This article first appeared in The Edge Malaysia Weekly on January 27, 2020 - February 2, 2020

LAST March, six minutes after taking off, an Ethiopian Airlines Boeing 737 Max 8 aircraft nosedived, killing 157 people. That crash followed the plunging of a similar aircraft belonging to Indonesia’s Lion Air four-and–a-half months earlier into the Java Sea just 12 minutes after take-off, killing 189 people.

Fifteen months on, the Chicago-based aeronautics and defence giant faces an existential crisis. The entire 737 Max 8 fleet remains grounded, including 390 planes that were delivered to airlines before the crash and over 400 that have rolled off Boeing production lines since. Late last month, Boeing, which has over 5,000 orders for the Max from more than 100 airlines worldwide, including Singapore’s SilkAir, Thailand’s Nok Air and Vietnam’s VietJet, suspended production of the controversial aircraft. Over 2,800 workers have been laid off by Boeing’s suppliers and more redundancies are expected across its vast supply chain. Unless the Max is airborne soon, the production shut-off could shave up to 0.5% off the US GDP in the current quarter alone.

Boeing is in a duopoly with Europe’s Airbus SE. The two firms each sell about US$50 billion (RM203.1 billion) worth of commercial aircraft every year and compete fiercely, though with its higher margins, ­Boeing has traditionally been more profitable than Airbus, which has long relied on European state subsidies.  Boeing gets the other half its revenues from services as well as defence and space.

Boeing is about 40% bigger than Airbus, chalking up US$100 billion in total revenues in 2018 compared with Airbus’ US$71 billion. Owing to the grounding of the 737 Max, Boeing delivered just 380 planes last year. Over 400 undelivered Max planes are parked outside its Seattle factory or nearby airports. In comparison, Airbus delivered 863 aircraft last year. It was the first time that Boeing had lagged behind its European rival in deliveries. In 2018, Boeing had delivered 806 jets while Airbus delivered 802.
 

It’s the hardware, stupid

Boeing’s original line was that there was really nothing wrong with the 737 Max aircraft. The whole thing was a minor software issue. A tweak to software would have the plane in the air within weeks, its management argued. And oh, that was back in March 2019. Yet, if you speak with aviation experts or pilots as I have over the past few months, you begin to understand that the crisis surrounding the Max 8 is a lot more than just a software problem.

Here is what is really wrong with the Max 8: The body of the aircraft that Boeing designed for the 737 Max was dynamically unstable. The 737 Max was Boeing’s response to the Airbus A320neo, which the European firm launched in 2010. Originally, Boeing was supposed to develop its rival to the A320neo as a completely new aircraft. Yet, as Airbus’ lead in that segment of the market grew, Boeing rushed to cut corners and come up with something quick. So, it just expanded its bestselling 737 jet that had been in service for 53 years. Boeing made the old 737 longer and added larger engines, mounted those engines further ahead on the airframe and slightly higher, and rebranded it as the 737 Max 8.

There was just one small thing: The bigger aircraft and larger engines as well as their positions made the plane more unstable. Its larger engines and their placement meant that it had the tendency to push its own nose higher. What we have learnt so far from the two crashes, as well as other pilots who have flown the Max and have since spoken out about the plane, is that in certain flying modes, particularly soon after take-off, the Max had the tendency to pitch up in a potentially catastrophic way. As it suddenly pitched up, the pilots had to fight to stabilise it, but the software forced it to head down.

Boeing’s problem was not just that it basically built an unsound plane. It compounded the issue by trying to patch what was fundamentally a hardware problem with MCAS, or Maneuvering Characteristics Augmentation System, an automated flight-control software that it designed to run on the 737 Max flight-control computer to help stabilise the aircraft at slow speeds and high angles of attack. Having made that mistake, Boeing made another, much bigger and potentially fatal, error. It believed that the MCAS software band-aid was so good that it forgot to even tell the pilots that it had patched some critical hardware problems with software. Moreover, it successfully lobbied regulators at the Federal Aviation Authority, or FAA, to keep any mention of MCAS off the Max 8 flying manuals. Essentially, the pilots thought they were flying a mechanical plane that was actually being flown by software.

The MCAS software would have pushed the plane down if one of the two sensors located on either side of its nose indicated that it was in danger of going into a stall. If it did, the software would attempt to push the nose down by forcing the angle of plane’s horizontal stabiliser up. In both crashes, data from just one of the sensors was enough to push the nose downwards to disaster.

Had the pilots known there was a major hardware issue with the Max that had been patched up with the software, as well as just what that software did, they would have been better able to respond to any malfunction. But they were deliberately left in the dark and effectively flying blind. Indeed, when Lion Air asked for additional simulator training for its pilots, Boeing employees mocked the Indonesian airlines. “Now friggin Lion Air might need a sim to fly the MAX, and maybe because of their own stupidity,” one Boeing employee wrote in June 2017 text messages released by the US House Committee on Transportation and Infrastructure.

Designing a bad aircraft is not necessarily the end of the world, especially if you can patch it with some kind of software that helps the plane do what a better-designed one is supposed to do. The real problem with the 737 Max was that MCAS in the end turned out to be deadly. How so? It actually took control of the aircraft itself and pitched the plane downward, until it crashed.

When planes take off, they climb to a certain altitude, then stabilise and continue moving forward. When the software took over control of the aircraft and pointed its nose downwards, there was nothing the pilots could do to pitch the aircraft up again because the software did not allow them to. We still do not know what the Lion Air and Ethiopian Airlines pilots did or did not do inside the cockpit because investigations into those crashes are ongoing, but whatever they did is really irrelevant because we now know the software was in total control of the two aircraft when they went down.

On Jan 21, Boeing’s stock plunged 5% after it announced that the Max would probably not fly until July. Indeed, it is now unclear whether it will ever fly again. MCAS is not the only software that needs fixing. Boeing recently said it had discovered another software “glitch” that prevented the Max’s flight-control computers from powering up and verifying they are ready for flight.

Last March, Boeing was confident that the plane might be airborne again in weeks. At the 52 planes a month that the company was producing, it would have taken nearly 10 years to deliver the last of the 5,000 737 Max it has on its order book. The fact that Boeing decided to suspend the entire production of the Max and its eagerness to reach generous settlement packages with airlines affected by delivery delays are a sign that the company itself has no idea when the plane might fly again.

Many aviation experts have argued that instead of software patches, Boeing might want to redesign the plane and address the underlying hardware issue. The problem is that any hardware solution at this stage would be very costly.
 

Focus on engineering

Despite the Max crisis, Boeing remains the biggest and one of the most successful industrial firms in the world.  In recent years, however, instead of putting more money into R&D and building better, safer and cheaper aircraft that speedily get us to our destination, Boeing’s management has been obsessed with maximising shareholder returns and getting its stock price airborne. It systematically de-emphasised aerospace engineering and focused more on financial engineering, buying back US$46 billion of its own shares, or more than three times what it spent on R&D, while steadily increasing dividend payouts, and cutting back on things like pilot training or plane safety, things that helped it become an aviation behemoth.

To get its mojo back, Boeing must become the innovative, engineering-focused company that it once was. That means being obsessed with the next generation of planes, rather than just coming up with a new iteration of a 50-year-old one like the 737. Even though the aviation industry now accounts for up to 3% of total global greenhouse emissions, Boeing has yet to take the lead in hybrid electric aviation. It also needs to focus on new materials and technology to bring down overall costs, instead of cutting corners to maximise profit margins.

Catherine Wood, chief investment officer of ARK Invest, a tech-focused asset management firm in New York, cites the emergence of 3D printing, which could help Boeing lift its margins in the new decade. “With gross profit margins in the 15%-to-20% range, aerospace companies like Boeing and Airbus are attracted to the 25%-to-75% drop in weight and manufacturing costs enabled by 3D printing technologies,” she says. That will help lead to a decline in manufacturing costs over time and better margins for Boeing, and ultimately lower cost for airlines and flyers, like you and me.

In the smaller, growing but hugely profitable space segment, it needs to more effectively compete with emerging new champions such as Elon Musk’s SpaceX and Jeff Bezos’ Blue Ocean. In drones, it needs to play catch-up with the Chinese competitors, which have a formidable lead.

But most of all, Boeing needs to realise that trust is probably the most essential commodity when it comes to air travel. Trust has allowed it to become the world leader in ferrying passengers around. Passengers trust that pilots will get the aircraft to their destination without a hitch. Pilots trust Boeing to design aircraft that fly safely. Boeing needs to earn that trust back — the trust of airlines, pilots as well as increasingly jittery passengers.

Assif Shameen is a technology writer based in North America
 

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