Conservative 737 MAX timeline indicates change in Boeing tone

On January 21, 2020, Boeing announced that the manufacturer now expects the 737 MAX to return to service in mid-2020, indicating that the type will be sat on the ground for almost one and a half years since its second fatal accident in Ethiopia in March 2019. The announcement indicates a very distinct change of tone from what was previously visible when the company was guided by the now-ousted Chief Executive, Dennis Muilenburg.

The press release begins with the words that “the FAA and other global regulators will determine when the 737 MAX returns to service.” On a previous update on 737 MAX operations dated November 11, 2019, the statement begins with “Boeing’s priority remains the safe return to service of the MAX and supporting our airline customers through this challenging time,” indicating a slight yet visible change in tone.

“However, in order to help our customers and suppliers plan their operations, we periodically provide them with our best estimate of when regulators will begin to authorize the ungrounding of the 737 MAX,” Boeing latest update on the 737 MAX return-to-service schedule reads.

When Boeing presented its Q3 financial results in October 2019, the company estimated that the un-grounding procedures would begin in the following quarter and that customers would be able to fly the newest generation of the 737 in early-2020. Yet that estimate pushed a few buttons within the industry, including the Federal Aviation Administration (FAA) and its Administrator, Stephen Dickson.

In a public statement in November 2019, Dickson said that he supported the FAA’s employees and their careful scrutiny of the 737 MAX, reiterating that they could take the time needed to conduct a thorough, deliberate process for a safe return to service.

“Now I know there is a lot of pressure to return this aircraft to service quickly, but I want you to know that I want you to take the time that you need and focus solely on safety.”

“I have got your back.”

And it was not the first time that Dickson had to tell Boeing and it’s former executive to ease on the gas pedal.

A rocky December

On December 12, 2019, Dickson met with Muilenburg to discuss matters regarding the 737 MAX, just a day after Dickson sat in front of lawmakers from the House Committee on Transportation and Infrastructure, denying that the relationship between the FAA and Boeing was “cozy.”

Reportedly, Dickson rebuffed Muilenburg and later expressed concern that the manufacturer’s public statements regarding the return-to-service date “have been designed to force FAA into taking quicker action.” He also advised the then-CEO of the manufacturer that Boeing should focus “on the quality and timeliness of data submittals for FAA review.”

Less than two weeks later, on December 23, 2019, Muilenburg was told to pack his bags and leave the company with immediate effect, as the road towards the recertification of the 737 MAX only got darker, rather than Boeing seeing the light at the end of the tunnel. Upon his exit, Muilenburg received around $80 million of pension and compensation benefits.

As David L. Calhoun took the Composite Throne on January 13, 2020, the reality he faced was quite grim: with new potential flaws on the 737 MAX, the recertification timeline kept slipping.

Wiring issues and recommendations of simulator training

Just a week before Boeing’s new Chief Executive Officer officially began his term, reports revealed that wires that control the horizontal stabilizer of the 737 MAX could potentially short circuit and pilots could lose control of the aircraft’s nose. Such a problem arose due to the fact that the Boeing now uses a much more conservative estimate of pilots reacting to an emergency. Previously, when the narrow-body was certified, the FAA estimated pilots would react within four seconds – the number has since changed to 15 seconds.

Whether the wiring problems will require Boeing to make significant changes to the design of the electrical systems remains to be seen, as the company, together with the FAA, is still assessing the probability of a short-circuit and what kind of solution would solve the issue, reports indicate.

On January 8, 2020, Boeing announced that it would recommend simulator training for all 737 MAX pilots prior to the aircraft’s return to service, a move that surprised many. After all, during Muilenburg’s testimony before the House Committee on Transportation and Infrastructure, the Chairman of Committee Peter DeFazio asked him whether Boeing had a contractual agreement with Southwest Airlines (LUV) , the biggest customer of the 737 program. The agreement allegedly foresees that if MAX pilots required simulator training, the manufacturer would pay $1 million to the airline per aircraft.

Muilenburg responded that he “believed that was part of the contract structure we had with Southwest.” According to the company’s Orders & Deliveries data, Southwest Airlines (LUV) has 280 Boeing 737 MAX aircraft on order, 31 of which were already delivered before the groundings occurred in March 2019.

Greg Smith, who was the interim CEO of the company as it transitioned from Muilenburg to Calhoun, stated that safety was a top priority of the company, as was “public, customer and stakeholder confidence in the 737 MAX.” With its focus on restoring the confidence, “Boeing has decided to recommend MAX simulator training combined with computer-based training for all pilots prior to returning the MAX safely to service.”

However, confidence is seemingly still at an all-time low. Jon Horne, the President of the European Cockpit Association, publicly stated that the company “has a long way to go.”


Providing a buffer for itself

Despite a five-months’ heads up for the return-to-service date of the 737 MAX, the latest timeline was not impacted by another fairly recent snag regarding a software monitor that checks the aircraft’s systems upon powering up, reports The Seattle Times, citing a person familiar with the matter.

The same publication also reported that a U.S. airline official said Boeing was being very conservative and the MAX could fly sooner.

Other customers are less positive: Icelandair does not expect to fly its MAX aircraft in Summer 2020, during the peak traffic season. In order to mitigate the absence of the grounded aircraft, it has leased three Boeing 737-800 aircraft and will extend the service of its Boeing 757 planes, keeping more of the Flying Pencils than originally intended. Financially, the impact of the groundings in 2020 would be less intense than in 2019, notes Icelandair, as leasing agreements “were made further in advance” compared to last year. This allows the airline to ensure much better financial terms with lessors. The carrier also switched from wet to dry leasing, meaning that it would use its own flight crew to fly the leased aircraft instead of relying on the crew of the lessors, allowing to save on operating costs.

Nevertheless, while the change in tone is a welcome one, especially for Boeing’s customers, the question is how much change will truly occur in the company. After all, many of the executive board members, including Calhoun, sat there as the 737 MAX was developed and decisions of alleged money-saving occurred during the aircraft’s development phase.

However, only time will reveal the true impact of the ongoing 737 MAX crisis, even if the aircraft is re-certified to carry passengers sooner, rather than later.


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