
The Coming Boeing Bailout? - fanf2
https://mattstoller.substack.com/p/the-coming-boeing-bailout
======
bhouston
Boeing and the US government recently killed the Canadian aviation industry by
putting on 300% duties on our main manufacturer because of a government
bailout it received. See:

[https://www.theglobeandmail.com/report-on-business/us-
issues...](https://www.theglobeandmail.com/report-on-business/us-issues-final-
ruling-upholds-duties-on-bombardier-c-series-planes/article37394931/)

As a result Bombardier, Canadian's only large aviation manufacturer, was sold
to AirBus:

[https://www.theglobeandmail.com/report-on-
business/bombardie...](https://www.theglobeandmail.com/report-on-
business/bombardier-sells-majority-stake-in-c-series-to-
airbus/article36610340/)

The cause was a Canadian province (equivalent to a US state) did a $1B equity
investment in Bombardier in order to help it survive a tough spot -- a
bailout. Thus 300% duties were imposed on the company as a result, thus
killing any potential plane sales to the US.

But if the US government bails out Boeing, should countries around the world
also impose business destroying duties of 300% on Boeing because of the unfair
government support? Or do business destroying duties of 300% only get imposed
on the aviation industries of smaller countries who do not have as much clout?

~~~
arcticbull
The duties were also overturned in the end, but not before Bombardier gifted
50.01% of the C-Series program to Airbus so it had a chance of survival. The
net result was Airbus rebranded the program the A220, committed to building
US-destination A220 jets within the US to avoid tariffs anyways and while they
significantly weakened one [small] competitor (Bombardier and by extension
Investissement Québec) they massively empowered their real competitor
(Airbus).

Ultimately, their plan backfired and forced them to acquire a large stake in
Embraer to remain nominally competitive (I say that because the C-Series
planes are much better than similar Embarer aircraft, both longer range and
more comfortable) -- all while simultaneously empowering Airbus. They also
significantly soured their relationship with the Canadian government
jeopardizing both current and future military procurement opportunities.

This was an unmitigated failure on their part.

(EDIT) To be clear, Bombardier wasn't sold to Airbus, they gifted majority
control of the C-Series program to Airbus. The new equity split is 50.01%
Airbus, 31% Bombardier and 19% Invesissment Québec.

~~~
PaulHoule
Both the 2nd generation E-Jets and the A220 beat the pants of the 737 with the
caveat that they are smaller planes that carry fewer passengers.

They also are smaller planes that have better comfort than the 737 in most
respects; it is like the Japanese cars of the 1970s which were big on the
inside and small on the outside compared to American cars of the time. You
have to fly it to believe it.

I could see these eating into the 737/A320 market from the small side the same
way that the 777/787 classes ate into the 747 market. The A220/E2 Jets would
have been even more appealing had the airliners known that 737 MAX pilots will
require simulator training. (And they will... Boeing will probably delay the
737 MAX return to service by trying to insist that they won't, but the FAA has
one way to get credibility back, and that is requiring simulator training of
an MCAS failure, just as A320 pilots need training on what to do if the fly-
by-wire system gets in a degraded state)

~~~
CydeWeys
The crazy thing is that Boeing hasn't designed a new clean-sheet small jet
since 1967, when the 737 came out. Prior to that they were iterating on a
pretty rapid cadence, with the 707, 717, 720, and 727, and then they just got
stuck in an absolute rut and have been increasingly paying the consequences as
the 737 no longer stacks up favorably against the much newer clean-sheet
designs put out by their competitors. To give an idea of how antiquated the
737 is, one of its primary design considerations was that it could land at
primitive airports -- its low ground clearance is caused by the need to be
able to fit a folding staircase inside the aircraft itself. It didn't even
require a stair car, let alone the ubiquitous jetways that we see everywhere
nowadays. And this design consideration is the main cause of the 737 MAX
problem.

I wonder, if the merger hadn't happened and Boeing hadn't been taken over by
penny-pinchers, what would Boeing's small jet offering look like now? Would
they still be iterating on the same obsolete design? Was there some new
replacement small jet already in the early design stages that got canned?

~~~
kgermino
It’s worth noting that even though the 717 was first released in the late 90’s
it isn’t a case of Boeing innovating since it’s just a rebadged MD-95 which
was developed by McDonnell-Douglas

~~~
NikkiA
It's also worth noting that there were two 717s, the first was indeed part of
the 720 & 707 family. (it was the 'commercial' designation of the C-135 when
sold to france for use as a tanker)

~~~
CydeWeys
It always strikes me as strange that the USAF is still regularly running such
old planes as the C-135 (the most _recent_ of which was produced over five
decades ago). I guess they don't care about fuel efficiency like the airlines
do? Maybe that's the real reason? I get that the mid-air refueling planes have
a lot of specialized hardware on them, but most of them are just used for
moving people and equipment around. Why not buy an off-the-shelf modern cargo
airplane? You'll increase safety and fuel efficiency dramatically. A 767F is
better than a C-135 in a multitude of ways, including better fuel efficiency,
higher cargo capacity, shorter runways, etc.

~~~
NikkiA
> Why not buy an off-the-shelf modern cargo airplane?

Because the procurement procedure would take 10-20 years, have to go through
congress several times, and get pork barreled everywhere, and the 'modern
freighter' would still likely be old as dirt once it's all done.

Look at the fuss over the KC-X/KC-30/KC-45/KC-46 for an example of how it
would pan out. (The KC-X procurement started in 2002, settled on the KC-30
from airbus, modified to include pork barrelled 'Northrop Grumman' changes to
be the KC-45, boeing objected to a non-US company winning the contract, and
thus the KC-46 (a modified KC-767) was the only option left)

------
kuu
_How did Boeing make miracles in civilian aircraft? In short, the the civilian
engineers were in charge. And it fell apart because the company, due to a
merger, killed its engineering-first culture_

Uhm, this makes me think about the engineering-first of Google. I wonder if
Google will end in the same path...

~~~
drawkbox
Companies can come back after the HBS MBAs/bizdevs take over, they must return
to product/engineering/creative focused though and it is tough, usually it
takes a near failure for the problem to be recognized.

Apple survived when Jobs came back and focused on
products/engineering/creativity.

Microsoft survived post-Ballmer after returning to product/engineering led
decision making and power structures.

Amazon is top of their game due to their relentless focus on product
innovation and research and development.

Google, I hate to say it, is Microsoft 2004-5, slipping away from
product/engineering focus, using their position as business/marketing leverage
rather than product/engineering/creativity focused leadership similar to how
Microsoft made that same mistake.

Companies that don't realize that business and marketing should cede power to
product/engineering/creativity and return more to the open mode over the
closed mode, well they end in stagnation after the last bit of value is
extracted and all grace and position in the market gone.

Companies that realize that product/engineering/creativity is most important
and then their business/marketing teams boost those efforts in the
marketplace, well those companies go on to live a long time and have well
established research and development as well as risk taking adventures.

Companies that are led by product/engineering/creative respect the open and
close modes you must enter so you don't force creativity but let it flow [1].

> _We 've become fascinated by the fact that we can usually describe the way
> in which people function at work in terms of two modes: open and closed._

> _CLOSED MODE_

> _So what i can just add now is that creativity is not possible in the closed
> mode._

> _Let me explain a little. By the "closed mode" I mean the mode that we are
> in most of the time when {we are} at work._

> _We have inside us a feeling that there 's lots to be done and we have to
> get on with it if we're going to get through it all._

> _It 's an active (probably slightly anxious) mode, although the anxiety can
> be exciting and pleasurable._

> _It 's a mode which we're probably a little impatient, if only with
> ourselves._

> _It has a little tension in it, not much humor._

> _It 's a mode in which we're very purposeful, and it's a mode in which we
> can get very stressed and even a bit manic, but not creative._

> _OPEN MODE_

> _By contrast, the open mode, is relaxed… expansive… less purposeful mode… in
> which we 're probably more contemplative, more inclined to humor (which
> always accompanies a wider perspective) and, consequently, more playful._

> _It 's a mood in which curiosity for its own sake can operate because we're
> not under pressure to get a specific thing done quickly. We can play, and
> that is what allows our natural creativity to surface. _

> _But let me make one thing quite clear: we need to be in the open mode when
> we 're pondering a problem but once we come up with a solution, we must then
> switch to the closed mode to implement it. Because once we've made a
> decision, we are efficient only if we go through with it decisively,
> undistracted by doubts about its correctness._

> _Humor is a natural concomitant in the open mode, but it 's a luxury in the
> closed {mode}._

> _But here 's the problem: we too often get stuck in the closed mode._

> _Under the pressures which are all too familiar to us we tend to maintain
> tunnel vision at times when we really need to step back and contemplate the
> wider view._

Businesses that develop products, especially in entertainment, that kill the
open mode will kill the company. But default, the HBS MBA and bizdev metric
focused production as if resources are mere parts, kills the open mode first,
because it isn't quantifiable.

The moment you see a research and development department killed or sapped you
know that it is just a matter of time for that company unless they can return
to the right focus, with business and marketing as the secondary supportive
force to a solid product/engineering/creative focus.

This is also mentioned in 'How Software Companies Die' which is almost law
now:

> _" The environment that nurtures creative programmers kills management and
> marketing types - and vice versa."_ [2]

I wonder when this knowledge will make it back to HBS MBA business school,
there are plenty of examples in the market.

Business and marketing should be the multiplier of your value, they are not
the value creators, the product / engineering / creative / research /
development / design departments and the people you have are the value
creators.

[1] [https://genius.com/John-cleese-lecture-on-creativity-
annotat...](https://genius.com/John-cleese-lecture-on-creativity-annotated)

[2] [http://www.call-with-current-continuation.org/rants/how-
comp...](http://www.call-with-current-continuation.org/rants/how-companies-
die.txt)

~~~
phkahler
>> Companies can come back after the HBS MBAs/bizdevs take over, they must
return to product/engineering/creative focused though and it is tough, usually
it takes a near failure for the problem to be recognized.

I'd also point to AMD. After AMD64 came out, Ruiz focused on marketing and cut
back in engineering. He also bought ATI, which was a good long term but cost a
lot of money at the time. They only turned around after betting the company on
Zen, but it took 3-4 years to get the design to market. They seem to be pretty
focused on engineering now - even adding staff to support Linux drivers.

~~~
dralley
He also sold their mobile graphics technology, Adreno, only about 2 years
before the smartphone revolution began.

------
seren
What is more worrying for Boeing is that a SW fix might not be that easy to
implement.

According to that article [0], the fix is running too slowly on the Flight
Control Computers, that are based on a 80286 architecture.

I am not sure how reliable this info is, and that should not be surprising
given the cost of verification or certification of an aircraft, but I am
_still_ surprised that a 2019 plane, has still some HW and SW from the
1980ies.

Edit : There are actually more details in Wikipedia [1]

>In June 2019, "in a special Boeing simulator that is designed for engineering
reviews"[75], FAA pilots performed a stress testing scenario – an abnormal
condition identified through FMEA after the MCAS update was implemented[76] –
for evaluating the effect of a fault in a microprocessor: as expected from the
scenario, the horizontal stabilizer pointed the nose downward. Although the
test pilot ultimately recovered control, the system was slow to respond to the
proper runaway stabilizer checklist steps, due to an 80286[77] microprocessor
being overwhelmed with data. The FAA characterized the slow responsiveness as
"catastrophic", whereas Boeing initially classified it as "major". The
solution appears to consist in rerouting data across multiple chips. Boeing
stated that the issue can be fixed in software.[78] The software change will
not be ready for evaluation until at least September 2019.[79] Boeing also
said that it agreed with additional requirements that the FAA required it to
fulfill, and added that it was working toward resolving the safety risk. It
will not offer the MAX for certification until all requirements have been
satisfied.[80]

[0] [https://www.moonofalabama.org/2019/06/boeings-software-
fix-f...](https://www.moonofalabama.org/2019/06/boeings-software-fix-for-
the-737-max-problem-overwhelms-the-planes-computer.html)

[1]
[https://en.wikipedia.org/wiki/Maneuvering_Characteristics_Au...](https://en.wikipedia.org/wiki/Maneuvering_Characteristics_Augmentation_System)

~~~
tempguy9999
Possibly talking rubbish but: a 286 is simple, well understood both in terms
of its spec and its performance (no fancy pipelines, no cache, so very
predictable performance), is fabbed probably in the order of a micrometer so
highly resistant to cosmic rays (assuming CRs do affect circuitry), inerface
to memory that is equally 'boring', those 286s are perhaps hardened and quite
possibly still produced for this purpose.

All the above is speculation but I can imagine that I'd like very old, boring,
predictable and very understood tech rather than the latest. That said, it is
a bit unexpected.

~~~
Leherenn
It's probably also certified, and has been in the 737 for a very long time.

Usually, if you see something old in a plane it's a matter of certification as
it's a long and really, really expensive process. If the chip has enough power
to do what is needed, the only reason to change it is that procurement for new
parts become more expensive than recertification. Given the price of
certification, companies make sure these parts remain available for decades as
that's still cheaper.

~~~
tempguy9999
expensive, yah. After I posted I did a little digging.

"The RAD750 is a radiation-hardened single board computer manufactured by BAE"
and "The RAD750 system has a price that is comparable to the RAD6000 which is
US$200,000 per board (per 2002 reference)"
<[https://en.wikipedia.org/wiki/RAD750>](https://en.wikipedia.org/wiki/RAD750>)

More general info here, inc. use of an 8086 and a MIPS R3000: "The CPUs of
Spacecraft Computers in Space" <[http://www.cpushack.com/space-craft-
cpu.html>](http://www.cpushack.com/space-craft-cpu.html>) which backs up the
chip cost mentioned above. Generally interesting.

Completely agree that if it's fast enough, why change it.

------
nabla9
Governments should have predatory practice towards shareholders in these
cases.

If company can't be allowed to fail (strategically important or government
regulated sector like banking) there should be 'fluid bankruptcy' option. When
they default or fail their obligations, the next day the government owns them
without operations being disrupted. Shareholders lose everything overnight and
any private debt would have standard 50% haircut (lenders would know this
beforehand). Government would then sell the stocks back to the market within
10 years or so.

Bailouts are subsidies for risk.

~~~
FigBug
Isn't that pretty much what happened with GM? The stocks and bonds were all
wiped out. And then the new GM was owned by the government / union until they
did an IPO a few years later?

~~~
nabla9
Yes, eventually.

First the auto industry asked and revived $25 billion in TARP money and $5
billion in loans for auto industry suppliers. That was not enough and they
asked another $25 billion and this time the government refused. Only after
that GM and Chrysler went bankrupt.

~~~
a_wild_dandan
Freakonomics did a wonderful episode on the subject of government
bailouts/investment, _Is the Government More Entrepreneurial Than You Think?_
[1]. One relevant quote:

> MAZZUCATO: What the U.S. government actually did with Tesla was the opposite
> of what they should do. They said, thinking they were quite wise, “If you
> fail to pay back the loan, we get three million shares in your company.” And
> you have to ask yourself why all these Goldman Sachs guys who were in
> Obama’s government didn’t actually come through when they were needed,
> because they should have said the opposite: “If you do pay back the loan, we
> get three million shares.” And the price per share, when the loan was taken
> out in 2009, was $9 a share. When it was paid back in 2013, it was $90 a
> share. That difference multiplied by three million would have more than paid
> back the Solyndra loss and the next round. Then the question becomes: how do
> you share not only the risks but also the rewards? So we don’t get what we
> get with the banks, which is that when things go bad the state has to bail
> them out, and when things go well, the banks take the profits.

[1] [http://freakonomics.com/podcast/mariana-
mazzucato/](http://freakonomics.com/podcast/mariana-mazzucato/)

------
mannykannot
This article repeats the claim that the MCAS software was faulty, but is there
any evidence of coding-level errors? There is the systems engineering failure
of not comparing the two available AofA sensors to detect faults, if not going
for at least triple-redundancy, but the root cause there is not a coding
error.

It has been suggested that high AofA readings should have been rejected
unconditionally, but that approach can have its own problems, as in AF447
where the stall warnings stopped as the airplane became more deeply stalled.
One should not leave the decision as whether to do that up to the programmer's
discretion.

~~~
wsxcde
> _This article repeats the claim that the MCAS software was faulty, but is
> there any evidence of coding-level errors?_

No, there isn't. The Verge (and IIRC other sources) have reported that the
crashes were due to failures in the angle of attack (AoA) sensors. No program
in the world is going to give you correct output with garbage input.

Verge link: [https://www.theverge.com/2019/5/2/18518176/boeing-737-max-
cr...](https://www.theverge.com/2019/5/2/18518176/boeing-737-max-crash-
problems-human-error-mcas-faa)

~~~
michaelmrose
No sensor failure should cause the plan to go into swan dive to destruction
mode.

The software that carries your tweets has to deal with exceptional situations
including hardware failure so to must software that runs life critical
hardware. Seems to me that if the proper response to faulty sensors was to
disable MCAS perhaps it should have just done that for the pilot.

Even without a second AoA sensors perhaps something could have been derived
from the fact that the pilot was furiously pulling up while the aircraft was
losing altitude?

Defense in depth is always a good thing.

~~~
DuskStar
> Even without a second AoA sensors perhaps something could have been derived
> from the fact that the pilot was furiously pulling up while the aircraft was
> losing altitude?

People keep saying this. But AF 447 was _caused by_ this. Pilot furiously
pulling up, plane rapidly approaching the ground... And the steps to fix it
would have been to _push down_. None of this is as simple as you seem to
think.

~~~
salawat
AF 447 was caused by not being "ahead of the plane", or not being "10% smarter
than the piece of equipment you're operating".

Pilots speak of being ahead of the plane as the mental state of understanding
the current condition of the aircraft, and being able to correctly forecast
the end result of any control action on the current state.

This is like driving a well maintained car. You know the car will "follow"
your directions.

Reasoning "behind the plane" is a state where the plane has started to do
something, and you have to figure out what changed; I.e. the actual plane is
no longer equivalent to your mental model of the plane. You can no longer with
any certainty forecast the end behavior of the plane on your understanding
alone. You're essentially in a reactive state. You have to rebuild your model.

AF447 suffered a major automation casualty. The pilot's didn't realize this,
and attempted to fly off their flawed mental models of the plane's behavior.
For instance, the Stall alert becoming active when the pilot tried pitching
the aircraft down being unsilenced due to the automation coming back within
non-extreme input regimes. The pilot attempted to avoid the alert by returning
to the extremis instead of pitching down through the alert to recoverable
flight.

Did the pilot's know that the alert would silence beyond an extreme value? No,
but instinct told them if they did something that caused a stall response,
reverse it to get away. Without the extra intelligence around how the
automation worked, heuristic reasoning led to a valid, but ultimately lethally
unsound course of action.

~~~
DuskStar
No disagreement at all from me. I just wanted to point out that the suggested
'should I cancel MCAS' heuristic was not _nearly_ sophisticated enough.

------
xmichael999
Let's not forget yesterday Boeing announce a human life is worth $289,017
[https://www.slashgear.com/boeing-reveals-100m-737-max-
victim...](https://www.slashgear.com/boeing-reveals-100m-737-max-victim-fund-
after-2018s-record-101bn-revenue-03582726/)

~~~
CydeWeys
That's quite pathetic, given that the actuarial value of a life is actually
around $5-10M (in the US anyway). They're going to end up paying out a lot
more money in the lawsuits though, so we don't know the final total number
yet.

~~~
xmichael999
Let's not forget where the two max's crashed. Ethiopia and Indonesia. Some
bean counters already decided the value of a life in these, "shit hole
countries." I wouldn't be surprised if they literally took the cost of living
index in the US and compared it to these countries and proudly patted
themselves on this back when they came up with this amazing cost savings... I
hope the individuals, airlines and the countries themselves find a way to sue
Boeing into the ground.

~~~
sn41
Ethiopian Airlines is a Star Alliance member. It must be one of the premier
customers of Boeing, and was one of the first airlines to introduce the
Dreamliner and 737 MAX into their fleets. If word gets around that this is how
they treat their good customers, this itself might be a nail in the coffin for
Boeing.

~~~
unscaled
It's also the largest airline in Africa and it has been growing rapidly.
Definitely a customer you'd want to keep satisfied.

------
cronix
At some point, we need to stop protecting incompetence. It just allows for
more incompetence. Let the chips fall where the company bet on them. All of
the companies. Or, let them get private insurance for such things. The public
shouldn't be their insurance policy.

------
markus_zhang
The problem is that corruption has already reached the core.

The military-industry complex, the revolving door scheme, pretty much
everything. I mean the system still works because the United States, so far,
is still the most powerful country.

But for how long?

The elites are not doing their job, so the people should pick up from here.
But the thing is, the people are not able to do this either.

~~~
adventured
> because the United States, so far, is still the most powerful country. ...
> But for how long?

What would be the competition to the US other than China (which is insular,
nationalist to the extreme and protectionist to the extreme)?

If China is the only superpower competitor, then the structure you just
described will continue to work perpetually as there is no alternative.

There is a common fantasy that the US is suddenly going to collapse, because
'all empires end.' It's nothing more than a fantasy because US wealth and
power is derived from its domestic economic output, not from conquering
foreigners or invading countries like Afghanistan (despite what the collapse-
fantasy types would like to believe; the US already had the largest economy by
1890, long before the dollar became the global reserve standard). The US
economy is built on its enormous scientific and R&D output, which is unrivaled
in world history. That positioning of strength spans aerospace, spacetech,
medtech, biotech, pharma, agriculture, software, mobile, semiconductors,
intellectual property broadly, media & cultural export, finance & banking
(Visa is worth $400b, Deutsche Bank is worth $16b; US banks are eating Europe
right now, because of how weak their financial position is in contrast). The
US is the world's #2 manufacturer by a large margin and is likely to regain
ground on China from here forward (they will lose manufacturing share
globally). The US has a position in energy that is unrivaled overall,
including its oil and natural gas potential. The US has by far the strongest
and most profitable airlines, which are now looking outward and beginning to
buy into the rest of the world's weaker airlines.

The US still has 19 of the world's top 20 universities, and 40x of the top 50.
That's one of its critical foundations supporting its economy in the post WW2
era. The rest of the world has nothing even remotely like it.

The US position is still expanding, not contracting. It has added an economy
the size of Germany + France since the great recession. Simultaneously, China
is gobbling up position / influence / economy / power in the other half of the
world the US doesn't control.

There is no peer to the US in the 'West' and there is not going to be. Most of
Europe has seen zero economic growth since 2006-2007, their stagnation is
going to get worse rather than better. They will fall further behind (and
their politics will get much worse as that happens). Japan (third largest
economy) is going to see little to no economic growth for the next 20 years at
least. So where's the competitor going to come from? It's not. The US will
continue to grow more powerful, wealthier, and its economy will continue to
out-grow Europe and its military capabilities will continue to expand far
beyond what Europe is capable of.

China will be the sole competitor to the US in the 21st century and the two
will split the world in half.

~~~
joyjoyjoy
"The US still has 19 of the world's top 20 universities"

Nope.

"and 40x of the top 50."

Nope.

[https://www.timeshighereducation.com/world-university-
rankin...](https://www.timeshighereducation.com/world-university-
rankings/2019/world-
ranking#!/page/0/length/100/sort_by/rank/sort_order/asc/cols/stats)

But nice try.

~~~
seibelj
The crux of GP’s comment stands despite quibbling on a few details. The US is
the most powerful country on the planet and no one else is close.

~~~
joyjoyjoy
"The US is the most powerful country on the planet and no one else is close."

Really? How do you measure this? Based on GDP Europe and China should be the
same level. Based on PPP China may have surpased the US already. Military
might? Questionable how effective carriers are against an able opponent. Paul
Kennedy would argue, that increased military spending against an upcoming
opponent might be a sign of weakness.

------
sschueller
How much more support does Boeing need? [1] Maybe the should start considering
stop cutting so many corners.

[1] [https://www.theguardian.com/business/2019/jul/02/donald-
trum...](https://www.theguardian.com/business/2019/jul/02/donald-trump-new-
tariffs-eu-cheese-whisky-aircraft-subsidies)

------
mmargerum
The Max software -- plagued by issues that could keep the planes grounded
months longer after U.S. regulators this week revealed a new flaw -- was
developed at a time Boeing was laying off experienced engineers and pressing
suppliers to cut costs.

Increasingly, the iconic American planemaker and its subcontractors have
relied on temporary workers making as little as $9 an hour to develop and test
software, often from countries lacking a deep background in aerospace --
notably India.

In offices across from Seattle’s Boeing Field, recent college graduates
employed by the Indian software developer HCL Technologies Ltd. occupied
several rows of desks, said Mark Rabin, a former Boeing software engineer who
worked in a flight-test group that supported the Max.

Don't feel sorry for them and hope the govt doesnt give them a penny.

------
MobileVet
While Boeing clearly participates in a duopoly... cash flow may necessitate a
bailout. Cash on hand is going to get hammered by penalties for out of service
planes and lost revenues due to the inability to deliver new planes.

Outside of that, it will be interesting to see how endemic the issues were.
Here is hoping that this was an isolated incident.

The nightmare scenario would be multiple models suffering from a wide range of
issues. Even though there haven’t been crashes, the optics and responses would
be complicated.

If investigations or whistleblowers uncover other issues in other models it
could fall apart very quickly. This would crush the economy with travel and
shipping grinding to a halt. A bailout of Boeing would be the least of our
worries...

~~~
bradleyjg
Why necessitate? Businesses sometimes go under, that’s how the system works.
The government ought not pick winners and losers.

~~~
willyt
I’m guessing that it’s considered a strategically important business to US
defence? The US government would presumably be unwilling to allow all those
teams of specialist engineers and technicians to be disbanded and all the
facilities and assets to be sold off as would happen when a normal business
fails.

~~~
philjohn
Arguably those people would be able to form new, competing, companies with
their know-how and a degree of investment. They would, naturally, have to
start out small and grow from there - but Boeing was tiny once, as was
McDonald Douglass, Lockheed etc. etc.

~~~
macintux
Boeing was tiny when it didn’t take billions of dollars to design any new
aircraft.

------
leemailll
Boeing still has more than 5000 planes orders to be delivered
([http://investors.boeing.com/investors/fact-
sheets/default.as...](http://investors.boeing.com/investors/fact-
sheets/default.aspx)), I don't think they will try to change any time soon
when things seem going well albeit 737max.

~~~
xmichael999
The cancellations haven't officially taken place, but you can be damn sure
everyone other than committed 737 fleets like Southwest have unofficially
already cancelled their orders of MAX's. Air Canada is the perfect example,
it's the first time to introduce 737's to their fleet - they are waiting for
the dust to settle but you can be damn sure the 737's they already own will be
sold and Boeing will largely give them their money back too and the rest of
their order will never be completed.

~~~
leemailll
I’m not trying to defend Boeing and I also think the problem for 737max is a
serious blow to boeing, but I suspect the only chance for massive
cancellations of its orders is when ffa designates it as a new airworthiness
type. Even that might depend on contract details. What also make the
cancellations less likely, in my opinion is that its competitors, the A320neo
has a backlog of more than 10 years at the current production rate. And the
smaller a220, the former bombardier cseries, has a backlog of almost 400
planes. Besides, at 2019 France air show, IAG put an order of 200 737max in a
letter of intent which is quite surprising and strange

~~~
lefty2
Airbus can always just increase production if the demand was high enough

~~~
xmichael999
This!

------
KuhlMensch
Ctrl + F "China", 0 results

Oh? How can you talk about Boeing's current financial state and the trade
tension between US and China?

[https://fortune.com/2019/03/26/china-airbus-order-
boeing/](https://fortune.com/2019/03/26/china-airbus-order-boeing/)

------
canada_dry
> military procurement and engineering created a corrupt design process, with
> unnecessary complexity, poor safety standards

Assuming this permeates a considerable amount of the US military spending I'm
curious how much it deflates the true value?

The US spends more than double China on military, and although it is likely a
portion of their (China) budget goes towards graft and corruption my suspicion
is that actual design, development and manufacturing is much more efficient
(e.g. lack of environmental controls and labor unions) and would support the
argument that the US is on course to losing its position of top military force
(to China) within the next two decades.

~~~
mrj
The US spends a _lot_ of that on graft and corruption, as well. Even the
article linked here mentioned playing politics with procurement, but also
consider the billions and billions paid for military hardware that doesn't
work and the Pentagon has gone on record saying they don't even want. The US
has grown comfortable thinking it's still ahead while they continue to prepare
for a style of war that will not come. If history is any guide, the next big
war will be fought with a technology that takes advantage of the weaknesses of
the previous leader, despite spending advantages.

------
Zenst
Is there any airline manufacturer since 1950 that was not born or kept alive
on the back of governmental subsidies/grants/bailouts or lucrative military
contracts to fund R&D?

~~~
Theodores
You know the answer to that question. Comac, UAC, Airbus, Embraer and others
all came from government efforts. Bombardier took Canadair off the
government's hands to get started, so they might be the nearest there is to
'private free market enterprise'. Boeing live off the the defence contracts
but they are arguably totally free market. We know this isn't true and
pretend.

The article talks about how the McDonnell Douglas and Boeing merger was evil.
But there is no discussion on why Airbus is okay when Airbus is a merger of
various European defence interests with different cultural values.

Why is one merger bad and the other not put under the same scrutiny?

Also, why isn't there a supply chain where anyone can enter the market? Pratt
and Whitney, Rolls Royce and General Electric make engines, so if you can make
your own plane you just bolt on ready made engines. But that is as far as the
system integration aspect seems to go.

Most auto manufacturers do make their own engines so they are not 'systems
integrators'. However, if you want to make cars you could go to Bosch for the
bits they make, Johnson Controls for the bits they make, Pirelli for a few
tyres and before you knew it there would be everything needed for final
assembly. You could even get a contract manufacturer to make the whole thing.

With computers anyone can build a PC. But there might only be 2-3 supplier
choices for a given component. Some PCs are built for a specialist niche, e.g.
point of sales systems, or medical. No heavy handed governments made the PC
manufacturers merge into giant mega corporations, they did that themselves
opening doors for new entrants in the process.

Planes could be more about systems integration, so a given airliner might be
able to get a local place to build planes for its requirements from off the
shelf parts. The governments could have rationalised the industry to work this
way. Imagine if, as per the engine example there are 2-3 suppliers for wings,
fuselages, avionics packages, cabin interiors, fuel interiors and so on.

This idea can be easily nitpicked, however, aeons ago the U.S. government
legislated so that airliners could not build their own planes.

~~~
Zenst
Thank you for your wonderful reply.

I'm of the feeling that electric planes may open up the market , though
mindful it may be like the early days of plane making. Lots of small private
companies that eventually merge over time into a handful of behemoths with the
same governmental factors playing out.

~~~
0xffff2
Fully electric commercial airliners are unlikely to ever exist. Even hybrid-
eletric airliners are 30+ years out from commercial production.

------
zeristor
Very interesting, McDonnel Douglas was the company that gave us the DC10. I
particular remember that since they weighed up the legal costs of when it
would crash with applying a fix; rather short sighted.

[https://www.designnews.com/aerospace/designed-disaster-
dc-10...](https://www.designnews.com/aerospace/designed-disaster-
dc-10-airliner-part-1/196128601048982)

------
salawat
>And it was bad software, written by to engineers paid $9/dollar an hour.

I really wish people wouldn't grab onto this; I've found no authoritative
source linking those outsourced to to the coding of the MCAS, and several that
explicitly state that was not the case.

While the rest of the article has absolutely valid points, let's not cloud the
issue with cheap mudslinging.

------
euroclydon
Terrible title. Either I skimmed the end of the article or there was nothing
about a bailout in there.

~~~
windexh8er
I think you missed the point. The implication is that it is the direction
we're headed. Which, personally, I find egregious given there's a criminal
investigation into the company. I'd love to see the executive ranks do
legitimate prison time for their cause of unneeded death.

------
Havoc
Bit strange how the article seems to blame McDonnell Douglas for all Boeing's
current troubles.

First, it uhm no longer exists and second the merger was in 1997 - more than
two decades ago!

The current mess is flying under the Boeing flag one way or another.

~~~
cryptonector
It doesn't matter that the merger was over 20 years ago. What matters is
whether there was a lasting cultural change at the merged company, and whether
it was for the better or worse.

I've worked through half a dozen M&As, and I've seen the culture at the bigger
partner in some of them change radically, often because the bigger company
will promote executives from the smaller company as part of the deal. This
really is a thing, and sometimes it's a very bad thing, though I've also seen
it succeed wildly.

Executives often don't understand the culture in the companies they lead, or
the companies they acquire or merge with. Sometimes they don't even have the
luxury of choosing partners on the basis of cultural compatibility.

------
betimsl
Great article.

Now:

> In 1993, a Defense official in the Clinton administration, Bill Perry,
> called defense contractor CEOs to a dinner, nicknamed “the last supper.”

Bill you devil.

Jokes aside, now imagine you're this guy and have all this power in your
hands, imagine that for a second, what would you do? If you ask him, he did
great. Because all he knows is _that_ , he can't see past the situation
because he is a small minded creature. This begs a question is he responsible?
Well I don't think so. It's us, us people that go to polls and vote.

Now imagine the frustration of the good Boeing engineers of that time. You
probably can't because of the today's culture, a culture where nobody is
giving a shit about anything.

No matter what though, it's very important not to lose the compass and not
forget for what you have fought when the time comes.

~~~
saiya-jin
> This begs a question is he responsible?

Well yes he is. It doesn't matter that much what his original intentions were
(not that we will ever learn true intentions of these backdoor deals, politics
is dirty at every level), the result is what it is. And this meeting was the
decisive push for it.

Will he stand trial for this? I can't imagine it happening. Can he claim to be
a good moral person who did only the best possible choices for mankind/US
citizens in his life? Absolutely not.

------
bdavis__
Not a viewpoint I agree with.

Boeing has plenty of business. 737 MAX sales may suffer, but that will not
kill the Boeing Company.

Aviation is a deadly serious business. Design is done by people, which are
highly flawed cogs in the system. The system was broken. (meaning design,
verification, and certification process). The system can be fixed.

Incompetence at some levels; perhaps. Not murder and not criminal behavior.

Given a crew that has experienced an AOA sensor failure during MCAS operation
in the simulator, I would fly on a 737 MAX as it was delivered. Without
concern.

~~~
amluto
> Given a crew that has experienced an AOA sensor failure during MCAS
> operation in the simulator, I would fly on a 737 MAX as it was delivered.
> Without concern.

How about if the crew failed to recover in the simulator?

~~~
bdavis__
If they fail to recover the first time, that would be excellent. (the pilot
thinks "wow, this is hard and I need to learn..")

Pilots do not like to die. If the first attempt was incorrect, they will do it
again. and again. and again.

A crew that was unsuccessful would not leave the training device until they
had mastery of the situation. (and, the airline would not let them fly)

For a single crew, the simulator time is very cheap. very cheap * 10,000 crew
members shows up on a spreadsheet; thus the avoidance of simulator training by
management.

------
ptah
or let the free market and invisible hand take swift care of it

~~~
Anarch157a
Free market and Invisible Hand bot fails when there's a monopoly/duopoly,
especially when the players are deeply embedded in government structures, like
Boing is, thanks to their status as the largest defense contractor for the US
military.

------
sslayer
This article didn't seem to have any point to it other than bashing. I didn't
see any hard facts pointing to the necessity of a bailout, rather a crude
opinion piece designed to manipulate stock prices?

------
KeAShizuku
I don't think things are going that badly for Boeing. There are only two
aircraft producers and Airbus is at full capacity. The airline industry is
still growing. You would actually have to try really hard to fuck this up.

It would be amusing if the US government gives them money though. European
alleged subsidy of Airbus is the latest accusation of Trump and one of the
causes of the US-EU trade war.

~~~
onli
> _You would actually have to try really hard to fuck this up._

Murdering 350 civilians with lies and negligence for profit and "shareholder
value" just might suffice.

They put a plane into the air that flies itself automatically into the ground
after all, with no opportunity for the pilots to save the plane. You can't
fuck up more.

> _It would be amusing if the US government gives them money though._

The US is already giving them money, indirectly. The EU is just also giving
Airbus money. That's the core of the issue of Trumps position and why the
conflict can't be easily solved.

~~~
sokoloff
> They put a plane into the air that flies itself automatically into the
> ground after all, with no opportunity for the pilots to save the plane. You
> can't fuck up more.

Though Boeing has significant contribution, if you read the report on the
Ethiopian Air 737-Max crash, I think it's easy to see several places where
there was ample opportunity for the pilots to save the plane, particularly in
light of the LionAir crash. Even in the LionAir case, a prior LionAir crew
_did save the airplane_ on an earlier flight by following the manufacturer
provided checklist.

Boeing made a serious design error here. However, it's not nearly as serious
as the quoted sentence, IMO.

~~~
onli
I was honestly under the impression that the provided checklist did not work,
as it included elements that did not work in the 737-MAX as expected when
coming from earlier models. Plus the fact that the forces were to strong, the
pilot could not manually correct the course.

Besides, did the pilots have opportunity to read and implement the new
checklist?

~~~
sokoloff
There was no new checklist. (Arguably, this may be a problem.)

The existing checklist was unchanged from other 737s and the required actions
were all "memory items" (items which must be recalled and implemented by the
crew from memory, prior to referencing and completing the written checklist in
the QRH). Any 737 crewmember would have had to have demonstrated those
checklist items, from memory, prior to receiving their type-rating to fly the
jet. Runaway trim is a "no joke" event in nearly any type and is a memory item
in any type I'm familiar with.

The Ethiopian Air crew seemed to correctly diagnose the issue, got the
aircraft somewhat under control and then, in an attempt to fix the trim issue,
_undid_ the corrective checklist item, ran the trim aircraft-nose-up using the
thumb switch (so far, excellent!!) and then, inexplicably, left the stab trim
power enabled without commanding further aircraft-nose-up. So, they diagnosed
the issue, initially did all the right things, then undid them [with good
reason], then failed to re-do them.

(I agree that Boeing still wears a lot of blame here. It's just not the case
that the crews were helpless and unaware passengers.)

~~~
mannykannot
It's not _just_ the checklist: the experience of MCAS-induced trim runaway is
significantly different from that which NG pilots are trained for, to the
point where additional training seems necessary. Boeing set up the conditions
for an accident by first hiding, and then downplaying, those differences,
apparently to avoid additional training being required.

I have seen some suggestions that this was also the reason for not having MCAS
compare the two AofA sources to detect a fault, as the fault would have to be
reported, and the documentation of that indicator would reveal the existence
of MCAS.

~~~
sokoloff
I agree with you, hence the "arguably, this may be a problem" parenthetical.

Nevertheless, the provided checklist did work as evidenced by Lion Air 043.

~~~
mannykannot
So the checklist worked sometimes, but the question is, could it have been
improved if we put aside the issue of whether doing so would make a case for
additional training?

It is quite possible that it would have been an adequate checklist when backed
up with sufficient training that emphasized the differences between MCAS-
induced trim runaway and that which might have been experienced in other
variants. Simulator practice of manually trimming might help as well, though
there is some doubt whether current simulators can adequately model the
difficulties that may be experienced.

[https://www.youtube.com/watch?v=n4qDLR4s45U&t=296s](https://www.youtube.com/watch?v=n4qDLR4s45U&t=296s)

