Insight: Wednesday 7 August 2019 – Boeing Scrambling for MAX Recertification

News

There are several items that are making news today about the MAX and 787-10 that merit attention, so we will focus on them one by one.  The issues include:

1. Boeing has conducted almost 500 test flights since the grounding of the 737 MAX
2. A test flight earlier this week that appears to replicate some of the issues with MCAS
3. The company is also meeting with Chinese carriers this week.
4. Families of the crash victims are also asking for a full FAA re-certification of the MAX
5. KLM criticized the quality of the 787-10 aircraft recently delivered.

Analysis

1. While Boeing has conducted almost 500 test flights since the grounding of the 737 MAX, it still has not submitted a final re-certification package to the FAA, which is expected by the end of September.  At that point, the FAA and its international counterparts will review the documentation and testing results for both the software and several other issues prior to returning the aircraft to service.
2. Boeing conducted some test flights over the Pacific that appear to replicate the up and down movements of the MCAS system being over-ridden by a pilot, and not resulting in a crash scenario.  Telemetry from Flight Aware shows multiple altitude changes during the test flight that would be consistent with simulating a system failure.
3. Boeing is meeting with Chinese carriers this week to brief them on the MAX situation in the wake of China Southern’s “suspension” of its orders.  Combined with the international trade negotiations, which are likely to impact Boeing, this trip to China is important to one of Boeing’s key future markets
4. There are legitimate concerns over the certification of the MAX, including recently identified concerns such as the placement of rudder controls in the event of an un-contained engine failure. These will likely be addressed, however, on a one-by-one basis
5. The criticism of 787 quality, particularly focused on Charleston, has been an on-going issue for several years.  An Al-Jazeera investigation from 2014 documents this.  The additional criticism by airlines this month was particularly hard hitting, with Singapore Airlines noting a ladder left inside the tail section of an aircraft.

Insight

1. At a conference in Chicago last week, Boeing’s CEO Dennis Muilenburg reiterated his projection that the 737MAX would return to service early in the fourth quarter.  Operators disagree, having cancelled flights until 2020, and we do not expect a quick review of the multiple issues associated with the aircraft.  Our forecast remains Q2 of 2020 before MAX services are restored.
2. While Boeing can fly as many test flights as it needs and can now simulate the failures in the MCAS system, the fact remains that these are tests that should have been carried out prior to certification.  Boeing, who handled the safety analysis, and the FAA, who let them classify the risks as minimal, remain both at fault for 346 fatalities that could have been prevented.
3. The “suspension” of orders by China Southern appears to be a cancellation and re-thinking of their fleet plan, and several planes configured for China Southern are stored awaiting delivery.  This is a key first stop for Boeing, which will need to settle claims with all of the Chinese airlines for late deliveries and grounding costs.  If Boeing can recover China Southern, it would be a strong indicator of future success.  If it cannot, COMAC and Airbus will likely fill the void.
4. While the crash victim families have legitimate concerns over the certification process, there has never been a full re-certification of an aircraft that has already entered service, and we see the odds of this as unlikely.  The group also called for the resignation of Ali Bahrami, who headed the FAA’s safety efforts.  That, after congressional hearings last week, remains a possibility, given the agency’s apparent lack of accountability.
5. Boeing still has quality control issues with the 787, and labor relations with a unionized facility in Everett and a non-union facility in Charleston.  While the union certainly wants any quality differences highlighted, when airlines complain publicly to Boeing, there is something wrong.  Boeing’s inspection processes have been criticized, and need to be further addressed to ensure customers do not reject aircraft being delivered.

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