After nearly three months on the International Space Station, two astronauts are to be marooned there until next February as their proposed transport home, Boeing’s Starliner capsule, remains out of service after a host of thruster failures, software glitches, parachute problems and helium leaks. The astronauts are being philosophical about it, but Boeing will be aggrieved at losing credibility points to its arch-rival NASA co-contractor, the Elon Musk-owned SpaceX, which will now take on the responsibility for bringing the astronauts home (tinyurl.com/3bj3ua2t).
Boeing is fast becoming a byword for ‘omnishambles’ with a recent history that showcases just how capitalist competition and corporate profit-chasing can result in highly uncreative destruction.
When Boeing swallowed up the last of its US aviation rivals in the 1990s, it saw the chance to adopt a less product-oriented and more shareholder-focused and monopolistic approach which sought to maximise returns by outsourcing not just part production but the cost of part development too, while also extorting price reductions. This put the squeeze on suppliers, who were faced with a Hobson’s Choice of a bad deal or no deal at all. But outsourcing creates complexity, and this compartmentalised approach on the wide-bodied 787 Dreamliner resulted in delays and overruns and never delivered the savings expected (tinyurl.com/fsmbd8mz).
While Boeing wrestled with a problem of its own making, its major European rival, the joint venture Airbus, announced the re-engined narrow-body A320neo, which it claimed could cut fuel use by up to 35 percent. This caused consternation at Boeing, whose 50-year-old 737 had previously dominated the core-segment single-aisle market. To compete, Boeing really needed a brand new plane, but the lead-time to mass production of an all-new design, outsourced or not, would be far too long, and Boeing were already haemorrhaging buyers to Airbus. So bosses resorted to the least-worst option, to re-engine the 737. Morgan Stanley said of this ‘reactionary’ solution, ‘Boeing’s hasty decision to re-engine the B737 is a clear indication of the success and strong competitive positioning of the A320neo’ while another business analyst was ‘astounded at the Airbus smackdown’ (tinyurl.com/36rkdsrr).
Enter the 737 MAX. But when you put new and bigger engines on a 100-ton aircraft they alter its centre of gravity and flight characteristics. Normally this would necessitate costly flight simulator retraining and recertification of pilots. Instead Boeing used a background software fix known as the Manoeuvring Characteristics Augmentation System (MCAS), which altered the plane’s rear flaps in response to sensor signals. As long as it worked properly, they reasoned, the pilots didn’t need to know about it. So Boeing did not tell them about MCAS or include it in the pilot manual. The Federal Aviation Administration wasn’t too worried, despite whistleblower allegations of its regulatory capture by Boeing, and agreed with the company to give pilots just an hour of training on an iPad, without mentioning MCAS. Boeing weren’t worried either. They had calculated the likelihood of a ‘major failure’ (one not resulting in the loss of a plane, which is termed ‘catastrophic’) as once in every 223 trillion flight hours – around 2 billion years of annual MAX fleet service (tinyurl.com/549z2ahj).
In the event they had two catastrophic failures in less than 6 months. The sensors and control panel light didn’t work properly, and pilots did not know about MCAS or how to override it when it malfunctioned. In October 2018 a Lion Air 737 MAX 8 crashed in the Java Sea, killing all 189 people. Airily dismissing this as ground crew and pilot incompetence, Boeing announced record $100bn earnings the following January. But in March 2019 an Ethiopian Airlines MAX 8 also fell out of the sky, killing all 157 on board. Clearly this was no coincidence, and Boeing immediately saw its orders, stock prices and reputation plummet. Its CEO promptly resigned, though with a cosy retirement package of $80m in stock options (tinyurl.com/498cvau4), and the new CEO issued a mea culpa to the US Senate, accepting the company’s responsibility for the deaths and agreeing to pay compensation and submit to regulators.
And then, despite all the regulation, a door panel blew off an Alaska Airlines flight in January this year, because bolts were missing. How could this happen? Multiple whistleblowers had faced company reprisals after drawing attention to falsified inspection reports and a string of unsafe practices due to cost-cutting and inadequate staff training. In July Boeing pleaded guilty to criminal conspiracy after being found to violate the terms of the regulatory agreement, meaning the company now has a criminal record (tinyurl.com/mv4av7m2).
On top of that, Boeing workers have been on strike against a union-busting and bullying culture, pay rates that have not increased in 16 years as the cash-strapped company grinds down on its own workforce, and ‘panic mode’ as managers hound staff to keep quiet over quality concerns (tinyurl.com/ysjh9mnc).
Now Boeing has $60bn of debt and is ‘one level above being potentially downgraded to non-investment grade status – junk status’. But nobody wants Boeing to collapse, not the airlines, who are faced with a global shortage of aircraft and fear an Airbus monopoly even more than the current Boeing-Airbus duopoly, and not the US government, which relies on Boeing’s aerospace defence arm and fears market capture by a major Chinese competitor like Comac (Economist, 20 June).
Airbus has seen A220-300 engine failures, diversions, groundings and supply chain problems but no crashes, and its stock has gone up, not down. The story of Boeing shows what can happen when market competition tightens the screws, and things like quality control, adequate training, product performance and company honesty begin to crack and splinter. Accidents will still happen in non-market socialism, but not because someone is eyeing the balance sheet instead of the safety inspection reports.
Meanwhile the astronauts continue to float in the ISS, patiently above it all. Compared to what many others have suffered at Boeing’s hands, they might consider themselves lucky only to be left out in the cold.
Paddy Shannon
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