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Boeing to Suspend 737 Max Production in January (wsj.com)
334 points by JumpCrisscross 38 days ago | hide | past | web | favorite | 259 comments



I'm surprised that the market hasn't reacted more negatively towards Boeing regarding the Max 8 disaster.

Airlines operate on razor-thin margins (~1 to 2%), and several users of the Max 8 have had significant portions of their fleet out of service as a result.

Westjet [1], for example runs 124 planes currently. 13 of which are the Max 8. Over 10% of their fleet. Southwest Airlines [2], for example, runs 748 planes, 34 of which are Max 8s (with an additional 246 ordered), ~4.5% of the fleet.

The lawsuits that are surely incoming are going to pile-drive this company into the ground.

edit: [1] https://en.wikipedia.org/wiki/WestJet#Current_fleet edit 2: [2] https://en.wikipedia.org/wiki/Southwest_Airlines_fleet#Curre...


> lawsuits that are surely incoming are going to pile-drive this company into the ground

Legally, everyone is indemnified up the wazoo.

Strategically, airlines are in a worse position if Boeing goes under. Not only do they lose the planes on order. They also lose their service and replacement-parts provider. The survivors would, in the medium-term, face an Airbus monopoly and, in the long-term, a Chinese-European duopoly.

As emotionally-satisfying as it may be to see Boeing go under for its arrogance, it's neither helpful nor likely. (A well-managed break-up, on the other hand...)


>Strategically, airlines are in a worse position if Boeing goes under. Not only do they lose the planes on order. They also lose their service and replacement-parts provider. The survivors would, in the medium-term, face an Airbus monopoly and, in the long-term, a Chinese-European duopoly.

Boeing "going under" just means that shareholders will get wiped out, not that they cease operations.


I wonder if Lockheed Martin would get back into passenger jets.

Or Bombardier leads a Canadian aerospace resurgence.


I wonder if we will be to trust Mitsubishi designed wing root components should they fly.


Bombardier is part of Airbus now.


No they aren't; airbus has a stake in one of Bombardier's aircraft lines, that's all.


>> Bombardier leads a Canadian aerospace resurgence.

Do we have enough tax dollars to finance such an event </s>


That may be what the poster meant by "well managed break up".


This always baffles me. It's still the free market even if regulators sometimes step in to ensure that incentives are aligned and outcomes don't become systemically catastrophic.

In this case, it would be Boeing going bankrupt, and authorities stepping in to buy the assets to keep operations running if no other entity stepped in to do that. Then selling on the reformed company on the open market afterwards.


> Chinese-European duopoly

Unlikely. The Chinese is currently competing with Embraer (E-Jet E2) and Bombardier (C-series/A22x) with the Comac C919 which has problems with production. Since its first flight in 2017, there has only been 5 built.

Tech transfers has also slowed to trickle since the HSR fiasco with foreign rail technology absorbed and then re-exported. Nobody trusts the Chinese to play fair.

What's more likely if Boeing run into difficulties from the MAX damages is that it will restructure under Chapter 11 and re-emerge with the existing shareholders wiped out. This may involve a breakup, with the defence business separating from the commercial airliner business, but that's also unlikely due to how aerospace companies are run these days.


The C919 is competing with the 737 and A320, and hasn't entered production yet. Are you mixing it up with the ARJ21?


Yeah, the ARJ21 is in production and the C919 is in testing.


The Chinese is currently competing with Embraer (E-Jet E2) and Bombardier (C-series/A22x)

AKA Boeing and Airbus.


The C919 is a narrowbody jet aimed at the 737/A320. There are no Chinese widebody/twin aisle aircraft, now or anytime in the foreseeable future, that can compete with the 787/A350.


In a huge leap of naming they’ve named it the C929 with initial flights in 2025 and EIS planned for 2027. It’s cool to think they probably won’t hit those dates but pretending like a roadmap doesn’t even exist is not.

https://en.m.wikipedia.org/wiki/CRAIC_CR929


The CR929 is vaporware: they're not even planning to begin construction of the first prototype until 2021. Also, it's "CR" for "China/Russia", since this is meant to be a joint venture between COMAC and UAC (Sukhoi). Which sounds like a great recipe to delay everything even further.

Also also, even if China does pull off the airframe, they'll still rely on Western jets to power it. China's first modern turbofan, the CJ-1000A, is not scheduled to go into service until 2030 (!) and even that is geared only for the C919: https://en.m.wikipedia.org/wiki/ACAE_CJ-1000A

Don't get me wrong, I'm sure China will get there sooner or later, as they've already demonstrated with high-speed trains and many other things. But timeframes for going from concept to a serious competitor in this business are measured in decades.


Something I'd like to point out here, not taking away from any of your points.

If you think of Airbus as a multi-national consortium (as it rightly is: French, British, etc.) then a Chinese/Russian hook-up is not totally daft. You could make the same argument about "a great recipe to delay everything even further" about Airbus versus Boeing and yet Airbus appears to be doing okay.

Don't we think competition is good? What happened to cheering on free markets? Why exactly do we want a Western duopoly to continue to exist in perpetuity? If Western countries believed their own rhetoric they'd be helping Russia and China to compete on the world stage – it would be a win for the entire globe.

You make it sound like 2030 is a lifetime away. It's only 10 years. It's been less than a century since the last huge global conflict and it looks like China and Russia will be toe-to-toe with the West (ignoring that Russia is already largely Western) in commercial aviation, space-flight, nuclear power, possibly semiconductor production, you name it.

The West does not have some God-given or divine-right to remain on top of the heap – China (and India) are going to eventually catch up, it's just a matter of time, the only thing up for debate in my mind is whether it's sooner rather than later, and I believe in China's case it's going to be upon us sooner than we expect.


I didn't say any of that. My point is simply that building large modern passenger aircraft is Hard with a capital H, and while I wish them luck, China still has a long, long way to go.

And FWIW, if you read up on Airbus's history, you'll see that their unusual structure and resulting internal politics have caused a lot of pain over the years (eg. the A380 superjumbo program). Ironically enough, Boeing got a taste of this too when they decided to outsource all the things when building the 787, which consequently went way over budget.


Replying to myself. Airbus is a consortium of four countries: France, UK, Germany, Spain – started in the 60's. Basically China/Russia are 50 or 60 years behind!

Here's a recent doc about the most technologically advanced aircraft they've manufactured, the A350: https://www.youtube.com/watch?v=Yutzg2NLwcU “Giant Aircraft: Manufacturing an Airbus A350 | Mega Manufacturing | Free Documentary”


Not to forget a joint venture with Canada.


> Don't we think competition is good? What happened to cheering on free markets?

No? Not really? Obviously competitions is good when it drives innovation, which is beneficial for domestic industry as a whole. Competition is not good for competition's sake. It's not good competition when Western players fall behind. This isn't some kind of hypocritical failing of free-market doctrines. You either don't understand what it intended to accomplish, or are deliberately misrepresenting it. I suspect the latter.

> Why exactly do we want a Western duopoly to continue to exist in perpetuity?

... Why wouldn't we want our own players to dominate the industry? I don't think any kind of monopoly/duopoly is a good thing, but I don't really think that's your point. Your use of the word 'Western' betrays your intent here.

> If Western countries believed their own rhetoric they'd be helping Russia and China to compete on the world stage – it would be a win for the entire globe.

Um... no? China's exports becoming more competitive would not be a win for the entire globe, it would be quite the opposite.

> The West does not have some God-given or divine-right to remain on top of the heap...

Of course not, God didn't put us on top of the heap either.

> China (and India) are going to eventually catch up, it's just a matter of time, the only thing up for debate in my mind is whether it's sooner rather than later, and I believe in China's case it's going to be upon us sooner than we expect.

I wouldn't hold your breath.


Yes yes yes. But even if everything plays out like you say I don’t think you can say there’s no foreseeable future in which this happens. Please engage with the actual plans and state the technical details you know rather than saying that China has no roadmap do a thing they have a roadmap to do.

Also let’s be clear if the C919 actually works out they will be a serious competitor. The market for wide body aircraft is the one that captures all the imagination and attention but the narrow body sales are the bread and butter. They absolutely do not need to succeed in this market right away to put a big dent in the duopoly.


Also let’s be clear if the C919 actually works out they will be a serious competitor. The market for wide body aircraft is the one that captures all the imagination and attention but the narrow body sales are the bread and butter.

That's a pretty large if. Head west a bit to Russia and see how they're doing in the international market. The Sukhoi SuperJet is, by most accounts, a great plane. Sukhoi managed to sell to the Mexicans (Interjet) and Irish (CityJet) and both got rid of them quickly. Being a threat to Boeing/Embraer and Airbus/Bombardier goes well beyond the complex task of building an airliner.

Sukhoi and Comac are still hugely dependent on the west to build these planes. Avionics and engines especially. The metallurgy required to build a modern turbofan engine is incredibly exotic — outside of France, England, and the US it's simply not there. The Superjet didn't fare well -- the Russians collaborated with Safran and the result was a unreliable engine that was hard to find replacement parts for. The Russians are also currently peddling the PD-14 that competes with the 20+ year old CFM56. Comac skipped that step and went straight to GE.

Comac abandoned carbon fiber for the wings in favor of aluminum. While the C919 wings are built in China, I believe they're a European design (Comac's previous stillborn attempt at an airliner used Ukraine's Antonov for the wings).

They absolutely do not need to succeed in this market right away to put a big dent in the duopoly.

Sure they do. Network effects are huge with airliners. If your Embraer breaks down away from your maintenance base chances are you can buy / borrow parts from another airline. If you're the only one around flying, you're entirely reliant on the manufacturer — and Comac doesn't have any sort of international support network.

Bombardier and Embraer both developed competitors to the 737 on the small side, both nearly went bankrupt, and both were eventually acquired. Unfortunately when you're a widget salesman like McNerney everything looks like a damn commodity. While McNerney's actions set Boeing back quite a bit, Comac is a far smaller threat than he thought. If Boeing can deliver on a MAX replacement it's doubtful that Comac will move the needle much in the next 10-15 years.


> both nearly went bankrupt, and both were eventually acquired

Nitpick: in Bombardier's case at least, these were separate events. The acquisition wasn't to deal with bankruptcy (they got a Canadian government bailout for that), but rather to gain access to Airbus's US manufacturing facilities to avoid import tariffs on US deliveries, which became necessary following a Boeing anti-dumping complaint that would have made the C-Series prohibitively expensive to US carriers.


Nitpick: in Bombardier's case at least, these were separate events. The acquisition wasn't to deal with bankruptcy (they got a Canadian government bailout for that), but rather to gain access to Airbus's US manufacturing facilities to avoid import tariffs on US deliveries, which became necessary following a Boeing anti-dumping complaint that would have made the C-Series prohibitively expensive to US carriers.

My recollection is that Bombardier made (rejected) overtures in Boeing's direction before the trade spat. In either case BBD has gotten out of the commercial aircraft business completely, in large part due to the cost of developing the C-series.


Sukhoi and Comac are still hugely dependent on the west to build these planes. Avionics and engines especially.

Boeing and Airbus don’t build their own engines. I don’t expect COMAC to try that in their first rodeo.

The metallurgy required to build a modern turbofan engine is incredibly exotic — outside of France, England, and the US it's simply not there.

If you’re betting on metallurgy to be the barrier to keep western technological advantage alive I think you’re in for a surprise.

Comac abandoned carbon fiber for the wings in favor of aluminum.

So they have gone back to using the material used to build every other narrow body plane on the market in this size category. I admit, a new design should use carbon fiber, but given that no one else is yet...

Sure they do. Network effects are huge with airliners. If your Embraer breaks down away from your maintenance base chances are you can buy / borrow parts from another airline. If you're the only one around flying, you're entirely reliant on the manufacturer — and Comac doesn't have any sort of international support network.

First off, airlines have purchased a ton of E175 family aircraft.

Second off, while a large international distribution is important, you don’t need to compete in the wide body market to get it.

Third off, COMAC can focus on the Chinese market to start and take it region at a time slowly expanding across Asia. From there South Asia and SEA is easy and both are big markets, Russia would welcome it with open arms and then they can take a whack at the middle eastern market and also be competitive anywhere Airbus and Boeing aren’t really playing that hard anyway. (Africa, etc.) All this well before getting around to Europe or North America.

If Boeing can deliver on a MAX replacement it's doubtful that Comac will move the needle much in the next 10-15 years.

Let’s see Boeing deliver the MAX again first.

I think it would be easy to win a bet that COMAC delivers C919 to commercial airline customers before Boeing delivers a new narrow body design to replace the 737 family.


The C-Series is using carbon wings, and an absolute fuckton of carbon fiber everywhere. I've seen tech that goes into their carbon fiber parts and geometries, it's incredibly impressive, and I'm confident Bombardier more or less got it down.


It’s seemingly an excellent aircraft so far but it is not in the same size class as the C919, B737 or A320. In that market carbon fiber hasn't really hit yet. It clearly will in the next generation since the size class down (this market) and size class up (787, etc) both are carbon fiber designs. But the 737/320/919 size class isn’t there yet.


It’s seemingly an excellent aircraft so far but it is not in the same size class as the C919, B737 or A320. In that market carbon fiber hasn't really hit yet. It clearly will in the next generation since the size class down (this market) and size class up (787, etc) both are carbon fiber designs. But the 737/320/919 size class isn’t there yet.

They're all (C-Series/A220, C919, 737, A320) roughly the same size, but the C919 is antiquated and struggles to compete with the NG and CEO. Meanwhile the C-Series sets the benchmark. Even so, the C-Series was extraordinarily difficult to sell until Airbus stepped in. Comac, with dramatically less experience than Bombardier, will have an even more difficult time trying to unload the C919 (outside of China).

The C919 is specced out at 168 people in a one class layout with an overall length of 38.9 meters, the CS300 seats 160 with an overall length of 38.7 meteres. That puts both between the 737-700 and 737-800 (or A319 and A320) in capacity. Range-wise the CS300 and CEO do well over 6,000 km. The C919? Even with current generation turbofans it can only do 4,000-5,500 km. The NG slots in between (but closer to the C919).

The C919 is at least a generation behind the C-Series and NEO and is not a threat to either Boeing or Airbus. Hell, Comac doesn't even have a western cockpit for the C919 where Bombardier was toying with a stretch of the C-Series.


If you’re betting on metallurgy to be the barrier to keep western technological advantage alive I think you’re in for a surprise.

It's worked out well for the past 70 or so years. Industrial espionage can only go so far, that's more or less why the Russians dominate the rocket market.

So they have gone back to using the material used to build every other narrow body plane on the market in this size category. I admit, a new design should use carbon fiber, but given that no one else is yet...

The MC21 and C-series use carbon fiber wings and the MC21 also uses a CF wing box. Comac is targeting planes from 20-30 years ago. Even if it were perfectly reliable, it's nowhere near competitive with what's on the market now. If that extra few percent of fuel burn weren't important there'd be no market for the NEO or MAX.

First off, airlines have purchased a ton of E175 family aircraft.

That's the entire point. Without that scale support becomes that much more difficult and expensive.

Third off, COMAC can focus on the Chinese market to start and take it region at a time slowly expanding across Asia.

Yeah they've tried. The ARJ went over like a lead balloon. The domestic airlines haven't warmed up to Comac, and it's highly unlikely the C919 will move the needle much.

From there South Asia and SEA is easy and both are big markets

With a strong anti-Chinese sentiment (Malaysia, Vietnam). Perhaps more importantly SEA sees a lot of short-range widebody service which the C919 doesn't help with.

Russia would welcome it with open arms

Russia would welcome a direct competitor to its homegrown offerings? That seems unlikely for the C919 and unlikely even if we're talking about a hypothetical plane built in a Sino-Russian joint venture. Although why would they partner? Russian avionics aren't going to be accepted internationally, Russian engines are woefully inefficient. Comac struggled with the Ukranian wings on the ARJ. Maybe a carbon fuselage, but are the Russians anywhere near being able to do that?

and then they can take a whack at the middle eastern market

The shrinking middle east market? Emirates/flyDubai (who's got both Airbus and Boeing wrapped around their fingers is scaling back their growth (to put it delicately).

and also be competitive anywhere Airbus and Boeing aren’t really playing that hard anyway. (Africa, etc.)

How welcoming will Africa be as they slowly come to terms with how screwed they are by the Belt & Road initiative? Sure, maybe CCP applies pressure to make sales. That's not going to translate to any sort of European or American success though.

Let’s see Boeing deliver the MAX again first.

I suspect that's not going to happen.

I think it would be easy to win a bet that COMAC delivers C919 to commercial airline customers before Boeing delivers a new narrow body design to replace the 737 family.

Boeing began working on a 737 replacement before the MAX program was begun, meanwhile Comac pushed the EIS target for the C919 back to 2022. As Aviation Week pointed out last year the C919 needs about 33 hours per month of flight testing for a 2021 EIS, in practice they're seeing about 5 hours per month. So, maybe.


I expect Comac to do a much better job on supply chain support than Sukhoi did. Russia in general has always been troublesome for parts supplies for its exported equipment, whereas China has a much more consumer-friendly culture and is likely to invest heavily in making the C919 a success there.

The bigger issues I expect for the C919 will be fuel-efficiency, and trust that it is a safe plane. The fact that they're building it from scratch when the main competitors are using refreshed old designs of the 737 and A320 might help it achieve competitive fuel-efficiency, but it remains to be seen. Safety trust will be hard to make up, but a possible pathway would be to have Chinese airliners and cargo companies use it first to establish a track record free of major accidents before getting sales to international airliners.


I expect Comac to do a much better job on supply chain support than Sukhoi did. Russia in general has always been troublesome for parts supplies for its exported equipment, whereas China has a much more consumer-friendly culture and is likely to invest heavily in making the C919 a success there.

I wasn't aware that China had built much of a reputation for international customer support.

The fact that they're building it from scratch when the main competitors are using refreshed old designs of the 737 and A320 might help it achieve competitive fuel-efficiency, but it remains to be seen

There's not much to see. The C-series is the one to beat and so far the assuredly optimistic, published specs (per Wikipedia) for the C919 don't come close to the CS300.


The difference here is that China has a rich (and growing) internal market.


Yep! Which means it doesn’t even have to be better to win orders. It just has to be vaguely sufficient. Which is legitimately a tall order. But!

Let’s also remember there’s a government entirely willing to subsidize the growth of a native product. Russia already has an 80 year history of taking wildly diverse and frankly oddball aircraft designs and turning them into things that actually fly. Anyone who thinks that them partnering with a Chinese company can’t build a widebody isn’t paying attention. Who knows if it’ll be any good, it may not be competitive. But will they be able to make something that flies?

I’d happily bet on it.


Russia already has an 80 year history of taking wildly diverse and frankly oddball aircraft designs and turning them into things that actually fly. Anyone who thinks that them partnering with a Chinese company can’t build a widebody isn’t paying attention.

Well that's changing the goalposts just a bit. It's likely that the Chinese can churn out a widebody, but Comac couldn't even pull off a warmed over DC-9. They've got less experience than any of the Russian companies and it's pretty much a given at this point that they won't be successful.


> Strategically, airlines are in a worse position if Boeing goes under.

It is an interesting situation for airlines.

Boeing is kind of a leaky abstraction layer on flying. End users deal with the airlines, not so much Boeing directly.

For example, if Amazon ships your package and it comes 4 days late because FedEx screwed up, you're going to likely think negatively of Amazon not FedEx. Because from your POV it's "Amazon said it will be here today but it's not".

Likewise if a major US airline's plane went down due to Boeing's fault it would probably ruin the entire airline. It gets even more weird when you think about airlines making questionable decisions to push Boeing into making poor decisions or knowingly operate when captains of those airlines are aware of the faults but the airline still flies them anyways and this is where it leaks.


Airlines know that which is why the PR has been particularly brutal on Boeing. Everyone has tried to shift blame to Boeing overtly or covertly even as Boeing tried to shift blame to pilots, regulators, airlines etc. In this particular case, Boeing's PR machinery got overwhelmed and in this day and age of high social value if authenticity, the bland corporate legalese speak adopted by its spokespeople hasn't helped.


> For example, if Amazon ships your package and it comes 4 days late because FedEx screwed up, you're going to likely think negatively of Amazon not FedEx. Because from your POV it's "Amazon said it will be here today but it's not".

I don't think that's true. Everyone I know seems to have a favorite of {UPS,FedEx} and thinks the other one is garbage. And people pretty universally hate the USPS. Amazon is trying to get into the delivery business, but people still recognize that there's usually a third-party shipping company that actually puts the box at their door.


But the airlines know that Boeing will never go under because the US government would (justifiably) never let that happen for strategic reasons.


Boeing has burned a lot of political and public capital recently so they may actually be in hot water over this. As a Canadian I'm still pretty outraged over the stupidity that the US carried out at Bombardier - Boeing basically told the US Government "Hey, those Canadians are better than us at everything" and then the US Government said "Oh, poor baby, well we'll just help the free market out with a 300% tariff."

Thanks free market economics!


Althought as a Montrealer I am really unhappy that the C-series is now called the A220, I was very happy when Bombardier basically bitch slapped Boeing by getting Airbus to buy it and make it in the US.


It was hilarious to watch the Airbus licensing, but Bombardier also got the raw end of the deal - with the corner they were backed into they're going to end up seeing a lot less revenue off that model then they had planned.


> they're going to end up seeing a lot less revenue off that model then they had planned

Per unit. Lifetime revenues could likely be higher given the heft of Airbus’ marketing machine.

Agree, however, that it compounds Boeing’s image as a distracted company.


The US needs Boeing for military planes.


Canada did that with dairy products. Fair is fair.


Hence Boeing will never improve, it'll just be in a perpetual death spiral.

See also: Bombardier.


There's no way Boeing will be going "under" just because 1 model of their planes is impacted

737 MAX is impacted but there's still 737 NG which doesn't have these issues

And then there's 747, 767, 777, 787 which are still under production

This is just the commercial plane side of the business, there's the huge defence side as well

Finally, Boeing has been playing this game a long time, very well connected in gov and congress, and its business impact many states and employees. Boeing is basically too big (and too well connected) to fail; even in the worst possible case, they'll probably get a bailout.


While I agree with you, I just want to point out that the 747 as an airliner is no longer made and airlines would not likely go back to it. Many are still flying them but they are being phased out for financial reasons. Their manufacturing continues as a cargo plane though. Passenger wise, the last one was made in 2017. https://money.cnn.com/2017/07/19/news/companies/the-last-747...


> Boeing goes under

We are way way far from that and if it does come close I would bet on bailouts and government intervention Boeing isn’t going to go under


> indemnified up the wazoo

Really? Are you sure boeing is, given the cost-savings that not being insured would make (I mean the mgmt is clearly penny-pinchingly stupid enough).

But even if boeing is insured, you can bet your butt the insurers will have an explicit or implicit clause that voids the insurance on 'reasonable grounds', and they will argue (correctly) that knowingly producing flawed products (when it became evident at least) matches that getout perfectly.

Even if they lose the insurers will basically move into a courtroom, sleeping bags and all, to tie things up forever. It's cheaper than paying out.

My opinion anyway.


>> As emotionally-satisfying as it may be to see Boeing go under for its arrogance, it's neither helpful nor likely. (A well-managed break-up, on the other hand...)

Not Likely is the key word here. They are large and have a strategic value to the US and hence Too Big To Fail https://en.wikipedia.org/wiki/Too_big_to_fail

I'd bet the US Government steps in to re-structure and backstop as required to save the company. There are numerous ways we've discovered to do so post 2008.


> There are numerous ways we've discovered to do so post 2008.

All of them bad. Companies should fail and keeping bad companies alive via artificial means is bad. You get zombie companies and eventually a zombie economy (see Japan).

(And "Too big to fail" is a phrase meant to identify a problematic ideology, not a bailout excuse).

Boeing failing doesn't necessarily mean that the USA loses their technology and production facilities. It does mean some substantial losses to investors in the company, but that should be part of the risk of investment.


I don't think the parent was endorsing this approach. It seemed like the opposite to me.


Correct. I'm the parent. Not endorsing this. Just accepting the reality. Most off our TBTF bailouts were unnecessary in my opinion, or if actually necessary, the bailouts were insufficiently punitive to investors. Most of it comes down to the political power and DC influence of the company management.


>Too big to fail

Maybe too strategically important to fail is more apt.


Didn't the US government already "manage" us into the McDonnell Douglas merger in the first place?

"We're from the Government and we're here to help," indeed.


Considering the military industrial complex is what created all of these firms in the first place, people complaining about the government rearranging them does not make sense.

There are a lot of complaints about China's "State Owned Enterprises" taking advantage of their ties to the CCP and government.

Boeing/Lockheed/Raytheon etc are the same but with the pretense that they are public companies with shareholders that have a say in how the company is run.


> The lawsuits that are surely incoming are going to pile-drive this company into the ground.

Boeing is one of the most heavily subsidized companies in the world -- right alongside Airbus. They are a strategic asset to the United States far beyond their market value. The market knows this, hence why their stock is not being hammered.


Isn't it bad government policy to be strategically dependent on a single company? Boeing enjoys its dominant position in large part due to US government policy and the US military's procurement policies (in the 80s there were over 20 major defense contractors, now there are only six). It seems to me like the government has been shortsighted in letting things get to this point.


There was once a story here one HN (1 or 2 years ago) about this. There is often just one or so company who can prduce some special parts. So a large company started to buy a lot of these small but important companys. After that, they raise the prize by factor of ten or so.


Indeed. Though personally I feel perhaps Boeing should be left to fail, I'm considering going long if the stock slides further in the short term because I anticipate some form of bailout/buyout.


> Indeed. Though personally I feel perhaps Boeing should be left to fail, I'm considering going long if the stock slides further in the short term because I anticipate some form of bailout/buyout.

I don't want to see it wind down as a going concern, but I wouldn't mind a bankruptcy and seeing the executives and board of directors fired with their compensation clawed back.


It's unbelievable that the CEO still has his job.


The shitstorm is far from over; who would want this on their plate? Better to let the current guy ride it out and then replace him once things can’t get any worse.


Instead of being fired with $50 mil severance package?


The only people that would suffer in a Chapter 11 would be the pensioners of Boeing. If anything, the executives would get bonuses to keep them in place during the restructuring.

The already perilous union jobs, with good benefits etc, in Seattle would be lost and there would be a race to the bottom by other states to claim the production facilities.


>a race to the bottom by other states to claim the production facilities.

Instead of a race to the top where people can just say five infinity dollars?


I am not from the states. both of the comments below indicate that Boeing is a strategic asset. Other comments also express similar sentiments.

What is the logic for this? why is this the case?

“They are a strategic asset to the United States far beyond their market value.”

”the airlines know that Boeing will never go under because the US government would (justifiably) never let that happen for strategic reasons“


Boeing is not just a commercial aircraft manufacturer, it is a commercial and military equipment & services giant. Commercial aircraft account for 60% of its revenue, but the other 40% is military aircraft (including fighters and drones), satellites, missiles, and all kinds of defense department contracts. You cannot sink the company without significantly impacting US intelligence and military capabilities fairly quickly.


They are are the equivalent of Airbus - a national champion for both commercial and military contracting.

Imagine the US military going to another country hat-in-hand to buy aircraft.

That's why.


Imagine the US military going to another country hat-in-hand to buy aircraft.

You mean like with the Harrier or Eurocopter? Or more like the KC-30 where Boeing protested until Airbus dropped out?


The US military didn't have to buy those hat-in-hand.


Boeing is a defense contractor that has well-developed supply chains. If we got into a shooty war and needed more airplanes, Boeing can build them. You don't want to be caught going into a shooty war without the ability to reinforce your equipment. And if you do, you can convert the commercial manufacturing capacity to military to much greater effect if the commercial side is already at super-scale. The capability is worth the subsidies IMO.

Boeing also ensures American interests dominate the skies around the world. There just aren't that many manufacturers of aircraft, and Boeing spreads American influence / values across the globe as an essential part of infrastructure. Airbus does the same for the EU.


I'd like some of these raxor thin margins! They are up in every category with the exception of a small drop in utilization for both the 3rd quarter and YoY, with essentially no more employees and better fuel efficiency:

"Our 2019 third quarter financial results reflect net earnings of $119.4 million and diluted earnings per share of $1.02, representing our second most profitable third quarter and our overall third best quarterly performance in our 23-year history."

Also according to their own report their fleet numbers 180 airplanes.

FInally:

"We continue to adjust our flight schedule through the end of 2019 as a result of the ongoing closure of Canadian airspace forthe Boeing MAX series aircraft impacting our fleet. Our contingency planning and proactive schedule adjustments enable us to reduce last minute flight cancellations and unexpected travel disruptions, however, certain routes have been temporarily suspended as a result of aircraft inventory shortages."

Wanna bet they suspended certain routes that were not very profitable like interior, non-hub routes?

https://www.westjet.com/assets/wj-web/documents/en/investorM...


A good rule of thumb is to never believe it when a company or industry says they have razor-thin margins.


That works at least until their cash flow seizes up and they need a huge bail out. The car industry is a good example of a margin thin one.


Boeing will be fine. By the end of next year everyone will have forgotten.

Even if Boeing wasn't fine, it would be fine, because the government would just bail them out.

Investors know this and ignore the drama.


The US government will ensure Boeing as an entity continues to exist, but that doesn't mean existing shareholders will keep their equity at the current valuation.


> the government would just bail them out.

Good thing for the proponents of the supposed 'wisdom of the market'. Nice of US to help keep that 'wisdom' alive.


Boeing already cleared their obligation to Southwest for 2019 with a $125 million payment. Nothing to sneeze at, but far from anything nearing a "pile-drive".


No, the $125 million was just the portion set aside for Southwest employees.


Boeing is sitting on a big giant huge bucket of assets. In the long term, this is a blip.


Isn’t the problem that all of our mutual funds just keep buying Boeing stock no matter what bad things happen?


Most index funds are in some matter market weighted. So when the price crashes, they buy less, and vice versa. You can see how this could have some odd effects, but the thesis is that heavily leveraged smart money washes it out.


They are down 25% from the high. That's a lot.

But if you look at their 50 year chart, it had recent run up of 3-4x in just past 4-5 years.

It's quite possible there's some serious downside, but only through series of bad news like this.


Assume there are 75 planes that will not be delivered. At an average of $125m per plane, that’s $9B or 7% of their assets. They can simply payback that money with all cash on hand and everyone is whole.

Boeing stock is down about 3% today which lines up with the numbers above. Boeing is not going anywhere. Maybe shave another 10% for them to remake the MAX (new 7x7) and fix their image problem and by mid decade no one will remember how to spell MCAS


Boeing is one of the pillars of the American economy and the market as well. Dumping the stock will hurt pretty much every fund that invested on it, plus Dow will plunge just because of this one stock if it's getting dumped.

Boeing, as well as many other firms, are just too big to fail suddenly.


There was a really weird moment for me about ten years ago when I realized Apple could pay cash to buy Boeing. I mean, obviously they wouldn't, but something is off about the scale of it all.

Are we sure it's a pillar? Perhaps if you take all of the suppliers and partners it represents, sure. But by itself, I don't think it really look all that impressive.

After The War, the US government was careful to keep domestic manufacturing 'healthy' which turned into 'fat and happy' which has now turned into I-don't-know-what, but I wonder if subsidies-as-defense-policy should be putting more energy into other industries.


Interesting comparison. I guess the difference is that the supply chain of Boeing is mostly in the US, whereas for Apple it's mostly overseas.


It gutted "domestic manufacturing", it lavished largesse on the military-industrial sector specifically (and even there, the post Cold War consolidation that Warren Christopher specifically promoted is one of the reasons the aerospace sector is such a mess).


Yeah including all those peripheral dmg if it falls suddenly. I'm mean might be able to afford I'd it declines overtime, but a shock is going be very scary.


Honestly, I don't know why Boeing has this image of being such a vital cog in America - America isn't wholly dependent on Boeing and if it was that'd be a generally terrible thing anyways.

Also, who cares about the Dow plunging if it's for such a clear and explicable reason - it's usually used by politicians to gauge mysterious impacts on the economy, when you know the cog that broke to cause the numbers to swivel it's a pretty useless metric - you already know the thing.

It's sort of like not wanting to go into maintenance mode to deploy a big infrastructure patch because being forced into maintenance mode is bad - yea, it is, and if you can avoid taking servers offline go ahead and do that - but if you can't then just eat the outage as it's probably better to upgrade things than to refuse to upgrade due to the fact that it will expose the fact that you had to upgrade.


> Also, who cares about the Dow plunging if it's for such a clear and explicable reason

The enormous fraction of people who have their retirement savings tied up in the stock market, that's who.


Who cares if the Dow plunges? The largest block of active voters, retirees and those near retirement who live off or will be living off their investments.


Is this why they should have 90% or more of their fund in bonds by now?


That is sound and oft repeated advice, but I do wonder how many people actually follow it. Anecdotally my parents are half retired and still have most money in stocks, as did one set of my grandparents. They lost a huge amount of their retirement in the .com crash and worked into their mid-70s to recover it. The other set of grandparents put everything into CDs and stable investments. The set of grandparents that lost it and had to get it back still ended up with 5x the money as the more risk averse pair.


China has 90% of their funds in US bonds by now (called dollars), and what good does that do them ?


It gets them stable 2% interest every year with almost 0% risk of default.


A quick google says Boeing is the 28th largest US company by both revenue and market cap (interesting that they line up exactly), sitting next to "pillars" like the Home Depot and PepsiCo.

We'll be fine.


It takes a lot less skill and knowledge to build another retailer or soft drink company than one that designs and builds cutting edge airplanes.


Arguably, sure. But it's not an engineering argument. The point was responding to comments like "Dumping the stock will hurt pretty much every fund that invested on it, plus Dow will plunge just because of this one stock if it's getting dumped."


> too big to fail suddenly

Also known as "a systemic risk".

This is the downside of allowing the concentration of economic power in too few hands. It's like other large scale systems. Yes there's a lot of redundancy; but that redundancy serves a purpose.


All the central planning of the old Soviet Union, with none of the pretense to public good.


The market assumes that Boeing is too big to fail and largely ignores this news. I made quite a lot on the short term BA calls after the Ethiopian disaster. Long term, the crony consolidation of Boeing, Lockheed and Douglas commercial airplanes will probably greatly diminish the US market share in lieu of the new East Asian competition. But unfortunately no effective long-term short instruments exist (with a time horizon of 5-10 years). I think if they existed, they would have dampened the stock market bubbles.


SWA and AA are morally responsible for some of these design choices. I’m sure they would come up in any suit vs Boeing


Is this regarding the airline delivery pressure that influenced schedule or some other mechanism?


Not just schedule but design, training (SWA incentives)


Except none of their pilots crashed the plane despite flying an order of magnitude more flights than Ethiopian or Lion Air. The difference is that US pilots are far better trained and maintenance doesn’t skimp like Lion Air had a long history of doing. The Lion Air plane should have been grounded when the the AOA sensor was reported bad on the flight the day before the crash. The executive in charge of Lion Air maintenance should be in jail: they let the plane fly knowing the AOA sensor was faulty. The MEL for that airplane required the AOA sensor. For some reason we let Lion Air off the hook, but look at their history: one of the most dangerous airlines in existence and that isn’t Boeing’s fault.


Index funds are so big now, the market rarely moves down.


>The lawsuits that are surely incoming are going to pile-drive this company into the ground

I'm sure the lawsuits are coming, but we're talking about Boeing here. "pile drive them into the ground" might be a bit of an overstatement. Worst-case scenario, they have to be bailed out by the government.


Lost in all of this discussion is the fact that Boeing problems began with South Carolina. The fact that politics played a big role in opening that plant should not be ignored. MAX wasn’t just designed poorly, the organization process within Boeing was already failing. It’s a corporate culture failure.


South Carolina and the 787 assembly process both looked like pretty poorly concealed union busting tactics to me.

First you made a plane that doesn't require the massive gantry cranes to construct. Smaller portable equipment does a lot of the work. You can build new, cheaper facilities. Then you move things more or less to the opposite corner of the country, but closer to the new headquarters.

Yeah, not suspicious at all.


Any chance you could elaborate on this? I am not following this comment thread, not able to read between the lines.


Highly skilled industrial work often requires highly skilled and educated workers, who are more likely to unionize or might already have unions in place. By building facilities that require assembly using less skilled means, you are selecting for a different type of worker and different manufacturing processes. Basically, Boeing tried to turn aircraft manufacturing into something closer to an Amazon fulfillment center. Which certainly helps the bottom line, but maybe not the quality line.

The implication about the headquarters is factories closer to the HQ can be easily controlled and execs can fly down and sort out problems. Chicago to Charlotte is < 2 hour flight, Chicago to Seattle is 5ish hours. Also, moving manufacturing out and away from Seattle means the existing unions have a harder time recruiting or setting up sister unions.

All of this can be seen within the wider context of the "financialization" of Boeing, with the company moving more towards a business focus and less of an engineering led company.

Apologies for the long post, lots going on here.


I remember reading South Carolina has among the lowest union representation among relevant workers.


They more likely started with the McDonnell Douglas merger. After which the company's top management relocated itself halfway across the country in order to be less accessible to the people actually building airplanes, opened the SC plant, and eventually built the MAX.


The airplane wasn’t designed in South Carolina. That issue with the unions is one manufactured by the unions and is nonsense. The union PR machine has a vested interest in pushing that narrative.


You clearly have an axe to grind here. Source for your comments?

Unions produced decades of incredibly reliable plans, so it seems like a huge leap to assume that they're the cause.


A lot of people thought this couldn’t happen.

Difficult to overstate the enormity of this to the industry.


Would the last person leaving Seattle please turn out the lights.



Really puts the current situation in perspective.


There was a related chapter the last book of Robert J. Sawyer's "WWW Trilogy".

The AI throughout the thread survives for long enough to see Humanity evacuate the Earth given Sol's transformation to swallow the inner planets.

Copies of the Original AI had been spread across intersolar Human civilization, but the original technically speaking had to remain on Earth. That chapter was titled something along the lines of "Will the last human please turn off the sun" or similar [it's been at least 5 years for me on the reading].


Renton sobs.


Is this good or bad for my house-buying efforts?


Neither. Closing the plants in Renton and Kent might move the needle.


No, because it's the techies who make all the money in Seattle.


"too big to fail" they said.

"whatever it takes they will fix it".

I'm personally glad this model is getting shelved. You'd just have a bad taste flying in one of those regardless of tweaked the design is or how good the software is going to be.

I'm also glad this is happening because it's a win for humanity and a loss for bureaucracy.

I have full confidence that the next model will be rock solid and much better overall.


They're not abandoning the model. At least not yet. They've been still assembling new planes even after March's grounding. The FAA told them to stop pretending the plane would be recertified soon. They are halting production until the mess gets sorted out and the planes can hopefully fly again.


The next model is 10 years and north of a billion dollars away.


A billion dollar would be dirt cheap for a clean sheet design. The MAX program (including its engine) is estimated at $2B-3B. For a clean sheet successor a safe assumption would be 7 to 8 years to EIS and $15B in investment.


I assumed it was north of 5b, but I was on my phone at the time and didnt look up costs.


The next model would be drawn up already. They knew where it went wrong.


The next model isn't a 737-something, it's an entirely new airplane, one that can replace the 737 and 757. There is nothing wrong with the MAX that is not fixable with software and some artful rebranding. But its still a 737, and comes with all of the discomfort and limitations thereof inherent to the platform. It's not a comfortable airplane to fly in, fly, and its limited in how fast you can evacuate it too.


How does the 737 restrict passenger evacuation?


The big question is why they haven't done it already? Boeing's disconnect from reality is painful to watch.


It is a question, but the answer is probably pretty mundane.

An airplane is a tremendously complex machine, and building them is a well honed process with lots of checks and balances built in which protect the investment the company is making in building such a complex device.

So no doubt there are many many root cause analysis meetings which are going on to root out the failures in the process that let the plane get to this point.

But historically, the company has made modifications to the 737 airframe to provide new models and those changes have gone well. Certainly in the sense that they produced a viable airplane that was safe to fly.

I would speculate that due to the history of the 737 airframe, and the track record of creating new variants that are safe, and the challenge of stopping the manufacturing line for such a plane which literally has thousands of suppliers making parts on a schedule that has years of deliveries in it, it took this long to get through the various options that would not require stopping the production of the plane. Stopping production is literally the second worse scenario[1] for Boeing.

[1] The worst is scrapping all existing planes.


I fully expect this was put out there to put this ball (tens of thousands of jobs lost) in the FAA's court. I also fully expect Boeing to halt production if the FAA processes drag out longer, its not economical to continue making aircraft and not delivering them, in that if they don't deliver them, they don't get paid.

There's a point where its no longer due diligence, but decision paralysis. I don't know if were anywhere near that point with the 737 MAX, but at some point we will be, and we shouldn't ever get there.

The problem is that this will hurt tons of small businesses and suppliers more than it will hurt Boeing. It will hurt the machinists who assemble the aircraft, the network of suppliers in the Seattle area. But for the suits in Chicago it will be a metrics miss and maybe less of a bonus.


As unfortunate as that is, due to overconsolidation, this is pretty much a foregone conclusion.

If Boeing were just one in a field of aircraft manufacturers, this wouldn't be half as catastrophic, since that whole supply chain would have everyone else to supply.

But that isn't the case anymore, and it is about time overconsolidation bit something in the arse.


They were gambling on a quick fix that would be acceptable to regulators, and which could be easily retrofit to existing aircraft, including the ones still rolling off the production line. Pausing production has cost -- and if the planes were recertified by now, the cost of storing finished planes in parking lots is probably quite a bit less.


Their initial reaction was "nothing to see here, keep moving". When it was clear that wouldn't fly, it was "don't worry, we'll have a fix ready before you know it". It should have been clear when the entire world stopped trusting their certification that this was going to be a long drawn out process. The scariest part of this event is their apparent disconnect from reality. Their gamble was a losing one from the beginning.


I think, given the corruption which has come out from the investigation, that gambling on a quick fix was probably a sane choice. That only makes it scarier, though.


I think they were gambling on the delay being a reasonable amount of time, say 6 months. Now the FAA has had the final updated software for something like a month and a half and just started certification testing.

This smacks of some incompetence on behalf of the FAA, since if they had a clear idea of what the requirements were for re-certification, they would also have a clear idea of how long it should take, and the last 6 months have been delays and "we will be done when were done".

I'm also not too keen on the machisimo of the FAA Administrator insisting on testing the aircraft himself.

Everyone here on HN wants this to be drawn out to punish Boeing, but its really punishing everyone, including the wallets of people buying airline tickets. Ticket prices have been high with many airlines because of their grounded fleet.


> Now the FAA has had the final updated software for something like a month and a half and just started certification testing. This smacks of some incompetence on behalf of the FAA

Up to the second accident FAA left much of the certification process up to Boeing(!) alone. No wonder that they discovered now that they need more time:

https://www.dallasnews.com/business/airlines/2019/12/11/faa-...

They also demonstrated to the whole world that they aren't serious about safety after the rest of the world grounded the planes but they still just repeated whatever Boeing told them.

The current weakness of FAA is of Boeing's making:

https://www.economist.com/business/2019/03/23/regulatory-cap...

"Since 2001 [Boeing] has lobbied vigorously to perform more of its own safety tests. In 2005 the FAA began to allow Boeing to do more self-certification. “It’s like putting children in charge of the sweet shop,” says a former Boeing adviser. An investigation by the transportation department in 2012 found that the FAA had not done enough to “hold Boeing accountable”. It quoted FAA employees who had reported retaliation for speaking up about problems with Boeing’s previous designs."


This is more of a business calculation (e.g. it's cheaper to keep the supply chain running & park the planes than it is to shut the supply chain down & then start it back up).


They have outstanding orders for around 5000 737 MAXes. Assuming they get them reapproved some time soon, keeping the production going to not fall too far behind their delivery schedule will likely have saved them a fortune in late-fees.


Especially if they rename it and sell it under a new brand. I’d go for a “737 Neo”, only nerds can make the difference (even between a Boeing and an Airbus).


With Boeing in the news all the time, I've paid a lot more attention to the aircraft.

For the 737/A320-size plane, it's now easy to tell:

- If the plane has a nice, spacious interior, it's an Airbus. The flight will be quiet.

- If the plane is crampt, it's a Boeing, and it will be a bit noisier.

I still don't really think about it when booking the flight. Schedule and price are more important.


> I still don't really think about it when booking the flight. Schedule and price are more important.

To be honest I do: I often fly MIL-PMO and when possible I book Alitalia and easyJet flights, or Air Italy since they've been leasing two A319s from Bulgaria Air to replace their MAX 8s, rather than Ryanair specifically because their fleet is composed of Airbus aircrafts instead of Boeing (and also because Ryanair won't stop selling you stuff during the whole flight, worsening the noise situation)

I'm in MXP right now to catch a Ryanair flight and I just hope my ANC headphones won't abandon me mid-flight.


737 Matrix


Cutting down production, especially for a major product like MAX, will hurt the supply chain and anger the labor. But for MAX I think this is the best decision.


What I wonder is how easy could it be to restart the production? Will they pay workers for doing nothing until the green light shows? Will the suppliers just sit tight without having orders and income waiting for the go sign? Will be there enough orders still?

I assume it is not just one or two months until it can fly again otherwise they wouldn't stop production. But if it is long time then life and people will go on. They will find other engagements and other things to do, they have to. Could and will they be able to throw away that other engagement they started to resume this operation? I bet not easily, not all. Airlines will need something to fly, they might look for other alternatives. Lots and lots of difficulties and loss, lots and lots of money and time to restart this. I believe.


I would assume that the reason they're shutting down is that they've run out of (feasible) places to park them.

As other commenters have mentioned, the order backlog is still long, so as long as you can easily store the planes, it makes sense to keep building them.


From what I have read they would have no problem storing an almost unlimited number of them in one of the desert aircraft storage areas.

It's really that while production operates without deliveries, it's a machine that turns cash into airplanes. Sooner or later, even Boeing is going to run a little low on cash.


I toured the Renton and Everett plants about a decade ago. They showed us the rail lines inside the factory next to the CNC mills. When Boeing lifts an individual stick of aluminum off the rail car they scan it and pay the supplier, before that the aluminum is still on the supplier’s books.

They have taken just-in-time delivery to an extreme to make that money->airplane pump as efficient as possible.

There are billions of dollars of raw materials in various states of becoming airplanes across the Boeing sites. It’s impressive they were able to run as long as they did without a delivery.


Because risk management takes in account the costs of each option.


Likely the same reason Muilenburg is sill CEO... as long as the military isn't pushing for something, status-quo is the result.


I'm really wondering how much this will impact Boeing in the future and what their plans are for the 737 Max replacement.


Depends a lot on how long it takes to get the planes recertified. At this point, they have taken some serious reputational damage, but every day they’re falling further behind schedule. If it takes too long, airlines might start cancelling their orders and buying Airbus instead.

And of course, if they fail to get the MAX flying again, it’ll be ruinously expensive. Massive write-offs, lost revenue, endless lawsuits. Probably not enough to end them outright, but it’ll be some tough times.


It probably impacted already. The Boeing NMA is basically nowhere to be seen, the 777X deadlines are slowly being broken, and that should be the future of Boeing. For now, Boeing is dealing with the past, basically, corpses falling out of the closet. Not to mention the 787 engine issues.


It increasingly seems like NMA won’t happen before a 737 replacement. 777X is going to be under a lot of scrutiny post-MAX and I would not be shocked if regulators find issues that Boeing overlooked before the plane is certified. At least the 787 engine issues are Rolls Royce and not Boeing, and RR isn’t the sole supplier of 787 engines.


True. Basically Airbus will have time to roll out their own purebred NMA competitor by then, although they have the A321.


It will be difficult for Boeing to walk back the public opinion of the 737 MAX for what they have done.

I know plenty of airline customers who intend to never fly a segment that utilizes one.


I sincerely doubt many people will remember anything about this five years from now. There have been dozens of crashes involving various models of the 737 series, and the vast majority of the population could not name a single incident.

As soon as this is out of the news cycle, everyone will forget.


But unlike the others, the max has been grounded for almost a year. It’s not just a news cycle, there are people who have never given two thoughts about the aircraft they fly on that now remember “that max plane” or “that 7-something plane” or even just boeing as being the one that keeps crashing.

I fully expect websites to pop up that will take a flight number as input and tell people if there is a MAX plane involved.

They won’t shake this one off easily.


The majority of the population probably can't even tell a B737 from an A320.


I think that has changed now, at least for 737 MAX. We people who did not care before are now hyper alert about which aircraft we are going to be on.


That means "737 Max" is the one name people remember as a threat.


they will rename the plane, almost certainly


> dozens of crashes

That's wrong by an order of magnitude. 737 series had a total of 478 incidents, 213 of which is resulted in hull loss [1].

[1] https://aviation-safety.net/database/types/Boeing-737-series...


To be fair, the vast majority of those are not "crashes" in the sense that the parent post describes.


Sad it had to come through death and wallet-vote... may agencies reinforce checking and limit absurd loopholes


They’ve already taken steps to rename it to drop the MAX moniker: https://www.theguardian.com/business/2019/jul/15/boeing-737-...

I highly doubt the average consumer will think twice about flying on a Boeing 737-8200, presuming they can avoid more scandals.


They will crash another one soon enough. The problems with the 737 MAX arose out of systemic problems that effect the whole company. There are likely tobe other bugs lying in wait. Even the military division is getting lazy. The US Air Force tanker replacement program has been a mess.

Nevertheless, while the flying public and Boeing may get past the MCAS issue, the next accident may be just around the corner.


They're already rebranding it. Newly shipped 737s are labeled "737-8200"


Flying already evokes an illogical visceral fear in most humans. (Listen to the screams, and white knuckled grasps, during strong turbulence.)

The 737 Max is likely dead, forever, for passenger traffic.

There's just too much for every stakeholder, but Boeing, to lose.

Most likely Boeing will need state help (like the auto company bailout) while it transitions to some new post-737-Max reality.

The 737 Max rise and fall will likely become a popular business school case study.

(I could be wrong, but I just don't see this plane ever being palatable for much of the flying public. The fear of flying is just to visceral, to simply act like none of this ever happened.)


I'm not sure the fear is illogical in a case when over 300 people have died due to a known design fault, particularly when the manufacturer in question tried to sweep it under the rug the first time it manifested itself.

I have no problem at all with flying and do it regularly (as recently as yesterday, on a 737-800 no less) but I wouldn't set foot on a MAX, even if I was assured that the fault was fixed.


The fear is illogical because there is a 1 in 2,925,000 odds of dying on commercial aircraft [0].

Before the MAX 8 was grounded, it had well over 2,000,000 hours of flight time on 387 aircraft performing 8,600 flights/week for 56 airlines [1]. Two out of 800,000+ flights crashed due to MCAS taking input from a broken AoA sensor, related to the poor maintenance of the airlines, and poor training by the airline and possibly pilot error.

Imagine the level of detail of scrutiny the MAX 8 is currently undergoing. I'll wager it'll have been the most scrutinized aircraft to have ever flown once it's re-certified, if not the safest. Plus, everyone knows about MCAS now so a crash due to it misbehaving in the case of a _double_ AoA vane failure is incredibly unlikely now.

So I think the fear is still illogical.

[0] https://www.economist.com/graphic-detail/2013/02/14/danger-o...

[1] https://en.wikipedia.org/wiki/Boeing_737_MAX


Well there are still a lot of 737 Max around, I don't think they will all be written off? Maybe if passengers continue to avoid the plane. But this is also not the first time in history something like this happened, usually people forgot after some time. Or is it the broader media coverage this time around?


yeah I'm not sure, I want to think we are living in an information vacuum where we are aware, but I feel like a lot of people are really watching this one

they could attempt rebranding the max and all the college aged people looking for deals might pile onto them indiscriminately

but I think a lot of people will notice. like if third party apps and website said Model B (Formerly 737 Max), then there is still high chance people will notice and demand something else.


Yeah, I'm not even scared of flying but I'd raise a stink if they tried to push me into a 737 Max, mainly based on principle. Given how FAA tried to initially defend the status quo and kept the planes flying to not shake the boat, trust is gone. Boeing would have to convince the regular public that the problem with the plane is solved - which might be an impossible task because public do not understand what really went wrong and how it would be fixed. So someone else can sway them the other way around just as easily. People would still choose the "safer" option.


The screams during turbulence are one of my highlights when flying. Doesn't happen very often these days unfortunately... 20 years ago flying used to be like going on a theme park ride.


Flying 100% scares the shit out of me. I know it's illogical, I know how safe it is etc, but when I'm on a plane all I just can't relax at all.


> The 737 Max rise and fall

Too soon


pop a THC edible in your uber ride and it kicks in soon after you are on the plane and then boom you're landing

calling it time travel


Heard on BBC Radio 4 news this morning: the cost of stopping production of the 737 Max is equal to 0.3% of US GDP.


Related, though a bit earlier in the news cycle: https://news.ycombinator.com/item?id=21799845


Non paywall version on cnbc.com:

https://www.cnbc.com/2019/12/16/boeing-will-suspend-737-max-...

Boeing's official statement:

https://boeing.mediaroom.com/2019-12-16-Boeing-Statement-Reg...

The relevant part:

"Safely returning the 737 MAX to service is our top priority. We know that the process of approving the 737 MAX's return to service, and of determining appropriate training requirements, must be extraordinarily thorough and robust" ...

"Throughout the grounding of the 737 MAX, Boeing has continued to build new airplanes and there are now approximately 400 airplanes in storage."

"As a result of this ongoing evaluation, we have decided to ... temporarily suspend production on the 737 program beginning next month.

We believe this decision is least disruptive to maintaining long-term production system and supply chain health."

Note: temporarily. It's still just a pause button.


Hitting the pause button doesn't mean the stop button suddenly disappeared.


why continue to make the planes when you have no idea when you can actually push them out the door? given that they continued to produce the MAX while they were grounded, they must be running out of storage space...


Because they have a huge backlog of orders to fulfill when it does get re-approved and it's very expensive to shut down and idle the production process (besides Boeing themselves there are 100s of suppliers)?



By stopping production, some of their suppliers will go out of business. It was a gamble to keep producing planes without knowing when they’d return to service, hedged against the cost of rebuilding parts of the supply chain from scratch.


Can't they just rebrand the 737 max? Sort out their dodgy internal processes and add some new safety features. They've been repackaging old designs since the 60's anyway.

Either that or they go all in on a new medium-range aircraft, the market is already disrupted in Airbus' favour.


The MAX was a "bridge too far" for the 737 type. They need a clean-sheet design with big engines and fuel-efficient wings to compete with the A320neo, and the 737 can't be adapted to do that (wings too low to the ground) and it has a bad reputation. They're better off developing the Future Small Airplane (FSA), and call it a "797."


Boeing can build a fuel-efficient aircraft that is highly compatible with the 737 airport equipment. There are two obvious approaches.

The first approach is that taken by the Boeing 717. Do a T tail with rear engines. Bombardier, Gulfstream, and Embraer commonly do this.

The second approach is that taken by the Boeing C-17. Mount the wings high. Although usually done for turboprops and military cargo, passenger jets have been done in this configuration. The British Aerospace 146 is an example.

There are many more unusual options as well.



Focus! Get MCAS squared away and get the plane back in the air. Reading some of these comments here makes me glad that none of us are in charge at Boeing. The comments are unbelievably naive or have huge gaps in business logic or lack technical rigor.


I was imagining just to myself whether the jobs or economic impact of this production suspension by Boeing would be similar or not even close to the disruption caused by the Samsung Galaxy Note 7 fiasco.

In this case, the jobs are much higher value per person, and the supply chain much more dramatic -- big factories and machinery idled. But the Samsung battery disaster probably affected 10s of thousands of workers, and caused Samsung a reported $15B (?) writedown of value.

But then thinking again, Boeing has experience with bad batteries too... Maybe the two companies should share PR disaster recovery playbooks.


Regarding the comments about renaming the plane, it is humourous that the first Boeing plane with a memorable name would turn out to be the plane whose name you'd hugely prefer if people would forget.


I am half-happy to see this happen to Boeing. I just only want the execs to suffer for the Max and the tariffs against Bombardier. I don’t have any ill will to the lower level employees.


Max is done and will likely never fly again as designed.

The real question is will Boeing re-design it as doing so will be an admission of guilt.


Why don't they suspend right now immediately, why is it set on January? What are they going to do with the previously produced, currently producing up to 31st of December, 2019? Are they going to blow them up on 2020 like fireworks to celebrate New Year?


production isn't just the plant itself - its not as simple as to send people home

production is a huge machine of suppliers delivering parts on demand - e.g. the chairs arrive exactly on the day that the chairs need to be mounted inside, otherwise is much more expensive to store, shelf, un-shelf, etc... expand thousands of times... and each supplier has its own suppliers, etc

also the tooling and all additional bits need to be correctly conserved, e.g. you can't leave sensitive measuring and calibration equipment out unused

this huge mechanism has a huge inertia. having it stopped in 2 weeks is amazing - but probably the supply chain was already working on how to stop the machinery in a way that's possible to start it again in some months


What prevents them from selling the same broken stuff under a new name like Boeing 987 something and everyone will be cool with that ?


What prevents them from selling the same broken stuff is the FAA and the European authority doing their jobs.

They didn't before, you say? It appears that they did not. But they have shown signs of waking up lately. It seems at least somewhat reasonable to hope that they are no longer just a rubber stamp.


I bet they will stop building the 737 max and start building the 737”new model that is the max with some changes that can be retrofitted”. Like a larger stabilizer, longer frame, or maybe something easier. But something that lets them say it’s a “new” model but keeps 99% of the production line untouched and can be negotiated with the existing buyers. We’ll see how it works in some weeks.


Why?


Also because I don’t see Boeing exiting the medium size jetline market, it would be like cutting an arm and a leg of the company. I see it as a mea culpa, as they recognize the screw up and try to make it from “0”. Not really 0 but if they redesign and improve the failures, the rest of the 737 is a pretty succesful plane. But with this way of saying it they are paying a public penitency, that maybe the public want them to pay.


Probably because the name is toxic.

But I don't think it will work, because it takes time to engineer such a modification, and more time to get FAA approval.


The software fix is complete, and the name is already been replaced, its now the 737-8200.


That is not the new name for the MAX; it is still called the MAX and Boeing has not publicized any new name for it yet.

The 8200 is a customized MAX variant for a single airline’s requirements, Ryanair.


Same hardware? Same team? Same CEO? “Fix” you say? We shall see.


The FAA needs to stop hemming and hawing, being unclear about what they need, put in some overtime and get things done.


Ban the aircraft. Criminally charge everyone involved in suppressing it's serious issues and forcing it through approval.

Figure out how their processes become vulnerable to corruption and attempt to change them.

The problem is of course the FAA doesn't want to hurt Boeing or the industry over this. But that strongly conflicts with their job.

The hope at this point seems to be to drag it out until people forget.


Why, were talking about a fatal error in one small system on a huge and complex aircraft which is 90% the same as the previous iteration of this aircraft.

We can fix these things.

We should not be approaching engineering problems with emotional reactions to crashes. The airline industry is so incredibly safe because each crash is analyzed, the problems identified and solved. If two crashes mean we should scrap it, does that mean we just stop flying because every major aircraft type has had serious incidents.

No, we fix the problems and keep flying. You don't get better at something by giving up the first time you make a mistake.


My understanding is not that at all.

From what I've read the engines that were the whole point of the plan just didn't work physics wise because they were too big for the 737 frame that their required placement moved the center of gravity to a bad spot.

Instead of scraping the idea as they should've they did a software fix. You can't solve a bad aircraft design with software. You can patch it but it leaves you open to all sorts of issues.

Issues we've now clearly seen have killed people. Issues that people have claimed were known about (how would the engineers not know?) but were sweep under the rug in the name of profits.

When people knowingly endanger other's lives in the name of profits they should face a trial and be judged.


Someone did the stats around the max 8. 300 lives lost in 3 years of operation and 400 planes in the sky. It is actually quite dangerous to fly and much more dangerous than driving when you compare by travel time and not distance. In comparison, A320 Neo and 787 have no hull losses and there's more of those planes in the sky than the maxes. 787s have been flying for almost 10 years.


Both losses were caused by the same faulty system, MCAS. I don't understand how can one make predictions about the safety of the plane with a fixed MCAS from the MCAS related crashes.


Because it's safer thing to do, when people lives are at risk. If it would be having some milk spilled or popcorn burnt, no one would try to make those overly precautious predictions. Also, because the plane has a bad track record, so it brought the scrutiny on itself.


> Ban the aircraft. Criminally charge everyone involved in suppressing it's serious issues and forcing it through approval.

That's going a bit too far. Banning MCAS and requiring pilots to undergo MAX-specific training and certification seems more reasonable (and less wasteful) response to the issues.

I would support criminal charges against the chief decision-makers that led Boeing into this mess, going all the way up to the top. Examples need to be made to reset the priorities of corporate decision-makers.


The 737 Max is doomed without the MCAS, the entire reason it exists is to keep the same type rating the same to keep pilots from needing to re-certify.

Airlines will have serious reason to consider other manufacturers if they can’t just throw pilots behind the stick with minimal training.


> The 737 Max is doomed without the MCAS, the entire reason it exists is to keep the same type rating the same to keep pilots from needing to re-certify.

I would suggest at this point, the ...creative documentation... that Boeing's been doing to keep the "737" a "737" has reached the end of the line.


> Airlines will have serious reason to consider other manufacturers if they can’t just throw pilots behind the stick with minimal training.

Hopefully the regulators will seriously investigate if it is safe to assume that the retraining is not needed even with modified MCAS.

Just claiming that pilots will easier deactivate MCAS, or that, after the "fix", MCAS will deactivate itself if there is some problem should not be enough: without MCAS running the plane just doesn't behave as the one for which the pilots were trained.


> The 737 Max is doomed without the MCAS, the entire reason it exists is to keep the same type rating the same to keep pilots from needing to re-certify.

That's what Boeing wanted, but that doesn't mean they should get it.

Anyway, I think "doomed" is overstating it. I would assume whatever training an existing 737 pilot would need to fly and MCAS-less MAX would be far less that what they would need to fly an Airbus.


Differences training only applies to aircraft that have the same type rating, there’s not any wiggle room in FAA rules for planes with different ones AFAIK (I’m not a pilot, so don’t quote me - just my cursory research).


The MAX can't be certified for civil air transport without MCAS. That's the rub. If Boeing could have built and certified the plane without it, they would have.


Are you sure? There's been a lot written about the reasons for MCAS and this is the first time I've seen anyone claim that the MAX couldn't be certified without it.

Everyone else has stated that the reason for MCAS is so that MAX could be certified as a previous generation of 737 and therefore not require training for an established 737 pilot to fly.


I am.

https://www.seattletimes.com/seattle-news/times-watchdog/the...

Yes, you are correct in that part of the reason for it was to mimic the control forces of older 737's for avoiding the burden of simulator training.

However, you have to look at why it was a manufacturer would take the risk to make such a boneheaded implementation in the first place. Nothing goes into a mass-produced highly complex system without being very carefully thought through. It wasn't some "accident". It was a calculated act of value engineering. On the one hand, someone had wind tunnel results that said there would be a divergence from the old 737 force curves. On the other, you had a pile of solutions capable of fixing the problem, each with varying degrees of cooperation with regulators, time taken, and a price tag attached.

The FAA (if provided with the benefit of a doubt that they aren't covering their asses which I'm not necessarily willing to give given reports from the IG) has signalled that if they'd known what MCAS was, they'd have demanded more intense scrutiny and testing.

There was whistleblower testimony alleged in the 60 Minutes expose on the MAX, that Boeing intentionally engineered the system in such a way as to minimize outside scrutiny of the system (I.e. regulator attention) in order to get development done, and planes out the door.

What this signals is that there was pressure from management to get things done, which meant minimizing external exposure and exploiting every trick they knew to get a rubber stamp out of the regulator.

Now in terms of not being certifiable, I offer a brief bit of Boeing history. The D.P. Davies interview w.r.t the the certification of the 727 by the U.K. CAA. As a well-known test pilot, Davies goes into great detail to describe how the U.K. regulator was very particular about control forces on approach to stall for that aircraft; to the point that the 727 only got conditional airworthyness certification for civil transport via the addition of a stick pusher; a device intended to make it very clear the pilot was approaching a stall.

https://www.aerosociety.com/news/audio-the-d-p-davies-interv...

Some people at Boeing knew, or were in a position to know the behavior they were dealing with was of a type previously uncertifiable. Someone knew that if they could sneak the plane past the FAA, that reciprocity would shield the plane from further scrutiny unless something catastrophic happened.

I don't know who it was, nor do I know whether the paper trail will be enough to bear it out. American management nowadays tends to go out of their way to minimize paper trail and maximize "fill-in-the-blank" style communication to facilitate plausible deniability.


They added MCAS because the larger engines increase the propensity of the aircraft to pitch up at high angles of attack. This is against FAA rules and renders the aircraft uncertifiable. Their solution was to add MCAS which is designed to change the aircraft's stall characteristics "in software" so that it can be certified without major design changes.

If they want to remove MCAS then they need to enlarge the undercarriage to give the aircraft more ground clearance, so that the engines can be placed further back. Such a major change to the aircraft's design would mean the 737 MAX could not share a type rating with the other 737s or at least would require significant differences training (not an iPad lesson)


Don't forget that the FAA also failed here too. The plane should never have gotten past the concept stage. They were taking Boeing's word that everything was going to be fine, and it wasn't. The FAA shares as much blame as Boeing for this fiasco.


There's nothing wrong with the concept. The errors are:

1. poor detail software design of the MCAS (single point of failure)

2. poor pilot training (2 crews couldn't remember how to operate the trim system)

Both are easily fixed.


I was looking into API to make an app for avoiding this plane, then I thought maybe I should not upset those who can kill hundreds of people and expect to get away with it.

I am not a nervous flyer, I even used to do paragliding but I am pretty determined to wait few years before flying on one of those. One thing I learned about paragliding was that you must trust your equipment or don’t fly.


Surely a 737 Max is orders of magnitude safer than a paraglider...


The performance and safety certification of the gliders seem more trustworthy than FAA and Boeing at this point. Also it is expected to get trained for the failure modes of the wing(unlike with the 737 max, apparently). Not a dangerous sport if you don’t take risks and have proper equipment.


You have to be kidding me. You are trying to assert that paragliding is safer than flying on a 737 MAX? Seriously?

How is this even a reasonable, thought out argument to work against? I downvoted you (and a lot of the other over-the-top reactionary nonsense from armchair “aviation experts”) but I figured I’d at least explain why.

Why is it every discussion on this site that involves any large company full of such over-the-top vilification? It’s so predictable and eye rollingly childish....


Obviously 737MAX and paragliders cannot be compared directly but paragliders don't come with an inherently dangerous design that is not disclosed to the pilots. Gliders do have failure modes but that is O.K. because pilots are trained to handle these. No surprises, therefore safer than 737 MAX with MCAS.

Hundreds of people died, Boeing repeatedly tried to deny the existence of the problem, the responsibility and at the end, the CEO only lost his seat in the board and nothing else. A deeper look unveiled multiple scandals about Boeing and FAA and you are complaining that I am vilifying this company? You have to be kidding me.

Why is it every discussion on this site that involves any technology that is a nerds childhood dream needs to be whitewashed? It’s so predictable and eye rollingly childish


Doesn’t need to be whitewashed but doesn’t need a bunch of hyperbole painting every giant Corp as the most evil villain ever. Nobody anywhere can do any right on this website. Very tiring.

Like, does anybody here understand the engineering and business trade offs in airplane design? I doubt it. Just a bunch of dunning Kruger affected people who think knowing to program equates to expertise in every other field.


>Nobody anywhere can do any right on this website. Very tiring.

You are being unreasonable here.

I see you have an emotional investment in this but let's not pretend that this is a witchhunt. HN is a very positive community that supports good work and attempts, but in this case, we are literally talking about a company that did very bad job by producing a craft unfit for use by humans that cost the lives of hundreds. How positive and supporting you are expecting me to be to the work of a giant corporation that cost so much and tried to defer blame? If anything, scrutiny is what would keep the repetition of this. This is not a mom and pop store that made a mistake and asking for forgiveness, it is a giant malfunctioning structure that created big trouble and is resisting to change.


According to a random study I found on the internet, your are at a 50x risk of death in a paraglider vs in car. I don't think there really is a comparison here between paragliding and flying in a MAX 8.


Deaths don’t occur randomly. This number might be relevant for insurance companies but your death can be greatly delayed by flying only with stabile equipment in good weather.

The same goes with the transportation, you can greatly reduce your risks by picking your equipment. Not All cars are 50X safer than paragliding and you can choose on which side of the average you will be.


6 people were killed paragliding in 2017 in the US. There haven't been any US fatalities on the 737 Max (which is the group I'm interested in, since I'm willing to believe that there are relevant differences in pilot quality across countries.)


How many of these are due to a defect in the gliders or undocumented features of wings sold as "the same wing but glides better, no need of training"?


Seems like there'd be no need for such an app since the plane is grounded.


Will your paraglider fit into your carryon? :)


So they have decided that it's cheaper to scrap that particular model than fix the issues, likely more reputation than technical.


They are suspending production until the grounding is lifted.

Not killing off the product.

They will of course not be paying the tens of thousands of workers that work on that product while production is suspended.



No layoffs at Boeing because of IAM, but you can bet when Boeing stops placing orders from their supplier network, people are going to be laid off.


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