesn’t get one, two or more crashes that are preventable by adopting long-established aeronautical knowledge and practices. You are on the highest level of notice not to add to your already extraordinary record of criminally negligent decisions and inactions. Result – 346 innocent people lost their lives.

A reckless salesman, driving dangerously to reach a customer and close a deal, causing a collision and death of a family in another motor vehicle, does not get to be exonerated from a manslaughter prosecution by saying he has a 25 year good driving record.

Boeing management’s behavior must be seen in the context of Boeing’s use of its earned capital. Did you use the $30 billion surplus from 2009 to 2017 to reinvest in R&D, in new narrow-body passenger aircraft?  Or did you, instead, essentially burn this surplus with self-serving stock buybacks of $30 billion in that period? Boeing is one of the companies that MarketWatch labelled as “Five companies that spent lavishly on stock buybacks while pension funding lagged.”

Incredibly, your buybacks of $9.24 billion in 2017 comprised 109% of annual earnings. As you well know, stock buybacks do not create any jobs. They improve the metrics for the executive compensation packages of top Boeing bosses. Undeterred, in 2018, buybacks of $9 billion constituted 86% of annual earnings.
To make your management recklessly worse, in December 2018, you arranged for your rubberstamp Board of Directors to approve $20 billion more in buybacks. Apparently, you had amortized the cost of the Indonesian Lion Air crash victims as not providing any significant impact on your future guidance to the investor world.
Then came the second software-bomb that took away control from the pilots and brought down Ethiopian Airlines Flight 302 on March 10, taking the lives of 156 passengers and crew. At the time, you were way overdue with your new software allegedly addressing the avoidable risks associated with the notorious 737 MAX.

Don’t you see some inverted priorities here? Don’t you see how you should have invested in producing better aircraft, if you wished to compete with Airbus, whose engineers were allowed to do their job and avoid design instabilities? Instead, your top management was inebriated with the prospect of higher stock values, through stock buybacks and higher profits by keeping your costs lower with that “aging design” of the Boeing 737s. It now is apparent that you guessed wrong – big time for your passengers as well as for your company and its shareholders.

Boeing is in additional trouble that reflects poor management. On March 22, 2019, the Washington Post reported that NASA’s Administrator, Jim Bridenstine said “the agency is considering sidelining the massive rocket Boeing is building because of how far behind schedule it is.”

According to a second Washington Post, March 22, 2019 article, the delay in the “scheduled maiden launch in June 2020” and the “billions of dollars over budget” had NASA’s leaders in a fury. Last year, NASA’s inspector general excoriated your company, revealing it has already spent over $5 billion and is “expected to burn through the remaining money by early this year (2019), three years too soon, without delivering a single rocket stage,” wrote the Post.

On March 13, 2019, Bridenstine said “although NASA still steadfastly supports the massive rocket, known as the Space Launch System (SLS), the agency would consider sidelining it and instead using commercially available rockets for the mission known as Exploration Mission-1 (EM-1).” This announcement before the Senate Commerce, Science and Transportation Committee “set off shock waves… a major blow to NASA’s flagship rocket program and its main contractor, Boeing.”

And now, the agency is about to announce another major delay in the high-profile spacecraft Boeing is building to fly astronauts to the International Space Station.

On March 28, 2019, the World Trade Organization (WTO) after 14 years, issued a final ruling that Boeing received an illegal U.S. tax break from the state of Washington in prohibited subsidies under international trade rules. Boeing has long been a recipient of various kinds of extensive corporate welfare before and after it became a U.S. monopoly.

Then on April 21, 2019, the New York Times in a lengthy front-page story, based on “internal emails, corporate documents and federal records, as well as interviews with more than a dozen current and former employees,” reported that your South Carolina factory, which produces the 787 Dreamliner, “has been plagued by shoddy production and weak oversight that have threatened to compromise safety.” These problems have persisted notwithstanding two documentaries, commencing in 2013, produced by Al-Jazeera investigators reported similar problems. The Air Force last month temporarily stopped deliveries of the KC-48 tanker after finding random objects inside the new planes, causing Will Roper, Assistant Secretary of the Air Force to exclaim “To say it bluntly, this is unacceptable.”

It is not as if you are receiving anything but top dollar payments for these civilian and military aircraft. Or, you are underpaid at over $23 million in 2018 which comes to over $12,000 an hour.

In the midst of these accusations, whistleblower lawsuits, alleged retaliations by management, the Times reports your pace of production “has quickened” and that you are eliminating “about a hundred quality control positions in North Charleston [South Carolina].”

Boeing shareholders and your compliant Board of Directors should be advising you that the scheduled one hour annual shareholder meeting is not nearly enough time for you to explain these matters to shareholders in Chicago on April 29, 2019. Big corporations are run like top-down dictatorships where the hired hands determine their own pay and strip their shareholder owners of necessary powers of governance. Do not push this envelope, further. Your Board of Directors should disclose what you told them about the 737 MAX and when they knew it.

Already, corporate crime specialists are making the case for you and other top Boeing managers, having refused to listen to the warnings of your conscientious engineers, regarding the redesign of the 737 MAX, to face criminal prosecution. Note BP pleading guilty in the Deepwater Horizon oil spill, to eleven counts of manslaughter in 2013.

Already, the kindly corporate crisis specialists are issuing warnings, along with the mild ones by the shareholder service firms such as Institutional Shareholder Services (ISS), which urges separation of the roles of the Chairman of the Board and CEO, both of which you hold. Further, Glass Lewis urges removal of Boeing audit committee head Lawrence Kellner for “failing to foresee safety risks with the 737 MAX aircraft,” reported the Financial Times, on April 16, 2019.

Consider, in addition, the statement of two Harvard scholars—Leonard J. Marcus and Eric J. McNulty, authors of the forthcoming book, You’re It: Crisis, Change, and How to Lead When it Matters Most. These gentlemen did not achieve their positions by using strong language. That is why, the concluding statement in their CNN article on March 27, 2019, merits your closer attention:

“Of course, if Boeing did not act in good faith in deploying the 737 Max and the Justice Department’s investigation discovers Boeing cut corners or attempted to avoid proper regulatory reviews of the modifications to the aircraft, Muilenburg and any other executives involved should resign immediately. Too many families, indeed communities, depend on the continued viability of Boeing.”

These preconditions have already been disclosed and are evidentially based. Your mismanagement is replete with documentation, including your obsession with shareholder value and executive compensation. There is no need to wait for some long-drawn out, redundant inquiry. Management was criminally negligent, 346 lives of passengers and crew were lost. You and your team should forfeit your compensation and should resign forthwith.

All concerned with aviation safety should have your public response.

Sincerely,

Ralph Nader
P.O. Box 19312
Washington, DC 20036

Via Oz Aviation:

FAA to host briefing of civil aviation officials on Boeing 737 MAX

written by australianaviation.com.au April 26, 2019

A file image of the Boeing 737 MAX tail and winglets. (Boeing)

The United States Federal Aviation Administration (FAA) has invited leading civil aviation officials from around the world to a meeting on May 23 to discuss the grounding of Boeing 737 MAX aircraft after two fatal crashes, media reports say.

The meeting was “intended to provide participants the FAA’s safety analysis that will inform its decision to return the 737 MAX fleet to service in the US when it is made”, the Reuters news agency reported on Thursday (US time).

Meanwhile, the FAA told Agence France-Presse the session would “discuss the agency’s activities toward ensuring the safe return of Boeing 737 MAX to service”.

The FAA said the meeting would be for regulators only, with no participation from industry.

This May 23 gathering in Washington DC was in addition to international authorities and experts from aviation regulatory bodies in nine countries – Australia’s Civil Aviation Safety Authority (CASA) included – starting a 90-day review of aircraft safety on April 29 following the crashes of two 737 MAX aircraft operated by Lion Air and Ethiopian Airlines in October 2018 and March 2019 respectively, killing 346 passengers and crew.

Officials from China, the European Aviation Safety Agency, Canada, Brazil, Australia, Japan, Indonesia, Singapore and the United Arab Emirates will take part in that 90-day review chaired by former National Transportation Safety Board Chairman Chris Hart. They will focus on the certification of the 737 MAX’s automated flight control system.

Given that 90-day timeframe, the grounding of the aircraft globally is unlikely to be lifted until late July. However, the FAA has previously said a decision on whether to lift that grounding was separate to the review.

A file image of a Boeing 737 MAX flight deck. (Boeing)

Boeing has been working on a software update to the Maneuvering Characteristics Augmentation System (MCAS) following the crash of a Lion Air 737 MAX 8 in October 2018. It has still to submit that software to the FAA for approval.

The airframer said recently it had completed the final test flight with the updated software. There is still a certification flightwith the FAA to come.

Boeing chief executive Dennis Muilenburg on a 737 MAX 7 test flight for the MCAS software update. (Boeing)

A supplied picture of a Boeing 737 MAX 7 landing on April 17, 2019 after a technical demonstration flight for the MCAS software update. (Boeing)

Norwegian delay

Meanwhile, low-cost carrier, Norwegian Air Shuttle ASA has arranged with Boeing to delay the purchase of 14 737 MAX aircraft due for delivery in 2020 and 2021.

It presently has 18 737 MAX aircraft lying idle because of the grounding. Norwegian chief executive Bjorn Kjos told media this week the impact of the grounding could cost the airline US$60 million (A$85.5 million).

& via CBS News:

At least 4 potential whistleblower calls made to FAA about Boeing 737 Max

BY KRIS VAN CLEAVE
APRIL 29, 2019 / 4:15 AM / CBS NEWS

https://www.cbsnews.com/video/4-potentia...-max-jets/

The Federal Aviation Administration has received at least four calls from potential Boeing employee whistleblowers about issues with the company's new 737 Max jetliner, CBS News has confirmed.



The calls began coming in within hours of Ethiopian investigators releasing a preliminary report on the second of those crashes, that of Ethiopian Airlines Flight 302 last month.


A source familiar with them confirms the April 5 calls were from current and former Boeing employees alleging possible issues related to the angle of attack (AOA) sensor and the MCAS anti-stall system that relies on data from the sensor.


Both have been linked to the two deadly 737Max crashes that killed nearly 350 people and lead to the grounding of the aircraft worldwide.


One of the claims deals with damage to the wiring of an AOA sensor from a foreign object.


Boeing said it could not verify the report but in a statement tolds CBS News, "Safety and quality are absolutely at the core of Boeing's values. Speaking up is a cornerstone of that safety culture and we look into all issues that are raised."


A Boeing source was skeptical of that particular whistleblower allegation, saying that as far as he knows, there have been "no reported issues...at all" with foreign object debris damage to AOA sensors or their wiring.


But, as CBS News confirmed last week, Boeing has had issues with foreign object debris (FOD) being found in the company's 787 Dreamliner assembled at its South Carolina plant, including metal shavings discovered by the FAA in aircraft Boeing certified as debris-free as recently as 2017.


Twice this year, the U.S. Air Force stopped accepting delivery of the 767-based KC-46 aerial refueler because FOD was found inside the newly delivered aircraft. The KC-46 is built in Everett, Washington.

Another of the potential whistleblower calls dealt with concerns over the shutoff switches for MCAS.

The four calls were made to call came in through a special hotline setup by the FAA for employees or the public to report problems. They are being evaluated by FAA investigators as part of ongoing probes into the 737 Max and its certification.

If true, it's possible the allegations could lead to additional investigations.


The hotline submissions were first reported by CNN and confirmed to CBS News. 


Earlier this month, the Senate Commerce Committee launched an investigation into the FAA certification process, citing whistleblower claims of improperly trained FAA inspectors working on the Max.


House Transportation and Infastructure Committee investigators have reportedly been speaking with potential whistleblowers. The committee has not responded to a CBS News request for comment.


It's unclear if any of these whistleblowers overlap.

Boeing's CEO was expected to attend the company's annual shareholder meeting Monday and participate in his first media availability since the crash of Ethiopian Airlines crash. He was expected to take reporters' questions. 

& via ABC News:

Virgin defers 737 MAX orders, hours after Boeing CEO survives battle to keep job

By business reporter David Chau, wires

Updated about 10 hours agoTue 30 Apr 2019, 10:38am


Photo: Virgin will delay taking delivery of Boeing's 737 MAX aircraft by at least 1.5 years. (ABC News: Giulio Saggin, file photo)
Related Story: Ethiopian Airlines flight repeatedly nose-dived before crash, but pilots not to blame
Related Story: Lion Air pilots were scouring handbook and praying when plane crashed

Virgin Australia has confirmed it will defer taking delivery of its first Boeing 737 MAX aircraft, from November 2019 to July 2021, due to safety concerns.

Key points:

• Aside from deferring the first delivery, Virgin is shifting its order to more 737 MAX 10s and less MAX 8s
  
• Virgin says, "We will not introduce any new aircraft to the fleet unless we are completely satisfied with its safety"
  
• Boeing's dual CEO and chairman Dennis Muilenburg held on to both roles despite backlash at a fiery shareholder meeting
  

It follows last month's Ethiopian Airlines crash and the Lion Air crash in October 2018 — which involved Boeing's 737 MAX planes crashing shortly after take-off and killing hundreds of people on both flights.

"Safety is always the number one priority for Virgin Australia," said the company's chief executive Paul Scurrah.

"We will not introduce any new aircraft to the fleet unless we are completely satisfied with its safety.

"We are confident in Boeing's commitment to returning the 737 MAX to service safely and as a long-term partner of Boeing, we will be working with them through this process."

The company has ordered 48 of Boeing's 737 MAX aircraft.

Its first MAX 8 was meant to be delivered in November 2019 — but has now been delayed to February 2025.

But it has brought forward the delivery of the first MAX 10 to July 2021, which was originally slated for a January 2022 delivery.

Virgin also shifted its order towards the larger MAX 10 (of which it now plans to buy 25, instead of 10), while cutting its order of the MAX 8 (from 38, down to 23).

In a statement to the ASX, the company said there would be financial benefits from deferring its Boeing aircraft order.

"This includes a significant deferral of capital expenditure by extending the use of existing aircraft given the relatively young age of our fleet," it said.

Boeing CEO keeps his job

Virgin's decision was announced hours after Boeing's chief executive and chairman Dennis Muilenburg survived a shareholder motion to split his two roles.

He later told reporters he would continue to lead the company through a crisis that has triggered the grounding of Boeing's fastest-selling plane, lawsuits, investigations and lingering concerns over the 737 MAX's safety.

"I am very focused on safety going forward," he said after the meeting when reporters asked if he had considered resigning.

"I am strongly vested in that. My clear intent is to continue to lead on the front of safety, quality and integrity."

However, Boeing will need to win back the trust of customers, passengers and regulators following the crashes.

The aviation giant, worth $US214 billion, has experienced a 10 per cent slump in its share price since the Ethiopian Airlines crash in March.

What we know about the 737 MAX



Boeing's newest version of its most popular plane, the 737 MAX, is again in the spotlight after another deadly crash minutes after take-off.

Boeing is under pressure to deliver a software fix to prevent erroneous data from triggering the plane's anti-stall system MCAS (the Manoeuvring Characteristics Augmentation System).

The company has acknowledged that the accidental firing of the software based on bad sensor data was a common link in the chain of events leading to the two accidents.

Last week, Boeing abandoned its 2019 financial outlook, halted share buybacks and said lowered production due to the 737 MAX grounding had cost it at least $US1 billion so far.

Shareholders have filed a lawsuit accusing the company of defrauding them by concealing safety deficiencies in the planes.

The model is also the target of investigations by US transportation authorities and the Department of Justice.
ABC/Reuters

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