Today we examine the history of the MAX, and provide some context and a time line of key activities. The impact of the 787 difficulties and cost overruns are still being felt by the company, and contributed to the development of the MAX.
Prior to the development of the 737 MAX, Boeing’s “Yellowstone” strategy was to develop three new technology aircraft that would provide competitive differentiation against Airbus and position it to dominate the future market. That strategy began with the 787, and was to be followed by a 737 replacement and then a 777 replacement over a 15-18 year period. The 787 was scheduled to be in service by 2008, the 737 replacement 5-6 years later in 2013-14, and the 777 replacement 5-6 years after that in 2018-2019. Of course, the latter two new airplanes were scratched in favor of re-engined models.
The development of the 737MAX is intertwined with Boeing’s product development strategy and the difficulties associated with the 787, which cost Boeing $32 billion to develop against a budget of $8 billion. The 787 financially used the planned spending for all three aircraft programs, keeping Boeing from developing a clean sheet 737 replacement.
Airbus, which also suffered from the failure of the A380 program to generate market demand, found itself in a position where it could take advantage of its more recent narrow-body design. The 737, introduced in 1967, was designed in the era of narrow “cigar-shaped” engines rather than the wider turbofans that were introduced later, and lacked ground clearance. The A320, developed in 1989, was designed for wider turbofans and had substantial ground clearance to accommodate today’s larger engines.
As a result, Airbus could invest only about €1 billion to re-engine its aircraft, which would fly and behave just like its existing models, and launched the A320neo in 2010, before the 787 even entered service. In July 2011, Boeing learned that American Airlines planned to order 200 A320neos to renew its fleet and had no new aircraft to effectively compete with it. Not wanting to lose a key major US airline to the competition, Boeing rapidly developed an alternative proposal for American to re-engine the 737, and the MAX was born.
With the 787 experiencing a myriad of early problems, and a grounding in 2013 that took the full attention of Boeing to cash flow, the MAX became a necessary alternative to a new narrow-body design that could have leap-frogged Airbus. Because the 737 was Boeing’s major cash flow generator, an urgency was created to ensure that Boeing continued its market share in the narrow-body market, which at that time was about 50/50.
Unfortunately for Boeing, narrow-body market share for orders is now about 40/60, with the A321neo and A321LR models dramatically outselling the larger 737 MAX 9 and MAX 10 models by a 4:1 margin in the fastest growing segment of the narrow-body market. That increases cash flow pressures for Boeing’s highest volume product.
Boeing is now in a transition, and is looking at major changes to its processes and procedures for its next two airplanes, the New Middle-market Airplane (NMA) and 737 replacement Future Small Aircraft (FSA). Boeing is re-examining the economics of how it builds aircraft and is planning substantial changes as it moves into the 2026-2030 timeframes for introduction of not only new aircraft, but new manufacturing technologies as well.
It is often useful to examine a time line when putting events into perspective. Here are some of the events leading up to the grounding of the 737, and some future dates to watch as the multiple investigations of the 737MAX program continue.
2005:
The FAA, under the G.W. Bush administration, seeks cost cutting and changes certification processes for ODA – Organizational Designation Authorization and reporting relationships to FAA. This enables Boeing to utilize its managers to
intercede between DAs and the FAA without DAs having direct contact. This may have enabled items “falling between the cracks.”
8 July 2007
Boeing rolls out 787 Dreamliner
May 2008
Target for initial EIS of 787 Dreamliner
15 Dec 2009
First flight for 787 Dreamliner
1 Dec 2010
Airbus launches the A320neo program.
July 2011
Boeing learns that American is placing an order for 200 A320neos
27 Aug 2011
Boeing receives FAA and EASA certification for 787-8, after massive overspending to budget during development and costs for delays and multiple issues with the aircraft
30 Aug 2011
Boeing launches the 737MAX program to compete for AA orders
26 Oct 2011
First 787-8 flight with ANA
3 Nov 2011
Boeing announces design changes to MAX, including larger engines
14 Dec 2011
Southwest orders 150 MAX aircraft
16 Jan 2013
All 787 flights grounded due to battery issue, with emergency efforts to get aircraft back into the air, taking engineers from 747-8 and 737MAX as needed
26 Apr 2013
787 flights resume after redesign of battery system
24 Sep 2014
A320neo first flight
3 Oct 2014
Boeing announces substantial production ramp-up plans for MAX in Renton
Early 2015
FAA managers push agency’s safety engineers to delegate safety assessments to Boeing and speedily approve the resulting analysis under ODA processes
5 Dec 2015
Boeing rolls out first 737 MAX
25 Jan 2015
A320neo entry into service with Lufthansa
29 Jan 2016
First Flight of 737MAX – 492 days after A320neo first flight
12 May 2016
Boeing promises to accelerate first MAX delivery to first half of 2017
9 Mar 2017
FAA certifies 737 MAX 8
7 April 2017
737 program is 50 years old
16 May 2017
Boeing delivers first 737 MAX 8
Sep 2017
Boeing discovers problem with AoA disagree indicator on MAX, but tells
nobody about it, as MCAS system was not disclosed to customers or pilots.
Sep 2018
Boeing is already working on fixes to MCAS system in the background and preparing preliminary changes for future FAA review
29 Oct 2018
Lion Air crashes in Indonesia with 189 fatalities
6 Nov 2018
Boeing issues instructions for pilots if a sensor failure erroneously triggers MCAS system. This is first description of MCAS to pilots and airlines, causing considerable industry consternation.
31 Jan 2019
Boeing’s order book is for 5,011 MAX aircraft from 79 customers
10 Mar 2019
Ethiopian MAX 8 crashes with 157 fatalaties
11 Mar 2019
China and Indonesia ground the MAX
12 Mar 2019
Europe, Canada and India ground the MAX
13 Mar 2019
The FAA grounds the MAX with political overtones as Trump announces grounding
13 Mar 2019
Department of Justice Fraud Section opens criminal investigation into development and certification of the 737 MAX by the FAA and Boeing. Department of Transportation’s Inspector General and FBI participate. Federal attorneys are gather evidence through a federal grand jury seated in Washington DC. There is no timetable for grand jury evidence, which is sealed and at the discretion of federal prosecutors who will evaluate whether or not to bring charges against the company or particular individuals within the company.
13 Mar 2019
DoT Inspector General is conducting a separate administrative audit into the certification of the MAX, which typically require s about 7 months to complete. While the aircraft could be re-certified to fly by then, we should expect audit results by October.
27 Mar 2019
US Senate Aviation and Space subcommittee held public hearing with acting FAA administrator Daniel Elwell. A future second hearing with Boeing is pending
5 Apr 2019
FAA announces formation of a review panel headed by former NTSB chair Chairman Christopher Hart with experts from FAA, NASA, and international aviation authorities. Group will conduct a comprehensive review of the certification of the automated flight control system on the MAX, as well as design and pilot interactions.
29 Apr 2019
Joint international review committee of regulatory agencies and the FAA meets with Boeing to review plans to return the 737 MAX to service developed by Boeing and examine how these plans correct prior software flaws.
Future Events of Importance
15 May 2019
US House subcommittee has scheduled a hearing for the Aviation subcommittee on the status of the MAX, with FAA administrator and NTSB chair.
23 May 2019
Meeting of international regulatory agencies in Washington to discuss the results of the FAA and multi-agency working group and determine the appropriate steps once the review of the proposed Boeing software fix is completed. The issue of whether additional simulator training should be required, which some countries favor but the US appears not to, may also be discussed, with an attempt to reach a consensus.
TBD
Findings of the international review committee published
TBD
Individual re-certification actions be taken by regulatory agencies around the world
TBD
Boeing 737 MAX returns to service
Oct, 2019
DoT Inspector General issues Audit of 737 MAX certification process
TBD
Federal prosecutors decide whether to drop or bring criminal charges against Boeing and individuals involved in the certification process.
The Bottom Line:
Boeing learned that the MAX had a potential angle of attack problem based on the forward and higher mounting of engines on the wing that could result in inadvertent stalls under certain circumstances. To solve the problem, Boeing developed a system to work in the background to lower the angle of attack should inappropriate circumstances, which should be rare, apply.
Boeing designed and the FAA certified a flawed system that was installed aboard the 737 MAX. That system relied on a single sensor, operated multiple times in sequence rather than one time, had four times the power to move the aircraft trim than initially designed, enough to put the aircraft into a 40 degree dive, and the existence of the system was not revealed to airline customers nor pilots, despite operating flight controls.
Unfortunately, a failed sensor, coupled with the relentless nose down drive of this system and lack of information on its actual performance, resulted in two crashes that could have been prevented had the industry standard of using multiple sensors for flight critical system been followed, along with proper training for pilots.
The sad litany is that Boeing owns this problem and the blame for 346 deaths, and the FAA has lost trust internationally and could be accused of playing favorites if it brings the MAX back before other agencies. This tale will continue for some time, as the “fix” is still under development and review.
Will the 737 MAX be a safe airplane? After the scrutiny applied by multiple agencies, it will be, just as the Comet, Electra II, DC-10 and 787 became safe airplanes after grounding. The question now is whether the traveling public will believe it, since credibility has been lost and is more difficult to regain. Boeing has been making safe airplanes for 100 years, and has a strong history, that will continue. But the short-term financial impacts will be significant.
