
Boeing has temporarily stopped making 737 Max airplanes - pseudolus
https://www.cnn.com/2020/01/21/business/boeing-737-max-production-halt/index.html
======
BitwiseFool
According to the article Boeing has halted production, but this leaves the
door open to producing them again in the future after design updates. I
predict they'll try to rename the model and fly it again after making changes
and certifying.

That being said, I never want to fly on a 737 Max or whatever they plan to
rebrand it as.

~~~
heavymark
Yes, I imagine the rebranding will be as ineffective as Comcast rebranding as
Xfinity, where everyone knows they are the same.

~~~
linsomniac
I don't know what you're talking about, Comcast has had amazing support the
last few months in my area. We even had a rep come to our house, and leave a
handwritten note on the door when we didn't answer, asking if we had any
questions or concerns and to give them a call if there was anything they could
do for us.

... I'm sure this has nothing to do with the city fiber to the home buildout
that is going on in our neighborhood... ;-)

~~~
Treblemaker
I just got comcast installed in a new home, and the experience was completely
different from what I've experienced in the past -- think "apple store",
rather than "we're the phone company; we don't have to care". The customer
service rep that helped me said they just finished six months of training, and
even they were surprised that the system "just worked" when I went in to pick
up the gear (my choice to pick it up two hours after calling them rather than
waiting for delivery). I won't go into detail about all the other things that
"went right" to avoid sounding like a marketing bird, but from what I heard it
is a corporate initiative and not just for the fiber buildout.

~~~
techsupporter
My kid recently moved apartments from one served only by Comcast to one not
served by Comcast. He filed the cancel request online and took his cable modem
to a Comcast office in a nearby mall. The cancel process took about six
minutes total; nobody called to beg for him to stay or stall him on the phone
for over an hour.

My view is that the indication is how a company treats you when you leave
versus when you arrive and, at least this once, Comcast did well on both.

------
mark-r
Total clickbait. Based on the title "Boeing has officially stopped making 737
Max airplanes" I thought maybe they had finally decided the plane was
unsalvageable. No, they just finally implemented the widely reported decision
to temporarily stop construction.

~~~
scottlawson
Reminds me of the exaggerated news stories about "Pewdiepie QUITS YouTube!"

------
biggc
Warning: CNN has autoplaying video with sound enabled.

~~~
jayd16
What browser still allows this?

~~~
grenoire
I think there is a new way to bypass this; FF recently missed an autoplay
video on Bloomberg (?). Arms race as usual.

~~~
paulmd
You can't autostart it when the page loads anymore, but you can autostart it
as soon as the user interacts with the page in any way (including scroll)

~~~
grenoire
My settings for these are not the defaults, I didn't get the option to block
autoplays on the domain menu.

------
HenryKissinger
I can't wait to read a senior Boeing manager's future book about the way the
company mishandled the development of the 737 Max and how the upper echelons
of decision makers managed the ensuing crisis. How many screaming matches
occurred between VPs and engineering directors behind closed doors, how many
angry emails were exchanged, how many panicked phone calls from the investor
relations department to Muilenberg, etc.

~~~
growlist
What's incredible to me is how this could be allowed to happen. Are the higher
echelons of these industries staffed by charlatans? Has something changed in
the engineering culture? Did greed override diligence and if so, how was this
allowed to happen when the consequences can be so catastrophic both to
passengers and to the company? It just doesn't make sense to me how, with such
high stakes, a company could manage to let things go so awry. Seems to me like
the entire management team for years should have the entirety of their assets
seized, as I assume they were _very_ well rewarded for presiding over failure.

~~~
klodolph
At some point, engineering gets displaced by short-term business concerns,
driven by managers who have incentives to cut costs and deliver faster even if
it destroys the company in the long term. Make a management chain long enough,
and most of the decisions will get made this way. Each layer in the hierarchy
serves both to insulate decision-makers from the impacts of their decisions
and to amplify perverse incentives (e.g. a VP is asked to cut costs, who asks
a middle manager to use cheaper solutions for problem X and recoup costs where
possible, who asks a direct manager to spend no more than $Y and Z weeks on
problem X, and the engineers can no longer do it safely).

This happens all the time, everywhere. I think of “good company culture” as a
temporary, unstable situation. Any movement away from that position will
accelerate towards failure.

The entire system is not necessarily engineered to avoid accountability, but
the system encourages people to figure out a way to avoid accountability, and
so you end up with this.

As another example, take a look at clothing companies which use child labor to
produce cheap clothing. The companies don’t directly employ the children, but
they use a chain of contractors and subcontractors. Each layer in the chain
makes it more likely that leadership is unaware of ground truth, and with this
many links in the chain, a top-level directive to cut costs will inevitably
end up with something like child labor at the bottom, because it’s cheap. If
you get bad press coverage for it, you look to assign blame to a specific link
in the chain, fire that contractor, and then rehire someone else (but the
chain repairs itself around the missing link and you end up with the same
child laborers working for you).

Systems are usually to blame more than people are.

~~~
iSnow
>Systems are usually to blame more than people are.

IDK, honestly. Systems are created by people who think or ought to think about
the incentives they are setting. But in the end, the lower echelons are still
"just following orders" by employing child labourers or pushing out a plane
with a crippled design.

I don't know about US companies, but I think most big enterprises have an
internal whistleblower system, that can and should be used if unethical
decisions are pushed down.

~~~
klodolph
> Systems are created by people who think or ought to think about the
> incentives they are setting.

You can think all you want, but the system is larger and more complicated than
you are. You might as well ask a gear to think about the engine.

The system has, in it, people who are smarter than you. You can’t hope to
understand all the implications of incentives you create in a system.

> But in the end, the lower echelons are still "just following orders" by
> employing child labourers or pushing out a plane with a crippled design.

I feel that a statement leading with “in the end” is too reductionist. These
are complicated problems, and pointing fingers is too simple a tool to solve
them.

The system is set up so that you can blame the people who hired child
laborers, fire them, replace them, and still end up with the same child
laborers making the same clothes in the same factory. Same with Boeing—no
matter who you point fingers at with the 737 MAX, you can fire those people
and rehire new ones but the disaster will happen again as long as the system
encourages it.

------
mzs
>Boeing is in talks with banks to secure a loan of $10 billion or more…

…

>Banks that have already committed to contribute to the loan include
Citigroup, Bank of America Merrill Lynch, Wells Fargo and J.P. Morgan…

[https://www.cnbc.com/2020/01/20/737-max-crisis-boeing-
seeks-...](https://www.cnbc.com/2020/01/20/737-max-crisis-boeing-seeks-to-
borrow-10-billion-or-more.html)

~~~
charwalker
They are betting that a key component of the US Military Industrial Complex
survives long enough to pay back the interest or whatever profit tool the
loans operate under. I'd take that bet.

------
yourapostasy
What is the cost to restart both the supply chain and production line? If this
lasts long enough, then there are portions of the supply chain that will start
to simply disappear as vendors go under or switch away to different customers
and de-prioritize Boeing.

It isn't just the monetary cost to re-calibrate machining and tooling, also
the staff time and monetary cost to fill in gaps that appeared during the
shutdown, both material and vendor relationships. And an abundantly clear
lesson (as if the domain experts in sourcing shouldn't know this already) from
the debacle is that outsourcing is not plug-and-play: there will be both
product and relationship re-alignment and re-certification going on anywhere
vendors are swapped out in the supply chain.

If Boeing was forward-looking, then they would bite the bullet and keep
production going, but use the downtime to crawl through every aspect of
production to look for and fix any quality and safety-related concerns on the
line (including absolute bottom-up authority for production line escalating
concerns through to engineering and design) and in the supply chain. It
massively slows down the production, which is perfectly fine right now. It
wouldn't matter if they slowed to 10% of normal output, if the deliverable was
absolute confidence in what is built on that line; they should have started
this a long time ago when the shutdown passed 90 days.

Even after the design is amended, planes modified, re-certification awarded by
all the aviation agencies around the world, there will be a titanic push to
run the line as fast as possible. And if they don't completely debug every
piece of that line to an inch of its life, there will be guaranteed production
quality problems when it restarts, and if those problems lead to more crashes,
Boeing is getting bailed out by taxpayers and unalterably changed. Better to
keep the line on "warm standby" while debugging it before the pressure is on.

~~~
tzs
> If Boeing was forward-looking, then they would bite the bullet and keep
> production going, but use the downtime to crawl through every aspect of
> production to look for and fix any quality and safety-related concerns on
> the line (including absolute bottom-up authority for production line
> escalating concerns through to engineering and design) and in the supply
> chain.

Where would they put them? These things ain't small.

Airliners are expensive. The manufacturers do not build a large number
speculatively and then find customers. They find customers, then build what
has been ordered. They have enough storage space to serve as a buffer between
output and delivery so that minor glitches on either don't affect the other.

Also because airliners are expensive, and they get paid on delivery not on
order, once past the initial production current production is paid for from
recent deliveries. If deliveries have to stop for an extended time, there is
no money to fund more production.

~~~
yourapostasy
Good point. IMHO the company's survival is on the line, and the storage opex
expense is worth it if it takes dropping production rate to 1% (about 0.6 737
MAX per month) or less to find out what other quality problems are lurking
outside of the design realm, and catch technical debt that they would regret
later. This is far preferable to writing off the entire product, and would be
a concrete start to re-establishing the old company culture's emphasis upon
quality. They're under a regulatory and compliance microscope now, and any
production problems when they restart are going to get a lot of negative
attention.

They're tapping more debt and _still_ plan on issuing dividends. Those
dividends are likely going to be accompanied by equity buybacks. Those
buybacks are measured in billions [1]. Carve out from the buyback funds what
it costs to ensure quality where they can control it while waiting for
clearance to reassure regulators, politicians and the general public, and tell
the investors that it is either hold on with the team until quality is re-
established within the culture, sell and come back later, or eventually zero
out the investment because no one wants to buy from a plane manufacturer with
suspect quality.

[1] [https://articles2.marketrealist.com/2019/06/boeing-
enhances-...](https://articles2.marketrealist.com/2019/06/boeing-enhances-
shareholder-wealth-through-share-repurchases/#)

------
lolc
I'm amazed to see such a big fleet grounded for such a long time. Since MCAS
was employed to avoid retraining of pilots, I'd assume that at this point
retraining the pilots out of their pockets would be cheaper for Boeing than
paying airlines' damages for grounded planes.

Is that training of no use because disabling MCAS would also need re-
certification? Is the process of getting certification for a MCAS-free version
roughly the same as getting the fixed version certified? Speculating way out
my depth now: maybe it would still be worth it to pursue parallel
certification to have the option of retraining when MCAS should be deemed
uncertifiable.

------
zaroth
EDIT: And an hour after writing this Boeing just now announcing (surprise,
surprise) they don’t expect return-to-service until July and stock is
currently trading down 5.5%)

I shorted BA for a few months based on many HN posts after the crashes, but
covered my position after it seemed to stabilize at ~320. I think it will
probably head lower, but as a general rule I try to find companies I believe
in rather than companies I don’t.

It was a very interesting choice to maintain the dividend for now. I think
they will have to revisit that and it will kick-off the next big swing
downward.

Last week the WSJ reported [1] that they are in the process of raising a new
$5 billion round. Now [2] the word on the street is they’re looking for $10
billion over 2 years - a “mid term” debt round, structured as a line they can
draw on over several years - somehow this is supposed to limit the effect it
will have on their debt rating. A significant Moody’s downgrade seems like
it’s past due, and Moody’s recently announced they put BA “on review”. [3]

Their debt at the start of Q4 was $15 billion and then rose to $20 billion by
the end of Q4. Back in 2018 it was closer to $12 billion. I wouldn’t be
surprise to see it near $25 billion at the end of Q1.

Supposedly Boeing keeps about $10 billion in liquidity “available” but they’ve
burned through that by now.

The “charges” they take against the MAX disaster which started at $5.6 billion
could balloon as high as $20 billion as the ramifications continue to unfold.
[4]

Lastly I would point out that over the last decade plus timeframe the FAA
hollowed out as a regulatory agency into a box checker. Today they have as I
understand it just ~750 total pilots and engineers on staff to review
technical data from the plane manufacturers. The FAA said last year to do it
themselves they would need 10,000 more. [5]

> _“It would require roughly 10,000 more employees and another $1.8 billion
> for our certification office,” Elwell told the Senate subcommittee on
> aviation and space._

> _The FAA Aircraft Certification Service had a budget of $239 million for
> fiscal 2019 and about 1,300 employees, 745 of whom are pilots, engineers and
> technical staff who oversee design approvals and production._

I recall news articles claiming Congress recently approved significant new
funding for the FAA, but looking at their budget [6] PDF page 37 it seems like
“Regulation & Certification” remains level-funded at $1.3 billion the last
three years.

A more recent report on the MAX specifically [7] said;

> _The report said the FAA had just 45 people in an office overseeing Boeing
> 's Organization Designation Authority (ODA) and its 1,500 employees._

...

> _The FAA 's office oveseeing Boeing has just 24 engineers and they face a
> wide range of tasks to ensure compliance in overseeing Boeing's 737, 747,
> 767, 777, and 787 programs._

> _The review added there are only two technical FAA staff assigned per Boeing
> program and some are "new engineers with limited airworthiness experience."_

The full report which this article is excerpting I believe is this one. [8]
See specifically PDF Page 47 but put down any objects you might be prone to
throwing before beginning to read.

I would imagine engineers qualified to actual critically review detailed 737
specifications aren’t unemployed and take a long time to hire. How long will
it take the FAA to even staff up to the point where they can _start_ doing
their job if they are only just now getting the money to hire? Pundits saying
they expected the 737 return-to-service to happen before New Years and now say
it’s happening any day now I think don’t comprehend the massive gap between
what the FAA used to do and what they are now tasked with doing, and that they
literally don’t have the qualified people in-house to even start doing much of
this work. All that assumes necessary funding has even been appropriated and
there are the people and the culture in place to even do the work. Big IFs.

To me that points to a extremely delayed return to service as new engineers
are hired and brought on to critically review documentation which used to be
rubber stamped — let alone dealing with the actual software failures and
faulty design specifications which straight up didn’t/don’t conform to modern
safety standards.

In short, my prediction is that BA will inevitably have to suspend its
dividend, it will take a charge upwards of $20 billion for the MAX, return to
service will be extremely delayed beyond analysts wildest expectations, they
will be downgraded by Moody’s and their debt load will increase to nearly $30
billion over the course of 2020 into 2021, and there is a remote chance of a
debt squeeze, and the company declaring bankruptcy and having to restructure.

I don’t currently own any position in Boeing (other than through holdings in
the S&P500) and do not plan on initiating any BA position in the next 72
hours. This is not investment advice.

[1] - [https://www.wsj.com/articles/boeing-considers-raising-
debt-a...](https://www.wsj.com/articles/boeing-considers-raising-debt-as-max-
crisis-takes-toll-11578308401)

[2] - [https://www.cnbc.com/2020/01/20/737-max-crisis-boeing-
seeks-...](https://www.cnbc.com/2020/01/20/737-max-crisis-boeing-seeks-to-
borrow-10-billion-or-more.html)

[3] - [https://www.marketwatch.com/story/boeings-debt-on-review-
for...](https://www.marketwatch.com/story/boeings-debt-on-review-for-
downgrade-by-moodys-2020-01-13)

[4] -
[https://apple.news/AcnxFGCurRfW3l1BNvzr6aw](https://apple.news/AcnxFGCurRfW3l1BNvzr6aw)

[5] -
[https://www.forbes.com/sites/jeremybogaisky/2019/03/27/want-...](https://www.forbes.com/sites/jeremybogaisky/2019/03/27/want-
faa-to-do-aircraft-certification-alone-give-me-10000-more-employees-
and-18-billion-chief-tells-congress/)

[6] -
[https://www.transportation.gov/sites/dot.gov/files/docs/miss...](https://www.transportation.gov/sites/dot.gov/files/docs/mission/budget/334316/faa-
fy-2020-cj-final508-compliant.pdf)

[7] - [https://www.reuters.com/article/us-usa-boeing-faa-
certificat...](https://www.reuters.com/article/us-usa-boeing-faa-
certification/faa-must-ramp-up-staffing-to-oversee-airplane-certification-
after-737-max-panel-idUSKBN1WQ28B)

[8] -
[https://www.faa.gov/news/media/attachments/Final_JATR_Submit...](https://www.faa.gov/news/media/attachments/Final_JATR_Submittal_to_FAA_Oct_2019.pdf)

~~~
yread
They have 1300 total employees and only 24 review all of Boeing's planes?
That's insane! What the fuck are the others doing? Can't be all HR (no offense
to HR)

~~~
gbear605
There are more airplane manufacturers than Boeing (although none of Boeings
stature other than Airbus)

------
samstave
ELI5: why can’t the auto safety system be removed and the plane be sound?

Is the design so flawed that it can’t be safely flown by a human without this
system that causes random catastrophic failures?

~~~
csours
Briefly: It could be, but that would mean reclassifying the airplane.

Maybe think about it like anti-lock brakes. Cars without ABS can be driven
safely in many/most circumstances, but most drivers are accustomed to ABS.
(This is necessarily a limited analogy)

Also, there are government requirements per aircraft type, and removing this
system would change the aircraft type, triggering a significant amount of
required re-training.

\---

Not directly related to your question, but I think [pure
speculation/psychological theory] one thing that went badly wrong here was
engineers thinking about this as a convenience system. Because it was thought
of as a convenience system, they didn't fully consider the safety aspect of
it.

~~~
kayfox
It cant, the forces have to linearly increase per FARs, so MCAS has to be a
thing, same type certificate or not.

~~~
csours
Ah, that's the first time I've heard that. I'm certainly not an expert, I've
just read/watched a number of reports.

~~~
kayfox
The problem with reporting around this issue is that its emotionally driven
and done often by people who have little experience with how the aviation
industry works. So while the exact details are accurately reported in aviation
industry news, the mainstream news keeps parroting things that are false and
confirmation bias keeps people from picking up when those things are false.

The departure from reality in this case is pretty severe:

1\. There were severe issues with pilot's performance on both flights.

2\. Airline maintenance is culpable in the Lion Air flight.

3\. MCAS is required irregardless of what type certificate is used.

4\. Boeing's "new problems with the 737" are not as much a result of faults
previously ignored, but new issues created by reassessing the risk factors
related to those systems.

5\. The 737 MAX is not aerodynamically unstable.

6\. The 737 MAX issue has brought to light severe issues in the aviation
industry that may require retraining many pilots in the industry or being way
more aggressive with refresh training (also see the Atlas Air crash recently).

------
caycep
One question in my mind is: what would it take for the old "engineer" faction
of Boeing to come to the top again? Or is this unrealistic as the
"management/costcutting" faction is just inherently better a "management"
politics to ever be dislodged?

Failing this, what is the likelihood a competitor with old-school Boeing
values might emerge to compete, in such a capital-heavy industry?

~~~
totalZero
It's basically impossible for a competitor with "old school" values to emerge.
The regulatory hurdles and foreign competition are daunting. There are only
two companies in the world that can do what Airbus and Boeing do.

~~~
internet_user
What are the two other companies? Lockheed and Tupolev?

~~~
favorited
They didn't say "two other," just "two."

------
gumby
Mods: headline should read "paused" or "temporarily stopped" rather than the
blunt "stopped". The original article's headline says it's temporary.

------
codegeek
I don't know about anyone else but personally, I would never fly a 737 max.
Yes it could be fixed and yes it may be the same as other models going forward
but the amount of coverage it has received and the fear it has created, I
would always check if I am flying a 737 max or not. Yes that doesn't
necessarily mean anything but it is now tainted. Boeing is smart to just
discontinue the name even if it repackages it again with a new name.

~~~
me_me_me
What? Why? We have duct-taped even more safety features now.

It must have made it safer to fly.

~~~
bmking
The simple fact for Boeing to continue "operating as usual" without real
consequences dis-aligns incentives that have been present until now in air
travel making it so safe. The precedence it creates can ripple so that e.g.
Airbus also slacks on safety to stay competitive if this is the new normal...

------
perfectstorm
wouldn't they just reuse their software on their new models? There's no way
they are going to rewrite their software from scratch.

------
runxel
And hopefully it will stay that way!

------
ape4
I assume the CEO will be on the first commercial 737 flight after its re-
certified /s

------
leesalminen
Surely there’s a better source than CNN for this?

