I you are like me, and grew up a while ago in Seattle, you were almost forced to become an amateur Boeing watcher. Until Microsoft came along, Boeing was the big dog in this here town. Seattle wasn't a company town, but it came very close. Economically and culturally speaking, Boeing dominated the landscape.
Now, of course, Boeing is one among several companies, and not even the largest or the most important. But it still retains significant importance. And old habits are hard to break. So, I continue to keep an eye on what it is up to. Lately, Boeing has gone out of its way to find ways to demand our attention.
But, before we take a look at what's currently happening with the company, let's begin at the beginning. And the beginning is 1909. William E. "Bill" Boeing started out as a timber baron in the Midwest. Like another timber baron, George Weyerhaeuser, he relocated to the Pacific Northwest because "that's where the trees are". Weyerhaeuser stuck to trees. Boeing didn't.
Building airplanes was one step up from a hobby business until World War I. But airplane development bypassed the United States because we stayed out of the War until late in the game. So, in 1915 it was still a game that any millionaire could dabble in, if he wanted to. That's when Boeing decided he wanted to.
He went to Los Angeles to spend some time with Glenn Martin, one of the pioneers in American aeronautics, so that he could learn about airplanes. Cutting to the chase, he ended up building and selling planes of his own design less than a year later.
The first Boeing airplane was the "B&W" seaplane. Except at the time the company was called "Pacific Aero Products Company". The name was soon changed to one that contained the word "Boeing". Since then, the company has been renamed multiple times. It has also gone through various incarnations and reorganizations. But all of them have contained the word "Boeing" in their name.
For several years Boeing, as I will refer to all the various permutations, eked out a modest amount of success building a few of this model and a few of that model. But the thing Boeing did differently in those early years was that it didn't restrict itself to just building the airplane.
It first branched out into what was initially an extremely modest mail and passenger service between Seattle and British Columbia, Canada. Boeing later expanded to other mail and passenger routes using various models of Boeing designed and built planes. It also managed to sell some fighter planes to the Army along the way.
Boeing was building a vertical monopoly. It merged with other airlines and grew. It merged with Pratt & Whitney, an engine maker, and grew. It merged with other parts makers and grew. Soon, it owned everything it needed to directly manufacture all the important pieces that went into an airplane. Then it, in effect, sold the airplane to its airline subsidiary. The airline subsidiary then flew mail and passengers from here to there using Boeing planes.
Even for the time Boeing was not a particularly large enterprise. But in its niche it was a big dog. In 1934 the Federal "Air Mail Act" was passed. Among other things, it was aimed squarely at Boeing Companies were prohibited from both building airplanes and running an airline. Bill Boeing was disgusted by this, so he sold all his Boeing stock and had nothing further to do with the company.
Boeing ended up being split into three companies. The airline part became United Airlines. The component parts business that included Pratt & Whitney became United Aircraft, which later became United Technologies. The airplane building part retained the Boeing name. This much reduced Boeing built the "airframe". It then attached Pratt & Whitney engines, and other parts, to create a finished airplane.
Boeing continued to develop commercial airliners. It saw some success but the Douglass DC-2, and later DC-3, were far more successful. Boeing did have some success with the "Flying Clipper", a machine that could fly long distances. But it took off and landed in water. So it also had boat-like qualities. World War II got in the way of volume sales of the Flying Clipper.
After several fits and starts, Boeing developed the B-17 Heavy Bomber for the military. My father thought that it was British money that made this possible but I have not seen anything to corroborate this. The B-17 was the best heavy bomber during the early part of the War. Crews liked it because it could take a lot of punishment. More than one plane returned safely to base with more than a thousand holes in it.
The other Boeing success during the War was the B-29 Heavy Bomber. It could fly higher, farther, and faster, than the B-17, or pretty much anything else. It could also carry a much heavier bomb load. Boeing pushed the state of the art to limit. It made the plane finicky. Ground crews had to know what they were doing. But results spoke for themselves. It came into its own in the Pacific theater where bombing runs were extremely long. And, most famously, it was used to drop both atomic bombs on Japan.
Boeing came out of the War with a sterling reputation for building military bombers and a pile of cash. The military had long since written Boeing off as a fighter plane maker. The airlines had other places to go for top of the line airlines. But Boeing managed to stay in the game by developing the B-36, B-47, and eventually the B-52 Heavy Bombers. The B-36 was propeller driven. The B-47 was a hybrid. But the B-52 was 100% jet powered.
Boeing did with the B-52 what they had done with the B-29. It pushed the state of the art, hard. And it turned out that's what the air force wanted. The basic parameters were hashed out on a napkin during a short negotiating session with the air force. Fortunately for Boeing, they were able to produce an airplane that did everything the napkin promised.
Boeing did such a good job of designing and building the B-52 that they are still flying front line missions for the air force today. The B-52 quickly went through a number of "variants" as Boeing made small, incremental improvements. The final variant was the B-52 H, the model that is still flying.
I believe it is the only eight engine plane now in regular service. Jet engines of the period had anemic "thrust", so it took eight to provide the power needed. A single modern jet engine can provide more thrust than all eight combined.
In the immediate postwar period Boeing tried unsuccessfully to come up with a propeller driven airliner that was noticeably superior to designs from Douglass and other companies. They were unsuccessful.
Meanwhile, the British were the first to be able to bring a jet powered airliner to market. The plane was called the de Havilland Comet. It looked like "game over" for Boeing in the market for commercial airplanes. But an opportunity arose when Comets started falling out of the sky.
They had a fatal design error, not in the "new" jet engine part of the plane, but in the "old" airframe part of the plane. All airplanes have airframes. Since it didn't appear that de Havilland had done anything markedly different from older designs, nobody thought to look there. But it turned out that de Havilland had done something slightly different. And they had gotten it fatally wrong.
The first few Comets crashed into deep water so there was no plane to examine in order to figure out what the problem was. Eventually, a plane crashed where it could be recovered. This quickly led to the problem. But by now the Comet had a very bad reputation. And the problem was one of those that takes a long time to fix. By the time de Haviland had a safe plane to sell, it was too late.
The other U. S. commercial airplane makers all had successful propeller planes they could sell. That made them slightly reluctant to get into the jet business. Boeing, with nothing to lose, moved more quickly. The result was the 707.
Famously, a 707 test pilot performed an unauthorized barrel roll in public in front of 50,000 spectators. And there were a bunch of airline executives scattered in amongst the 50,000. Both spectators and airline executives concluded that the plane must be safe and that Boeing had tremendous confidence in the plane. Otherwise, they never would have authorized the barrel roll.
If, right after the de Havilland Comet fiasco, Boeing was willing to take that kind of chance, then both airline executives and the public decided that they too were willing to take a chance. Airlines bought the plane and passengers flocked to it. And, most importantly, it did not fall out of the sky.
The success of the B-52 and the 707 led to the greatest period of Boeing success in the history of the company. Boeing quickly developed the 727 and the 737. Both were wildly successful. This was followed by what was for a long time the largest commercial airplane in the sky, the 747. Boeing was selling commercial airplanes as fast as they could pump them out.
Meanwhile, things were also going great on the government/military side. Boeing had the contract for the Minuteman III Intercontinental Ballistic Missile. It was building a Space Shuttle-like spaceship called the Dyna-Soar for the air force. It was building a 707 derivative for the called the KC-135. This was used for in-air refueling of B-52 Bombers so that they could fly all the way to Russia and back.
Boeing was building CH-47 "Chinook" helicopters for the Army. It was building the Saturn-1C stage of the Saturn 5 rocket for NASA. Boeing also was building the moon buggy for NASA to use on the moon as part of project Apollo. It was even working on it's own SST - Supersonic Transport, a commercial airliner that, like the Concorde, would fly faster than the speed of sound.
Everything was going great until it wasn't. The economy hit a speed bump and all of a sudden the airlines didn't need any more new planes. They particularly didn't need the giant 747. Full, it was a cash cow. Empty, it was white elephant.
And all of a sudden there weren't enough people flying to consistently fill up a 747. 747 sales went to near zero. Sales of the rest of Boeing's commercial product line also went into free fall. And by now Douglass had it's own jet powered airliner, the DC-8. So airlines could buy a jet airliner from somebody other than Boeing, if the wanted to.
That would have been manageable but everything fell off on the government/military side of the ledger too. The air force decided it had enough B-52s and Minuteman IIIs and KC-135's so those contracts wrapped up. By the late '60s NASA had all the hardware it needed to complete the Apollo program so orders dried up there too. Pretty much whatever Boeing was selling, nobody was buying.
Famously, some wags bought a billboard that said "Will the last person leaving Seattle, please turn out the lights?" At this point (1969) Boeing was the big dog when it came to the local economy. So the whole area got sick when Boeing caught a cold. Boeing caught triple pneumonia. Company employment went from over 100,000 to under 40,000.
The metropolitan Seattle area has since seen its economy dip less than other parts of the country when there is some kind of slowdown. But in '69 the Seattle area's economy fell way more than the rest of the country. And it was all due to the Boeing effect.
I think this big boom then big bust psychologically damaged Boeing. I believe Boeing lost confidence that it knew what it was doing, that it could trust its own judgement. In the commercial airplane business you must make huge bets. If you don't you end up behind the technology curve, the very place Boeing had been before the 707 debuted.
Before the '69 decline, Boeing's view of itself was encapsulated in the title of an authorized company biography that came out a few years earlier. It was called "Vision: The Story of Boeing". Before, Boeing saw itself as a visionary company that prided itself on being able to "bet the company" and come out a winner. After, while Boeing maintained the same external posture, I believe that internally, doubts had crept in.
I believe that it became important to find ways to hedge bets, to not "bet the company". Was there some less risky path that would generate acceptable profits? Small and incremental became the preferred approach. Making risky bets on big technological leaps was just too dangerous. It became a time of hedging bets and avoiding "going all in". Henceforth, bets would be smaller, more measured, safer.
And initially, that strategy paid off. Boeing did survive the "bust" of the late '60s and early '70s. Sales dropped from the stratospheric levels of the early and mid '60s. But the 727, and especially the 737, soon started selling steadily. And eventually the 747 became a big success. Government/military business came back. But it never returned to the levels seen before the bust.
So Boeing soldiered on. The 727 was eventually retired. But only after it sold enough planes to be immensely profitable. And the 737 kept selling and selling and selling. In the '80s Boeing rolled out the 757 to replace the 727 and the 767 to replace the 707.
Both were modest successes, but not at the level of the plane they replaced. Boeing has since discontinued the 757 and essentially discontinued the 767. The 707 and 727 were revolutionary planes. The 757 and 767 were evolutionary planes.
And Boeing had lost whatever Midas touch it had had in the '50s and '60s, when it came to defense/government contracts. It was a subcontractor on many projects. But could never break through to become the prime contractor.
In spite of the success of the B-52, Boeing lost out on the B-2 that was supposed to replace it, and on the Stealth Bomber that was supposed to replace the B-2. Boeing repeatedly bid on and lost on various fighter contracts. The Space Shuttle went to another contractor. And on and on.
In the '90s Boeing rolled out the 777. To understand why you have to understand the structure of the commercial airliner market. There are short haul flights, medium haul flights, and long haul flights. There are small, medium, and large planes in terms of seating capacity.
You want to fill the plane. As I mentioned above, the 747 is a very profitable plane to fly if it is full. But it is expensive to buy, requires a large crew, and consumes a whole lot of fuel getting the plane off the ground and up to cruising altitude.
If you fill the plane up with passengers and fly them a long distance the "cost per seat mile" is very low, however. Once they had been in service a few years, airlines started using 747s only on long international flights on popular routes. Why? Because the 747 had lots and lots of seats. And once it reached cruising altitude, if you apportioned its operating cost across all those seats, it was very cheap to operate. Of course, most of those seats needed to have paying customers in them. That's why it had to be a high volume route.
The 737, on the other hand, was the best fit for the other end of the spectrum. It was much cheaper to buy, It used a far smaller crew. It cost far less to get from the runway to cruising altitude. It had far fewer seats. But the "per seat mile" cost was much lower than flying a 747 (or pretty much any other plane) on the same route and with the same passenger load. A 737 could be profitably flown on much shorter routes that featured far lower passenger volumes.
Airlines had short, medium, and long routes. They had routes that had high, medium , and low passenger volumes. They wanted the plane that would deliver the lowest seat mile cost at a particular route and traffic volume point. There are nine combinations of the two parameters I have discussed. But in actuality, there are more gradations. And that required lots of models that could be optimized for various combinations of seating capacity and route length.
The 777 was supposed to fill the gap between the "medium" 767 and the "giant" 747 with a "large" plane. It would be offered in various sub-models optimized for various route lengths. In fact, variants featuring various amounts of seating and an the ability to fly routes of various lengths were offered up and down the product line.
As the decades rolled by Boeing was able to provide planes capable of flying longer and longer routes. Early jets could fly further than their propeller driven predecessors. But people like nonstop flights. There were many city pairs that couldn't be joined by a single flight because they were just too far apart. The holy grail was 13,000 miles. With that capability you could fly nonstop from anywhere on earth to anywhere else on earth.
And Boeing did not have the market to itself. Other airplane makers were trying to sell into the same market that was governed by the same rules. They all strove to offer planes that could be efficiently slotted into all the various combinations of seating capacity and route length. Eventually, the only other domestic airliner maker left standing was what was by then called McDonnell Douglass. In 1997 Boeing acquired them.
This acquisition was the brainchild of then Boeing CEO Phil Condit. Although technically an engineer, he thought like an accountant. Most observers believed that Boeing substantially overpaid. At the time McDonnell Douglas was heading for bankruptcy. But Condit admired M-D CEO Harry Stonecipher. The fact that Stonecipher had presided over M-D's decline apparently did not figure into Condit's calculations.
The thing that might have made the deal make sense was based on the fact that M-D was very good at securing military/government business. If the M-D people Boeing acquired in the merger had been able to use their supposed skill and expertise to land lots of additional military/government business for Boeing, then that additional business might have justified the cost of the acquisition. But post acquisition, Boeing never saw any substantial increase in their volume of military/government business.
Condit proceeded to remake Boeing in the image of M-D. The results were predictable. The decline was sped along when Condit was fired for moral turpitude and Stonecipher took over as CEO of Boeing for a while. Boeing has never really recovered from the Condit/Stonecipher era.
The M-D acquisition was part of a larger buying binge. When the "buy M-D for their ability to get military/government work" strategy failed, Boeing attempted to buy its way into the defense contracting business. There have been no big successes resulting from this. Boeing does have lots of pieces of lots of contracts. But the total is just not all that impressive.
Boeing also engaged in the favorite tactic of modern CEOs. It bought back billions of dollars of its own stock. This has left the company with an inadequate amount of working capital. Developing a new "rev" of an airplane, something Boeing has done a number of times with the 737, now costs billions of dollars. Developing an entirely new plane like the 777, now costs tens of billions of dollars.
Boeing was able to scratch up the money to develop the 707 on its own. It was able to roll the 707 profits into funding the development of the 727, 737, and 747. All three of these latter planes were developed within a few years of each other. The 747 did cause Boeing to become over extended when the market turned down. But a few years later the 747 turned into a very profitable plane for Boeing.
Since Boeing acquired McDonnell Douglass it has been hard pressed to fund the costs of new planes. It has been forced to proceed cautiously even when it comes to "revs" of planes. Boeing has been "rev"ing the 737 since the '60s. It is long past time for them to build a new plane from scratch. But money constraints keep driving them to "rev" the 737 yet again.
The only new plane Boeing has developed in the past couple of decades is the 787 Dreamliner. It embodies the accounting mentality and cash shortage problems Boeing has stuck itself with.
In about 2000, somebody I had never heard of managed to catch the ear of the press. His story was that there was some great technological advance in the offing that would completely change the commercial airliner market. It took a couple of years to find out that what he was talking about was a "new and improved" jet engine.
The question was: how should Boing take advantage of this advance, whatever it was. Boeing decided that it should be used to make faster jetliners. It turns out that jetliners had been flying at Mach 0.85 (85% of the speed of sound) since the 707 era. That speed had for a long time been a good tradeoff point between speed and efficiency. Slowing down didn't save much jet fuel. Going much faster required a lot more jet fuel.
But if airliners flew lots faster, the thinking went, then an airline would squeeze in more flights per day per plane. That would be worth money to them. From a passenger point of view, what's not to like about getting where you are going much more quickly?
But it turned out that the speed difference (going Mach 0.98) was not worth all that much. The new engine design made that possible for only a small increase in fuel consumption. But the speed increase was worth so little to passengers and to airlines that the cost increase wasn't worth it, even though it was small. So the "Sonic Cruiser", the nickname Boeing came up with, was a bust. Boeing managed to waste about 18 months figuring this out.
Boeing eventually gave up and went with what ended up becoming the 787. The priority now was fuel efficiency. In pursuit of fuel efficiency Boeing decided to use carbon fiber rather than the traditional aluminum as the primary structural material. That would make the plane significantly lighter. In the airliner business, the lighter the plane is, the more fuel efficient it is. That was a good choice.
But nobody had made a large airplane out of carbon fiber before. It was going to take a lot of effort to pull a change of that magnitude off. Boeing should have said "okay - one big change at a time" and gone with the traditional way for everything else. But they were cash strapped and accounting oriented in their thought processes. So they said to themselves "what else pencils out?"
Boeing's secret sauce is technology. They know more than anybody else about how to design and build commercial airplanes. This extended to manufacturing processes, airframe design, and particularly aerodynamics. And most especially wings. Boeing was held in high repute when it came to the details of wing design. To everybody but an accountant, giving away your secret sauce seems like a bad idea. But Boeing gave away their secret sauce.
Design and engineering costs a bloody fortune when it comes to a new plane. So how about having someone else pay for it? Sounds perfectly sensible, if you are an accountant.
Historically, Boeing had done all the design and engineering work. They then farmed the result out to subcontractors who built it under careful Boeing oversight. With the 787 Boeing put out "design build" contracts for large chunks of the plane.
That meant that Boeing no longer had to spend a lot of up front money on design and engineering. Now that was the subcontractor's problem. But it also meant that the subcontractor ended up learning a lot about how to build airliners. And it also meant that Boeing lost control of the process.
And Boeing does a lot of business all over the world. Usually this involves placing a certain amount of work in a country to grease the skids for sales of Boeing products into that country. But the old method did not involve the country's industry learning a lot about how to build commercial airplanes. Sure, they leaned out to make this or that part. But they didn't get a look at the big picture.
Boeing went ahead and signed up subcontractors for large parts of the 787 that hailed from countries all over the world anyhow. And some of those countries, Japan, for instance, harbored aspirations of developing a home grown commercial airplane industry. Boeing just gave them a leg up for free. It looked good on a spread sheet because Boeing was off the hook for all these design and engineering costs.
Boeing also decided to make another major change. For all previous planes, with the exception of a few large complicated things like engines, Boeing had let subcontractors build only relatively small parts of the plane. Boeing would then take this large number of parts made elsewhere and assemble them into the final plane. This meant that the "final assembly" process was complex and expensive.
With the 787 Boeing decided to switch to an assembly method used widely in other industries like autos. Subcontractors would supply large parts of the plane "pre stuffed" with all of the components. That would leave only a few large subassemblies for Boeing to quickly "snap together" to complete the assembly of the plane. Again, this moves lots of costs off of Boeing's books and onto the books of the subcontractors.
It didn't hurt that Boeing hated the union workers the assembled the planes. This change would switch a lot of work from union employees of Boeing to nonunion (or so Boeing management secretly hoped) employees working for subcontractors. Ignoring the antiunion component, for the moment, this might have been a good idea if Boeing wasn't simultaneously making all the other changes.
Finally, I judged Boeing management to be weak at this time. But each and every change would increase the burden Boeing management would need to shoulder. As a whole, the increased load on management would likely overstress even a top notch management team. Of course, a top notch management team wouldn't have done something so stupid.
And, of course, the expected happened. The development of the plane hit snag after snag after snag. And all of the cost saving assumptions built into the spread sheets used to justify all these decisions turned out to be wrong. So Boeing got none of the savings they planned on. In fact, everything cost way more than planned.
Boeing had to send engineering teams to several subcontractors to help them do what they had never been asked to do before. A Boeing subcontractor in South Carolina collapsed under the strain. Boeing ended up buying them. And the project was delayed. And parts of it needed to be redone. And on and on.
The standard accounting method used when building a new plane is that you assume that you will sell 400 of them. Then you write off all of your design and engineering costs evenly over the entire run of 400. The first few planes are fantastically expensive to build because you don't know what you are doing. But as you gain experience things get straightened out, sped up, and made more efficient.
The hope is that the profit you make on the planes toward the end of the run of 400 cover the costs you incurred building the first few planes in the run. If everything works out like it is supposed to, then all your up front costs are paid by the first 400 planes you build. Once the startup costs have been taken care of, the profit margin on subsequent planes is fat.
Boeing was forced to change "400" to "1,200" due to the awesome cost overruns they managed to rack up on the the project. That means that Boeing has to sell more than 1,200 878s before they have a chance of making a profit on the plane. As of midyear 2020, Boeing has only built 981 787's. So they are still a couple hundred short of the break even point.
Now imagine Boeing had the billions they have spent on stock buybacks. Then they could have retained much tighter control of the 787. They could have stuck with their traditional model of doing their own design and engineering.
This is something Boeing already knows how to do. So there would have been fewer problems. Subcontractors would have also done better because they would only been responsible for the "build" part and they would have had compete, well executed plans to work from.
The plane would likely have come in closer to on time and on budget. Boeing management would have not been as severely overstressed. And they would not have given so much secret sauce to companies in countries who have designs on becoming competitors to Boeing.
I'll just skip over the 878 "battery glitch" and other teething pains the 787 has gone through. For the most part, it is now humming along reasonably well. Instead, I want to refocus on the 737.
The 737 Boeing is currently building has a lot of new technology in it. But the various "rev" upgrades have each had to take the plane as it was and make only those changes to it that could be made and still drag along a lot of the old plane.
This has now been done multiple times. So the cumulative amount of change is substantial. For instance, the engines have been upgrades multiple times. This changes the balance and aerodynamics of the plane. So a lot of things had to be changed to compensate for that.
But each new "rev" was still supposed to mostly fly like the old model. At some point the 737 acquired cockpit screens, for instance. But the first generation that included screens could be configured to mimic the old electromechanical controls that they replaced. This was so that pilots who had been trained on the old model could fly the new model without having to first be retrained.
Over time, it has been possible to drop backward compatibility that stretched multiple generations back. But this "backward compatibility" requirement, even if it extends back only one generation, still severely limits what changes can be introduced.
The priority for some time has been to reduce airline operating costs by, for instance, introducing new engines in a way that does not requiring pilots to be retrained. Pretty much everything else, like safety improvements, that doesn't directly and obviously reduce the airline's costs has been let go by the way.
A few years ago Boeing felt that the needed to "refresh" the 737 in order to keep up with Airbus. Their two options were a new plane and yet another "rev". The fact that Boeing really didn't have the money to fund a new plane made the decision a no brainer. The result was the 737 "MAX".
The priority was to increase operating efficiency as much as possible while keeping development costs low and also keeping transition costs, like pilot training, to a minimum. That meant new engines because they were the primary driver of improved fuel efficiency.
But the new engines had a different weight, shape, etc., compared to the old ones. That drove a bunch of other changes to the plane. And all these changes would normally have changed the flying characteristics of the plane. And that would have require a round of expensive pilot training.
Enter MCAS. MCAS was a piece of software that was there to make the plane appear to fly the same way the old model did. Initially, it was supposed to kick in only in a few specific situations. But more and more situations were found where the MAX didn't handle like the "NG", the model the MAX was replacing.
The specs for MCAS kept getting modified every time a new example of this was discovered. In the end, the MCAS was active a lot of the time rather than only rarely. It was also making more "corrections" and being more aggressive about the "corrections" it was making than the original specification had called for. But each individual change was judged to be small enough that no high level or in depth review was necessary.
The MCAS that was eventually implemented bore little resemblance to the initial version. But the incremental nature of the change process resulted in no review of the "new and improved" MCAS ever being requested. As a result, the initial version was the only version that was ever subjected to any kind of in depth analysis and review.
The driving force behind this wasn't malevolence. It was an obsessive focus on the bottom line to the exclusion of everything else. An accounting perspective rather than an engineering perspective. Boeing repeated with the MAX the same sins that got it into trouble with the 787. The difference was that the shortcomings of the 787 got no one killed. The shortcomings of the MAX got hundreds killed.
Between them, the 787 and the 737 MAX have trashed Boeing's reputation. It got trashed both with airlines and with the flying public. And then COVID happened. Air traffic has been growing robustly for years. Over time, growth in air traffic turns into orders for lots of new jetliners.
Design improvements in engines, etc. has also driven increased efficiency. That has driven the cost of flying down. Not surprisingly, lots of people chose to take advantage of this. That is, right up until COVID shut everything down.
It turns out that Boeing could have avoided all the problems with the MCAS by spending a few million more on software. They probably could have implemented that better software without slowing down the schedule for the MAX. No additional hardware would have been required.
BTW, better software would likely have allowed Boeing to get away with no MCAS oriented pilot training. Here, I'm talking about what they could have gotten away with, not what they should have done. They should have mandated pilot training on the MCAS.
The reason no additional hardware is required is because it turns out that the 737 already has two of everything. The proximate cause of the MCAS going nuts was something called an AOA sensor. The MAX has two but only uses one.
When that one AOA sensor goes nuts the MCAS goes nuts and the plane falls out of the sky. It is theoretically possible for the pilots to recover from this. But they have to act instantly. If they don't act immediately then what they are supposed to do, turn a wheel, becomes impossible due to loads imposed on various control surfaces that are the result of commands that the MCAS has by now issued.
It also turns out that there are two computers that can run the MCAS software. But only one is used. The software fix is to have both computers active at all times. One computer uses one AOA sensor. The other computer uses the other AOA sensor.
They then regularly compare results. If the results differ they let the pilot know The pilot can then turn the MCAS off. (BTW, there didn't used to be a way for the pilot to turn the MCAS off. In fact, they didn't even know the MCAS existed.)
If Boeing had invested the money to change how the two computers operated and, as a side effect, caused the plane to use both AOA sensors, then no MAX planes would have crashed and no one would have been the wiser.
But the design of the 737 NG only used one AOA sensor and only one computer. So Boeing argued that this configuration should be "grandfathered" for the MAX and the FAA bought the argument. And, of course, all of this "only use one" business would have been redone if Boeing had decided to build a new 737 from scratch rather than rev-ing the old 737.
And, if Boeing's mind set was "what safety and other improvements can we make while we are rev-ing the 737" then the changes Boeing has now been forced to make would have been implemented before the MAX was certified, let alone delivered to an airline. But the mind set was "don't change anything you don't absolutely have to change".
And Boeing is back in trouble with the 787. After the MAX fiasco, all Boeing jets have been subjected to heightened scrutiny by the public and by regulators. So something that might have slipped by before won't now, and Boeing knows this.
It turns out that Boeing has had some quality control problems at its South Carolina plant. (Yes -- it's the operation Boeing had to buy because it couldn't do what was required of it while the 787 was in its design phase.) The details are not worth going into. But, if a couple of unlikely things happen at the same time, the plane crashes.
Since the FAA has been blamed for not doing its job with respect to the MAX, it is in no mood to let anything safety related slide. So Boeing knows it is on the hook to fix the problem. Luckily, no one is flying much these days. So there are lots of 787's already sitting on the ground that can be taken out of service, repaired, and put back in service, all without inconveniencing the airlines.
Not surprisingly, Boeing is seeing a lot of order cancellations, especially for the MAX, their bread and butter. Meanwhile, things are not rosy over at Airbus. But things are going a lot better there than they are for Boeing. People think Airbus planes are designed and built with safety in mind. They are no longer sure that mindset also applies to Boeing. So, given a choice, they'd rather fly on an Airbus plane.
Boeing did all this to save a buck. They have been forced to spend billions now because then they were too focused on the bottom line to authorize spending millions. The ledger on the787 is not as one sided. But there too, a short sighted (and incompetently implemented) attempt to save money in the short run ended up costing far more in the long run.
If you have a long term perspective, neither set of decisions makes sense from an accounting perspective, let alone an engineering perspective. But Wall Street has demanded that companies like Boeing only have a short term perspective. Boeing management has been only too happy to comply.
So what's ahead for Boeing? Well, the next year does not look good. The 373 MAX is still grounded, although it should be flying by next year. The problems with the 787 are not fixed yet, but they should be by next year. And COVID means that few people are flying, although they may be by next year.
And that means airlines are cancelling orders, not adding to them. Finally, airlines are likely to place what few orders they do make with Airbus. Boeing is, after all, damaged goods. It will take more than a few months and a few commercials to do anything about that.
And what that means is that there is a good chance that Boeing will need to be bailed out by the U. S. government. Boeing is the single largest exporter of U. S. made goods to the rest of the world. It is the only U. S. manufacturer of commercial airliners. That makes it too big to fail.
The difficulties Boeing is now facing are far more severe than they were in the Boeing Bust of '69. Boeing's reputation was high at that time. Sales dried up due to reasons that had nothing to do with anything Boeing had done. And Boeing was well positioned to take advantage of the eventual recovery. It just had to survive long enough for it to get underway.
This time around, Boeing was already in a lot of trouble when the COVID caused recession arrived. You can't blame Boeing for COVID. But you can blame Boeing for being in really bad shape when COVID did hit. That has left Boeing weak when it needed to be strong in order to survive the COVID recession.
And this time around Boeing is poorly positioned to take an advantage of the recovery, whenever it eventually arrives. That assumes, of course, that Boeing is still around by then. It may not be without a lot of government help.
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