Boeing 737 MAX grounded

Capitalism Kills: Boeing’s Criminal Negligence

“If it ain’t Boeing, I ain’t going.” Up until recently, this was the slogan many pilots and passengers had adopted when flying or boarding an aircraft. It was a nod of respect for the Seattle aircraft manufacturer that brought America into the jet age with airliners like the 707, the three-engine 727 that followed, and the “Queen of the Skies”—the 747. How times have changed!

In less than a year, Boeing—one of America’s largest single exporters—destroyed a reputation that took more than 100 years to build. The Boeing 737 MAX is still grounded and may never fly again; as a result, the company is bleeding money, made its first annual loss in 20 years and has now asked to borrow $12 billion. To top it off, last week’s damning revelations implicate the company in burying and ignoring vital information about the Turkish Airlines 737 crash in Amsterdam back in 2009.

Boeing’s Jedi mind tricks

In last year’s article “737 MAX scandal: Boeing putting profits before safety,” we described in detail the various shortcuts Boeing had taken and concluded that the manufacturer’s actions were criminally negligent. If that sounded like hyperbole at the time, this has only been confirmed in light of the facts of the last few months.

We argued that “the tweaks to the existing 737 Classic and NG reached a qualitative leap where it in effect becomes a completely new aircraft type that should never have been certified by the authorities.” Fast forward ten months, and a steady stream of internal leaks from former employees and congressional hearings have provided a mountain of evidence. Any serious prosecutor not in the pockets of big business or the Establishment could have a field day with building a criminal case against Boeing.

Last year, Boeing was forced to disclose internal messages from 2016, in which a test pilot working on the aircraft told a colleague that he was experiencing trouble controlling the MAX in a flight simulator and believed that he had misled the Federal Aviation Authority (FAA), which at that point was yet to approve and certify the design. “I basically lied to the regulators (unknowingly),” the pilot, Mark Forkner, said to his colleague, Patrik Gustavsson.

Boeing initially did not inform the FAA about the messages when the company first discovered them, but waited until about two weeks before now ex-CEO Dennis Muilenburg was set to testify in front of Congress to send them to lawmakers. The uncooperative behavior has angered key FAA officials, who felt misled by the company, and has caused the lengthy delay in recertifying the design.

luladiscursi Image Flickr Paul Thompson
Boeing was forced to disclose internal messages from 2016, in which a test pilot on the MAX admitted he was having trouble with it and had misled the FAA. / Image: Flickr, Paul Thompson

Earlier this month, the New York Times published a leak of hundreds of other internal emails (available in full here) that paint a deeply disturbing picture of the lengths Boeing was willing to go to in order to evade scrutiny from regulators, flight crews and the flying public, even as its own workers were sounding the alarm bell repeatedly.

A small sample below suffices to get an idea of the prevailing company culture:

  • “This airplane is designed by clowns who in turn are supervised by monkeys.”
  • “Would you put your family on a MAX simulator trained aircraft? I wouldn’t.”
  • “I’ll be shocked if the FAA passes this turd.”
  • “I don’t know how to fix these things … it’s systemic. It’s culture. It’s the fact that we have a senior leadership team that understand very little about the business and yet are driving us to certain objectives.”
  • “Fortunately I have all the skills of a used car salesman, and I have the ability to use the Jedi mind trick.”

The basic sales pitch of Boeing to airlines around the world was that the MAX was fundamentally the same aircraft as previous versions of the 737. No expensive simulator training for pilots would be required and just a couple of hours of e-training on an iPad would be enough. This was to be the winning formula to fend off main competitor Airbus and its efficient 320/321 neo design. Convincing customers to buy the new aircraft while sticking to the official sales pitch that it was fundamentally the same model, was known as the “Jedi mind trick.”

Corporate impunity

“The Force” may have had an influence over the weak minded for a while, but two crashes resulting in 346 casualties soon broke the spell. Boeing tried to cover up as much as possible and through its CEO Muilenburg displayed an astonishing level of arrogance. It was implied that the Ethiopian and Indonesian pilots were to blame, and that with some tweaks to the MCAS software, the 737 MAX would be flying again soon.

It took a full month after the Ethiopian Airlines crash, and five months from the time of the initial Lion Air crash, before the company accepted any responsibility at all. Muilenburg cut a pathetic figure in the Senate hearings and the closest he came to apologizing to the victims and their families was a half-hearted promise to make a “safe plane safer.” Otherwise, there was little else, not least by regulators, that could have been done.

This defiance before Congress and the absence of real contrition and accountability resembles the antics of Facebook’s Mark Zuckerberg, and the entitled sense of impunity shared by every high-ranking executive involved in the financial crisis of 2008–2009. All of these crooks escaped with little more than a slap on the wrist, alongside a massive public bailout.

The leaks proved too much. Muilenburg became the “fall guy” for Boeing and eventually resigned last December. He landed on his feet, though, being handsomely rewarded to the tune of more than $60 million in stock and pension awards. Not bad for a man who oversaw the final stages of the development, production and certification of a botched design that was directly responsible for the death of hundreds of innocent people.

This is a slap in the face for the hundreds of families who lost loved ones in the two crashes. A mere $50 million in compensation was allocated for them, averaging less than $150,000 per lost life—and less than what Muilenburg averaged in a month. People like him should be tried for the murder of hundreds of men, women and children instead of being rewarded with a new windfall to add to their fortune. As ever, it’s one law for the poor, another for the rich.

Warning signs buried

Last week the New York Times revealed how Boeing has even more skeletons in the closet. This concerns a 737 crash near Amsterdam more than a decade ago involving Turkish Airlines flight TK1951, in which nine people died. At the time, back in 2009, an expert study that sharply criticised Boeing was never published by the Dutch safety authorities, and its key findings were either excluded or played down in the final accident report. The crash shows striking similarities with the two recent 737 MAX accidents.

Crash Turkish Airlines TK 1951 cockpit 2 Image Fred Vloo
An expert study from 2009, concerning a 737 crash that killed nine people, sharply criticized Boeing and was never published by the safety authorities. / Image: Fred Vloo

The day after the publication of the Times article, the Dutch Safety Board, which had commissioned the study, reversed course and 11 years after the event put the critical study in the public domain. As aviation professionals, we have read both the original report (available here) and the originally suppressed critical document by Sidney Dekker (available here). We are familiar with the format and terminology of these accident reports and feel qualified enough to pass comment on them.

The findings are quite a revelation and are extremely relevant to the more recent crashes of Boeing aircraft. Dekker, himself a former 737 pilot and Safety Professor at Griffith University in Brisbane, Australia, acknowledged that the pilots had made serious errors (not monitoring speed on final approach) but also found that Boeing bore significant responsibility. He accused the company of trying to deflect attention from its own “design shortcomings” with “hardly credible” statements drawing attention to the pilots’ mistakes. However, none of his criticisms of Boeing were incorporated into the final Dutch accident report after pushback from a team of Americans that included the manufacturer and federal safety officials.

Without going into too much technical detail, these design shortcomings concerned the radio altimeter: a sensor that measures how high the aircraft is above the ground and that assists with coordinating the landing. This sensor had malfunctioned on one side and erroneously commanded the autothrottle, which controls the power setting of a Boeing aircraft, to “retard” as if it was about to land. The result was a gradual loss of speed towards the very end of the flight (involving the “capture of the glideslope from above,” an important contributing factor masking the inappropriate autopilot mode), just when the crew was busy doing a landing checklist. The loss of speed was noticed too late and insufficient power was applied to counteract the stall, resulting in the crash.

We mention all of this in a nutshell to draw the parallel between the accident and the 737 MAX crashes. As the Times article points out:

In both cases, design decisions by Boeing allowed a single faulty sensor [the radio altimeter in 2009; the “angle of attack” indicator on the 737 MAX—MS] to activate a powerful computer command. In both cases, Boeing had known of the potential sensor failures but determined that pilots would react correctly and recover the plane. And in both cases, Boeing didn’t include information in the pilots’ manual that could have helped them respond to the malfunctioning automation. (January 21, 2020)

Boeing, the FAA and the NTSB (National Transportation Safety Board) try to wash their hands of this by simply saying that the system involved in the earlier accident differed significantly from the one blamed in the MAX crashes. In our view, this is a huge copout that ignores the essence of the problem: a design flaw as a result of insufficient redundancy, leading to unpredictable behavior not explained in the manuals nor trained for in the simulator.

As Dekker himself explains in a very recent interview with the Dutch newspaper Het Parool (our unofficial and purposely literal translation):

First of all, let me say that these are technically two very different things. The problems with the 737 MAX happened at takeoff, while for Turkish Airlines things went wrong during the landing. But it is obvious that in both cases it had to do with a single sensor that did not work properly, immediately causing major problems. There was no correction mechanism. In addition, in both cases the pilots were not instructed about changes in the control of the aircraft, because there was nothing about it in the flight manuals or training materials from Boeing. In both cases the flight simulators were also not programed to display this flight behavior.

Dekker concludes the interview with a damning condemnation:

It seems to me that the Dutch Safety Board danced to the tune of America. The pilots were blamed. What I also know is that the Board’s experience with investigating major air disasters is not great. The NTSB has more authority in that area and are a bit like the gorilla in the room when they get involved. So that makes an impression. However, for me the NTSB then lost all credibility. It seems that they are trying to protect the American airline industry…

If Boeing had been open to the lessons that could be learned from the accident in the Netherlands, it would have been a different story. There were errors in the philosophy underlying their business, and we demonstrated that at the time with our research.

Dekker’s report should have woken everybody up. Instead, the issue got buried.

Broken trust

This latest revelation is slow to trickle through because of the technical and specialist nature of the matter. Regardless, the credibility of Boeing as “a company you can trust” has plummeted to historical lows all over the world. Trust tends to be a one-way street and once it has been broken, it is very hard to restore.

In the Netherlands, Jan Paternotte, a member of the Dutch House of Representatives, praised the Dekker study’s release and called for a hearing of those involved. “Boeing has been capable of strong arming outside parties if it serves the short-term interest of the company,” he said. “When safety is at stake, that is a problem.”

US pilots’ unions say that their members’ trust in the safety culture at Boeing is at rock bottom following the recent string of revelations. Restoring confidence among captains, on whom it is counting to repair the trust of the flying public, will be critical for Boeing. According to Dennis Tajer, spokesman for the Allied Pilots Association, which represents 15,000 American Airlines pilots:

It’s like a Jenga game, [trust] gets higher and higher, and then it tumbles down … These emails are beyond our worst nightmares. It’s as if it’s a poorly written screenplay that no one would believe—but it happened.” (Financial Times, January 22, 2020)

The Financial Times also reports how Jon Weaks, president of the Southwest Airlines Pilots Association, which is suing Boeing over lost earnings, said the company starts at “zero trust” with the union’s 10,000 members.

The return of the 737 MAX?

Desperate to return the MAX to service, Boeing has now distributed marketing materials to airlines that suggest one option to handle passengers who baulk at flying the MAX in the future will be to have pilots reassure them. Fortunately, the relatively strong American pilots’ unions seem to draw a line in the sand over this and refuse pilots to be used in PR stunts for a company that has repeatedly declined to take responsibility, and that tends to point the finger to the people in the flightdeck.

Boeing 737 MAX aircraft
It remains to be seen whether passengers will ever believe the MAX is safe to board. Meanwhile, Boeing is losing millions. / Image: Flickr, Paul Thompson

Despite Boeing’s reassurances, it remains to be seen whether airline passengers will ever believe the MAX is safe to board. Plenty of people refused to ever climb aboard a DC-10 decades ago when it was released from its grounding after a number of fatal accidents. In the age of the internet, smartphones and a generally savvier traveling public, rebranding the MAX would prove pointless.

Even if the aircraft manages to be recertified by the FAA and other authorities like EASA, Boeing will need three or four more months to update operating manuals, get mothballed planes ready to fly, and train pilots in MAX flight simulators. That means a best case scenario of a return to service after the summer.

Bad for business

All of this is bad for business and it is estimated that Boeing has been losing an astonishing $1 billion a month. Reimbursing customers, keeping suppliers afloat and maintaining about 400 newly built MAX aircraft that it can’t deliver until cleared—none of this comes cheap. “Boeing expects the total MAX bill to be $18.9 billion,” the Wall Street Journal wrote in an article titled “A Horrible 2019 Isn’t the End to Boeing’s Troubles.” “In 2019 as a whole, operating losses were $2 billion, following operating profits of $12 billion in 2018.”

Boeing recently saw itself forced to suspend production of the MAX, a planned pause in production that has rippled through the supply chain and already cost thousands of jobs. Spirit AeroSystems, which makes fuselages and other parts for the 737 MAX, is planning to lay off 2,800 workers. Southwest Airlines said the grounding cut its 2019 operating income by $828 million and indicated the shortage is creating “a crisis-like challenge.”

Boeing is working with its bankers to secure a new $12 billion loan that would help fortify its balance sheet, and has received commitments from several large lenders including Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, and Morgan Stanley. The loan is not the kind of loan an ordinary working person could get, but has been structured to give Boeing plenty of flexibility. This so-called delayed-draw loan with a two-year maturity would give Boeing access to the funds at a future date without its credit rating being affected.

The company’s $464.4 billion backlog, i.e. the amount of aircraft orders that have not yet been fulfilled, is still impressive on the face of it. However, an order is not an order until the aircraft is delivered and paid for. Aircraft manufacturers get paid the bulk of the price of the planes when they are delivered, making them very susceptible to an economic downturn. In other words, a lot of the positive spin surrounding projected revenue is entirely fictional and not based in reality.

The more forward-thinking capitalists understand this very well and are getting nervous. One of these financial analysts is quoted in the article Boeing’s earnings could be “an absolute disaster,” analyst says:

We still think [Boeing] has an amazing aerospace franchise, a strong order book and strong commercial, military, and services businesses that will persist for many years; however, we think the MAX grounding has gone on far longer than our initial worst-case scenarios, and we worry that the company does not have the right people in place to manage this crisis. (MarketWatch, January 25, 2020)

Credit rating agency Fitch Ratings downgraded Boeing’s investment-grade debt, with one of their analysts describing the company’s finances as “some point between a bad case of the flu and a heart attack—in an otherwise healthy person able to recover.”

The role of the state

Does this mean that Boeing will go bust? Unlikely. Its lobbyists have far too much power to keep this latest mismanaged design on the ground forever, technical issues or not. Boeing is the only major US commercial aircraft maker and is too integrated into the military-industrial complex of US imperialism. As the largest exporter in the United States, it has become a behemoth that is too big to fail.

C17 US air force1
Boeing is deeply enmeshed with the US state, particularly through its military contracts. It is literally “too big to fail.” / Image: US air force1

Paradoxically for a country famed for espousing free market values, the “land of the free” has produced in Boeing a company that is heavily dependent on the largesse of the public sector. The “America First” mantra of Donald Trump has greatly benefited Boeing with lucrative government contracts and the protection of its de facto domestic monopoly from competitors like Airbus. Despite the recent losses and scandals, its planned acquisition of Brazilian aircraft manufacturer Embraer also seems to be going ahead.

Apart from benefiting greatly from public loan guarantees provided by the federal Export-Import Bank (nicknamed “Bank of Boeing”), Boeing is notorious for its exploitation of the tax code and for years has gotten away with paying a negative tax rate on its income. The company is now the country’s second largest recipient of federal funding after Lockheed Martin, another company in the service of the US war machine. This means it is more dependent on the public purse than a number of federal agencies.

Within the aviation industry, with its massive infrastructural needs, the state has always played a big role. Perversely, after deregulation in the 1980s, Boeing was allowed to effectively become a public entity with private profits. It gladly accepted the money and the safety net from the American public. In return, it has made private shareholders and upper management fabulously rich, while producing aircraft that put the public at risk. The laws of capitalism have a logic of their own and after decades of “ripping up the rules” and cutting corners in search of profit, the chickens are coming home to roost.

To paraphrase Hamlet, something is rotten in the state of the US. Management, federal regulators, and top government officials have all been caught out eating from the same trough. The 737 MAX scandal is yet another example of the interconnected nature of the bourgeois state and big business. It exposes the false notion that the state is a neutral body to serve society, but rather a body for the defense of the interests of the ruling class.

It is long overdue to cleanse these Augean stables and to take the profit motive out of commercial flight. A corporate bureaucracy in cahoots with the state has made decisions that led to avoidable accidents. Preventing this in the future can ultimately only be done by nationalizing companies like Boeing, opening their books, putting the workers in control and introducing democracy in the workplace as part of a socialist plan of production.

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