A month ago we highlighted a long essay on how Boeing went from moated CCP-type franchise to a company run by cost cutters. Last week, even as news broke of Boeing’s CEO being shown the door, Slate published another piece which sheds more colour on the descent of this once luminous franchise. The piece is based on the emails and instant messages that Boeing has had to show the US Congressional investigators. These mails & messages show Boeing “employees describing cover-ups and concern over the safety of the 737 Max airliner…he internal comments give an unvarnished view of some of those closest to the aerospace manufacturing company’s production of the 737 Max, the plane that has since crashed twice and been grounded worldwide. The nature of the crashes—particularly the functioning of the airliner’s software system—has raised troubling questions about Boeing’s willingness to pursue profit at the expense of safety, its relationship with regulators, and what exactly it knew about the problems in its marquee aircraft.”
As per the New York Times, “The most damaging messages included conversations among Boeing pilots and other employees about software issues and other problems with flight simulators for the Max, a plane later involved in two accidents, in late 2018 and early 2019, that killed 346 people and threw the company into chaos…The employees appear to discuss instances in which the company concealed such problems from the [Federal Aviation Administration] during the regulator’s certification of the simulators, which were used in the development of the Max, as well as in training for pilots who had not previously flown a 737.”
Here is a sample of the messages & mails that Boeing has had to disclose to the US Congress:
“• “I still haven’t been forgiven by God for the covering up I did last year,” one employee said in a message in 2018 in an apparent reference to prior dealings with the FAA.
• “Would you put your family on a Max simulator trained aircraft? I wouldn’t,” one employee said to a colleague before the first crash in 2018. “No,” the colleague said.
• “This airplane is designed by clowns, who are in turn supervised by monkeys,” an employee wrote in 2017.”
The messages shed interesting light on how aircraft sales personnel use the time needed by an airline to train pilots to fly a new model as a sales tool. In particular, if the aircraft sales rep can show that pilots need little or no training to fly a new model then that becomes a key item in the sales pitch. Boeing used this trick to flog the 737 Max: “The messages also show how the company pushed to reduce the scope of mandatory training for pilots to fly the new aircraft in order to cut costs. Regulators ultimately agreed to only mandate computer-based training, rather than full simulator training, for pilots with experience flying another model, the 737 NG. “You can be away from an NG for 30 years and still be able to jump into a MAX? LOVE IT!!” a Boeing marketing employee said in an email after the FAA decision. “This is a big part of the operating cost structure in our marketing decks.” This week, Boeing reversed course and recommended simulator training for pilots new to the 737 Max.”

If you want to read our other published material, please visit https://marcellus.in/blog/

Note: The above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. The information provided is intended for educational purposes only. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India (SEBI) and is also an FME (Non-Retail) with the International Financial Services Centres Authority (IFSCA) as a provider of Portfolio Management Services. Additionally, Marcellus is also registered with US Securities and Exchange Commission (“US SEC”) as an Investment Advisor.



2024 © | All rights reserved.

Privacy Policy | Terms and Conditions