Boeing Reports Annual Loss Of $636m, First In More Than Two Decades

Boeing employees and guests take photos and welcome a Boeing 777X airplane returning from its inaugural flight at Boeing Field in Seattle, Washington on January 25, 2020. PHOTO: JASON REDMOND / AFP

 

Boeing reported its first annual loss in more than two decades on Wednesday as the lengthy grounding of the 737 MAX undercut the company’s revenues and exploded costs.

The aerospace giant reported a $1.0 billion loss in the fourth quarter and a loss of $636 million for all of 2019, the company’s first year in the red since 1997.

Newly-installed Chief Executive David Calhoun, who took the reins this month to stabilize the situation, pledged to turn the company around even as Boeing disclosed $9.2 billion in new costs connected to the MAX.

Some analysts had expected new costs twice as high, and despite the hefty charges, Boeing shares rallied early Wednesday in pre-market.

The MAX has been grounded since March following two crashes that killed 346 people which opened the doors to intense scrutiny of Boeing’s safety practices — and regulatory oversight of its productions — as well bruising congressional investigations which have revealed a troublesome culture at the aviation giant.

“We are committed to transparency and excellence in everything we do,” Calhoun said in a statement. “Safety will underwrite every decision, every action and every step we take as we move forward.”

Calhoun has been at the helm of Boeing only since January 13 after Dennis Muilenburg was ousted in December following criticism of his handling of the crisis, and immediately after damning series of internal communications were released.

Calhoun is targeting mid-2020 to win approval from aviation regulators to resume flights on the MAX, which is seen as a more realistic timeframe after Muilenburg repeatedly pushed a more optimistic schedule.

Higher cost

The grounding of the MAX dented Boeing’s earnings in multiple ways, halting deliveries of new planes to customers, a major source of revenues.

Boeing revenues in the fourth quarter plunged 36.8 percent to $17.9 billion, while revenues for all of 2019 dropped 24.3 percent to $76.6 billion.

The crisis also prompted the manufacturer to first reduce and then halt production of the MAX until the crisis is resolved.

Boeing said Wednesday the changes in the production schedule added $2.6 billion in costs connected to airplane deliveries, plus another $4 billion in “abnormal production costs” primarily in 2020 associated with the suspension of the MAX and a “gradual resumption” of production.

The company set aside $2.6 billion to compensate airlines that have been forced to cancel thousands of flights due to grounded MAX planes and undelivered aircraft.

The MAX crisis also has weighed on numerous suppliers, such as Spirit AeroSystems, which announced earlier this month that it would lay off 2,800 employees in Kansas due to the production stoppage.

And General Electric, which builds engines for the MAX, said the crisis lowered cash flow by $1.4 billion for 2019.

Boeing also announced Wednesday that it would again cut back production of the 787 Dreamliner, a top-selling plane that has supported revenues during the protracted 737 MAX grounding.

The aerospace giant plans to cut production to 10 airplanes a month in early 2021 through 2023 based on the “near-term market outlook,” Boeing said.

The company in October had dropped to 12 a month from 14 due to lower orders from China.

Boeing shares rose 2.4 percent to $324.25 in pre-market trading.

AFP

Trump Calls Boeing A ‘Big Disappointment’

A file photo of US President, Donald Trump. AFP Photo.

 

President Donald Trump on Wednesday criticised Boeing as a “very disappointing company” because of the aerospace giant’s recent problems after the grounding of the 737 MAX plane, which he said had a knock-on effect for the US economy.

“This is one of the great companies of the world, let’s say as of a year ago, and then all of a sudden things happen,” Trump said in an interview on CNBC from the Davos economic forum in Switzerland.

This “had a tremendous impact. You know, when you talk about growth, it’s so big that some people say it’s more than a half a point of GDP. So Boeing — big, big disappointment to me,” he said.

Boeing had Tuesday officially pushed back the time frame for the 737 MAX to return to the skies, sending shares plunging and overshadowing an earlier announcement of a first flight of the delayed 777X plane.

The 737 MAX was grounded worldwide on March 13, 2019, after two crashes claimed the lives of 346 people.

US Treasury Secretary Steven Mnuchin said on Tuesday he believed that issues including the grounding of Boeing 737 MAX plane had shaved some 0.5 to 0.7 of a percentage point off the US growth rate.

AFP

737 MAX: After 10 Months Of Crisis For Boeing, Questions Remain

 

 

Boeing is still far from seeing an end to its continuing crisis over the 737 MAX airplane. Ten months after two fatal crashes led to the grounding of the aerospace giant’s star passenger jet, many serious questions remain, including the date of its return to service.

David Calhoun, 62, a former top executive at General Electric, is to take charge of the aircraft manufacturer on Monday, after CEO Dennis Muilenburg was ousted in late December over what critics said was his catastrophic handling of the crisis.

– What exactly happened? –
On March 10, 2019, an Ethiopian Airlines 737 MAX crashed southeast of Addis Ababa just minutes after takeoff, killing all 157 on board.

It was the second accident in five months for the model, which Boeing launched in May 2017 as a competitor for Airbus’s A320neo in the lucrative narrow-body aircraft segment.

The October 2018 crash in Indonesia of a Lion Air 737 MAX had claimed 189 lives.

On March 13 of last year, the United States and Canada became the last two countries to ground MAX planes. Thus began Boeing’s crisis.

When will the MAX fly again?

It’s hard to say. The most optimistic prediction is late February or early March, but some experts, including the respected Richard Aboulafia of the Virginia-based Teal group, speak of late April or early May.

United Airlines has ruled out flying the MAX before June.

Investigations by Indonesian and Ethiopian authorities raised questions about the plane’s automated flight control system known as MCAS (Maneuvering Characteristics Augmentation System).

The US Federal Aviation Administration (FAA) has ordered Boeing to provide a fix, which the company is working on.

But as a result of the crisis FAA has subjected the MAX, which was only partially inspected during its original flight certification, to microscopic scrutiny.

The agency at first detected a problem with the microprocessor that manages flight systems and then, more recently, a flaw in the electrical wiring.

Once Boeing has resolved all problems, the FAA should set a date for a test flight — the last major hurdle before the MAX is green-lighted to return to service.

Boeing has taken one major step in that direction: after long resisting having MAX pilots train on flight simulators rather than on computers — a longer and more costly option, but one demanded by European and Canadian regulators — Boeing has finally backed that course.

– Is Boeing still building and delivering the MAX? –
Boeing suspended MAX deliveries a few days after the planes were grounded. It had continued to produce the aircraft, but has built none since January 1.

From mid-March to the end of December, Boeing produced 400 MAX planes, bringing the total number built to 787. Of those, 387 were in service when orders to ground them went out.

The planes are parked at different Boeing sites in the US.

Is Boeing in financial trouble?

No. As of the end of September, the company had $10 billion in hand and about $20 billion in available funds, according to financial documents.

Besides passenger planes, Boeing builds military aircraft and equipment. It also has a space division.

Nevertheless, the costs linked to the MAX crisis have continued to mount. They had already reached $9.2 billion by the end of September and should soar as Boeing deals with demands for damages and compensation from airline companies, aircraft-leasing firms, parts suppliers and victims’ families.

To cover future expenses, the company expects to turn to the financial markets to borrow up to $5 billion, according to the Wall Street Journal.

– What about Boeing employees?? –
The company so far has ruled out any firings or layoffs, which could provoke a political outcry in this US election year.

Boeing has already shifted thousands of workers to other programs — building its 767, 787 and 777/777X models — and has promised to find jobs for others.

– How are suppliers affected? –
The consequences vary. Engine builders like General Electric and Safran Aircraft Engines, through their CFM joint venture, are partially spared since they also build engines for Airbus.

Along with other smaller American suppliers, they will profit from Airbus’s surprise decision to ramp up production of the A320 in the southern US city of Mobile, Alabama.

But the Spirit AeroSystems group, which provides fuselages and other parts for the MAX, has been hard hit; the 737 program represents more than half its turnover. The company plans to cut 16 percent of its workforce — around 2,800 employees — and has not ruled out further cuts.

– Is Airbus profiting as Boeing struggles? –
Airbus received orders for 768 planes in 2019 and delivered 863. Boeing, which has yet to publish its full-year figures, had delivered 345 as of the end of November, while 84 orders were lost.

Airbus also gained ground in the important middle of the market sector with its launch of the A321XLR, which will give air carriers the ability to open new long-haul routes between secondary cities using a narrow-body craft that is less expensive, easier to fill and thus more profitable.

The first orders are already pouring in, notably from United Airlines, which ordered 50 of the new aircraft in December.

Boeing is banking on its own NMA (New Midsize Airplane), built to carry from 220 to 270 passengers on routes up to 5,400 miles (8,700 kilometers). But progress has been slow, and it is unclear, given the severe challenges over the MAX program, whether the NMA will be rolled out this year as planned. (Boeing has not decided to launch the NMA yet. It promised to make a decision this year.)

Key Dates In The Boeing 737 MAX Crisis

A Boeing 737 MAX 9 airplane test its engines outside of the company’s factory on March 11, 2019, in Renton, Washington. AFP

 

 

From its first flight to ceasing production and ouster of the CEO on Monday, below are the key dates in the life of the Boeing 737 MAX and the twin crashes that sparked a crisis.

Two deadly disasters

The Boeing 737 MAX, a narrow body aircraft that can transport up to 230 passengers depending on the model (7, 8, 9 and 10), was certified to fly on March 8, 2017 by the US Federal Aviation Agency (FAA). It was put into service in May of that year.

On October 29, 2018, a 737 MAX 8 from budget airline Lion Air crashed off the coast of Indonesia, killing 189 passengers and crew members.

Less than five months later, on March 10, 2019, an Ethiopian Airlines 737 MAX 8, flying to Nairobi, crashed near Addis Ababa, claiming 157 lives.

Grounded worldwide

China is the first country to ban the aircraft, on March 11. Regulators worldwide follow suit, but the American officials initially said there was “no basis” for grounding the 737 MAX.

US President Donald Trump intervened on March 13 announcing the planes would be grounded “effective immediately.” The FAA issued the official decree shortly after his statement.

– Crash investigations –
Indonesian authorities published its preliminary report on the Lion Air crash on November 28, 2018 — months before the second disaster — citing nine factors that contributed to the accident, including inadequate pilot training, and flawed design and certification of the MCAS flight control software.

The MCAS, which lowers the aircraft’s nose if it detects a stall or loss of airspeed, was developed specifically for the 737 MAX, which has heavier engines than its predecessor in the 737 family. But it relied on a single sensor which made it vulnerable to failure.

On March 17, 2019, Ethiopian Transportation Minister Dagmawit Moges revealed “clear similarities” between the Ethiopian Airlines flight 302 and Lion Air flight 610.

The MCAS anti-stall system was activated automatically in both disasters after receiving erroneous information indicating that the aircraft was stalling. The pilots were not aware of the existence of this software since it was not in the flight manuals.

Boeing comes under scrutiny of American and international regulators, as well as the US Congress, which is investigating complaints from American pilots about the MCAS, and the close ties between the FAA and the company.

Production stopped

After the aircraft is grounded, Boeing is forced to suspend deliveries on March 14, 2019, but the company initially maintains MAX production at 52 planes a month.

Output is later cut to 42 a month for the popular plane, which represented nearly 40 percent of Boeing sales in 2018.

But on December 17, after the FAA made it clear the MAX would not return to the skies anytime soon, Boeing announces it will halt production of its flagship aircraft in January 2020, for an indefinite period.

Leadership shakeup

The company had continued to express confidence that the MAX would return to the skies by the end of 2019, as it addressed software modifications and improved pilot training, but was criticized for putting pressure on regulators to rush the plane back into service.

Airlines were forced to push back the expected date for returning their Boeing 737 MAX fleet to service.

A week after announcing the production halt, Boeing on December 23 ousted Dennis Muilenburg, who has been at the helm of Boeing since July 2015. The company already stripped him of his title of chairman of the board in October.

Boeing named board Chairman David Calhoun as chief executive and president, saying the company needed to “restore confidence” and “repair relationships with regulators, customers and all other stakeholders.”

Boeing To Halt Production Of Grounded 737 Max In January

(FILES) In this file photo taken on March 27, 2019 Employees work on Boeing 737 MAX airplanes at the Boeing Renton Factory in Renton, Washington. 
Jason Redmond / AFP

 

Boeing said Monday it would temporarily suspend production of its globally grounded 737 MAX jets next month as safety regulators delay the aircraft’s return to the skies after two crashes.

The decision confirmed investor fears that the company’s recovery from the crisis is dragging on longer and creating more uncertainty for Boeing than executives anticipated.

Boeing’s travails since March have weighed on the US economy, holding down American manufacturing output, trade, and sales of durable goods while damaging the company’s performance on Wall Street’s benchmark Dow Jones Industrial Average.

In a statement, the company said it would continue to pay its workers despite the temporary production stoppage, but the decision immediately raised questions for the future of parts suppliers that contribute to the jets’ manufacture.

“We have previously stated that we would continually evaluate our production plans should the MAX grounding continue longer than we expected,” the company said in a statement.

READ ALSO: Boris Johnson Plans Law Blocking Brexit Delay Beyond 2020

“As a result of this ongoing evaluation, we have decided to prioritize the delivery of stored aircraft and temporarily suspend production on the 737 program beginning next month.”

The company said it would focus on delivering 400 jets it has kept in storage.

Though the jets have been grounded worldwide since March following deadly crashes in Indonesia and Ethiopia, which left 346 people dead, Boeing had continued to produce 40 of the planes per month at a Renton, Washington facility.

Shares Tumble On Wall Street

Last week, US aviation regulators issued the company an unusually sharp rebuke, accusing it of pursuing an “unrealistic” timeline for the MAX’s return to service and of making public statements intended to put pressure on federal authorities.

The Federal Aviation Administration said Wednesday it could not approve the jets’ return to service before 2020, even though Boeing had long said it planned to get officials’ green light before the end of this year.

Boeing and the FAA have been under intense scrutiny for their responses to issues with the aircraft, including the flight-handling system involved in both accidents, the Maneuvering Characteristics Augmentation System, or MCAS.

“Boeing seems to have finally come to terms with the new reality that international safety regulators will not be bent to their whim, and the process of returning these planes to service is not as simple as a quick software fix,” Senator Richard Blumenthal said in a statement.

Analysts say Boeing’s prospects will remain clouded until Boeing can get the all-clear for the MAX to fly again.

“As we have throughout the 737 MAX grounding, we will keep our customers, employees and supply chain top of mind as we continue to assess appropriate actions,” the company said, adding that it will disclose financial information tied to the suspension when it releases quarterly results late next month.

Major air carriers that had purchased 737 MAX jets have repeatedly pushed back the dates on which they anticipate a return to service.

Southwest said Thursday it had reached a confidential agreement with Boeing partially compensating the airline for costs related to the grounding of the jets.

Nevertheless, the manufacturer in November unveiled an updated version of the jet, the 737 MAX 10.

Shares in Boeing fall 4.3 percent as investors anticipated Monday’s decision. They were down another 0.4 percent in after-hours trading at 2300 GMT.

AFP

Boeing Says Working With Regulators For Return Of 737 MAX

Boeing 737 airplanes are pictured on the tarmac at the Boeing Renton Factory in Renton, Washington on March 12, 2019./ AFP

 

Boeing said on Saturday that it was working closely with regulators to make the necessary changes to grounded 737 MAX aircraft to ensure their safe return.

The model has been grounded since March following the second of two crashes which left a combined total of 346 people dead.

“We are interacting daily with the FAA (Federal Aviation Administration)… and also with regulators around the globe” over the return of the 737 MAX, CEO of Boeing Commercial Airplanes Stan Deal told a press conference in Dubai.

“We continue to work diligently around the changes necessary for the airplane,” Deal said ahead of the Dubai Airshow, an event that opens on Sunday.

“We continue to make progress.”

The FAA, which has been widely criticised for entrusting certification of important systems of the aircraft to Boeing, has promised a thorough review before recertification.

On Tuesday, the FAA said it expected the airplane to resume flying in January, delaying its return by one month.

But on Friday, United Airlines said it had pushed back its expected date for 737 MAX aircraft to return to service, following similar announcements by rivals Southwest and American Airlines.

The US air carrier now says it expects flights to resume on March 4, 2020, two months later than previously estimated.

Boeing said this week it hoped to get regulatory approval for a return to service before the end of this year but has delayed its estimate for the resumption of commercial flights until January, to allow for pilot training.

Deal said approvals from the FAA and other regulators around the world will help set the schedule for the air-plane’s return.

He said Boeing is discussing compensation for the grounding with its customers, including low-cost flydubai, a key client for the 737 MAX.

The grounding has exceeded initial expectations as Boeing had to upgrade systems and faced questions from regulators and politicians over the plane.

The 737 MAX crisis is one of the most serious in Boeing’s 103-year history, and has already cost the company tens of billions of dollars, amid multiple investigations by US authorities and complaints from victims’ families.

Boeing Chairman Says CEO Muilenburg Did ‘Everything Right’

Employees work in the cargo hold of a Boeing 727 MAX 9 test plane outside the company’s factory, on March 14, 2019 in Renton, Washington.
STEPHEN BRASHEAR / GETTY IMAGES NORTH AMERICA / AFP

 

Boeing’s new chairman on Tuesday gave a forceful vote of confidence in CEO Dennis Muilenburg amid calls in Congress for the embattled Boeing chief executive to resign after two deadly crashes.

“Dennis has done everything right,” Boeing Chairman David Calhoun told CNBC, praising Muilenburg for keeping the board closely abreast of efforts to return the 737 MAX back to service after 346 people were killed in the accidents.

“To date he has our confidence,” Calhoun said.

Shares rose after the interview in which Calhoun also confirmed that the company still expects the MAX to receive regulatory approval this year to return to service.

Calhoun acknowledged that some of Boeing’s assumptions in the development of the MAX were faulty but hit back at suggestions that the company cut corners and compromised safety.

Boeing’s board has kept a low profile during the crisis over the MAX, which was grounded worldwide in March following the second of the two crashes.

The company on October 11 stripped Muilenburg of the chairman title — replacing him with Calhoun — even as he was kept on as CEO and as a member of the board.

Muilenburg last week endured two days of bruising grilling and criticism from lawmakers probing the issues that led to the two accidents involving the top-selling jet.

Boeing has acknowledged problems with the Maneuvering Characteristics Augmentation System, an automated flight control system implicated in both the Lion Air crash of October and Ethiopian Airlines crash in March.

Calhoun said the crashes also revealed “flawed” assumptions about how pilots would react to a malfunction of the system.

“No one was hiding anything. It was a set of engineering decisions that ended up being wrong,” Calhoun said.

“And our job now is to make sure that whatever processes we had, whatever process our regulator has, that those processes never allow for this to ever happen again.”

But lawmakers depicted the crashes as evidence Boeing had cut corners on safety to rush the MAX into service to compete with a plane from rival Airbus.

Cultural Problem?

US Representative Peter DeFazio, an Oregon Democrat who chaired last week’s hearing before the House Transportation Committee, pointed to documents he said showed that during the MAX’s development, Boeing leadership was “aware of many of the problems that engineers are now attempting to fix.”

DeFazio faulted Muilenburg’s responses to many questions as “consistent with a culture of concealment and opaqueness.”

“The bottom line is that there are a lot of unanswered questions and our investigation has a long way to go to get the answers everyone deserves, especially the families of the crash victims,” DeFazio said in a letter to congressional colleagues.

But Calhoun said criticism of Boeing’s corporate culture missed the mark.

While Boeing could take steps to strengthen the visibility of its commitment to safety, “I do not believe that this instance is indicative of a cultural problem,” he said.

Meanwhile, he said Muilenburg is completely focused on returning the MAX to service and succeeding in the face of “one of the most difficult situations any CEO that I’ve ever known has lived through.”

“We’re going to support Dennis.”

Calhoun said Muilenburg had asked not to receive a bonus for 2019 after lawmakers lambasted the CEO over his pay at the hearing last week.

In 2018, Muilenburg’s total compensation package was $23.4 million, according to a securities filing.

And Calhoun said the company was not considering clawing back Muilenburg’s pay from earlier years because there was “no culpability.”

Shares of Boeing rose 2.1 per cent to $358.29.

US Lawmakers Grill Boeing CEO After MAX Crashes

Dennis Muilenburg (R), president and CEO of the Boeing Company testify before the Senate Commerce, Science and Transportation Committee October 29, 2019 on Capitol Hill in Washington, DC.  Alex Wong/Getty Images/AFP

 

Boeing chief executive Dennis Muilenburg faced a barrage of criticism from US lawmakers Tuesday at a jammed hearing on the company’s commitment to safety as family members of victims of two deadly MAX 737 crashes looked on.

In his first appearance before Congress since the 737 MAX was grounded in March, Muilenburg apologized for the crashes and acknowledged shortcomings, but broadly defended Boeing’s development of the ill-fated aircraft.

Senators from both parties signaled clear dissatisfaction, bordering on rage in some cases.

“Boeing is the company that built the flying fortress that saved Europe,” said Democratic Senator Tammy Duckworth, a former National Guard helicopter pilot who lost both legs during the Iraq War.

“You have told this committee and you told me half-truths over and over again,” said Duckworth, who represents Illinois, home to Boeing’s corporate headquarters. “You have not told us the whole truth and these families are suffering because of it.”

Muilenburg stuck to the company’s longstanding stance that development of the MAX followed time-tested company procedures and defended it against charges that it cut corners on safety and was too cozy with regulators the Federal Aviation Administration.

Many analysts view the hearings as a can’t-win situation for Muilenburg and expect him to exit the company in the foreseeable future, most likely after the MAX returns to service.

Asked by a reporter if he would resign, Muilenburg said, “That’s not where my focus is. My focus is on the job at hand focused on safety. And we’re going to do everything we can to ensure safe flight.”

But Nadia Milleron, who lost her daughter on the Ethiopian Airlines crash, said the company needs a shakeup.

Muilenburg “needs to resign. The whole board needs to resign,” she said. “I expect him to stop putting the blame on the FAA and other people because that is what they always do. They don’t take responsibility.”

Passing the buck? 

Many of the questions focused on the Maneuvering Characteristics Augmentation System, an automated system that Lion Air and Ethiopian Airlines pilots were unable to control, resulting in crashes.

“We have learned from both accidents and we’ve identified changes that need to be made to MCAS,” Muilenburg told the Senate Commerce Committee.

But Senator Ted Cruz, a Texas Republican, lambasted Muilenburg as he struggled to answer pointed questions about 2016 texts from Boeing pilot Mark Forkner to a colleague that discussed the “egregious” performance of the MCAS during a simulation test and said that he “basically lied to the regulators.”

Muilenburg indicated that Boeing counsel shared the documents with the Justice Department in February, but that he did not see the specific exchange until it was reported by news media earlier this month.

“I was made aware of existence of this kind of document,” Muilenburg told Cruz. “I counted on counsel to handle this appropriately.”

“That is passive voice,” Cruz shot back. “You’re the CEO, the buck stops with you.

“How did your team not put it in front of you, run with their hair on fire and say ‘We have a real problem here?’ How did that not happen and what does that say about the culture at Boeing?”

Senator Maria Cantwell, a Democrat from Washington state where the 737 MAX is built, said the crisis showed that Boeing leadership was failing its employees.

“This isn’t a question about line workers — this is a question about the corporate view from Chicago, and whether there is enough attention to manufacturing and certification,” Cantwell said. “You should take offense to the fact that people say, ‘It’s a great company that’s not being run correctly.'”

Tuesday’s hearing will be followed by a second session on Wednesday in the House Transportation Committee.

Boeing is still targeting regulatory approval for the MAX in 2019, a timeframe that many aviation experts still view as possible.

Senator Roger Wicker, a Mississippi Republican who chairs the Senate committee, told CNBC before the hearing that he intends to scrutinize Boeing’s processes but said he did not see anything that would prevent the MAX from going back into service “fairly soon.”

“I think this plane is eminently fixable,” Wicker told CNBC. “I don’t think it’s a hopeless cause.”

AFP

Boeing Compensates Families Of Lion Air Crash

FILES) This file photo taken on March 18, 2013 shows a Lion Air plane flying over Sukarno-Hatta airport in Tangerang, outside Jakarta. Adek BERRY / AFP

 

Boeing has reached settlements with 11 families of victims from October’s Lion Air crash, the first agreements following two deadly crashes that killed 346 people, a plaintiffs attorney said Wednesday.

The Wisner Law Firm, which specializes in aviation cases, is also “optimistic” about reaching settlements on its remaining six cases for families affected by the crash in Indonesia, said attorney Alexandra Wisner.

The settlements pay out at least $1.2 million per victim, a person familiar with the matter said.

Boeing, which earlier Wednesday announced new company initiatives on safety, declined to comment directly on the agreements.

“We extend our deepest condolences to the families and loved ones of all those onboard Ethiopian Airlines Flight 302 and Lion Air Flight 610,” a Boeing spokesman said.

“As the investigations continue, Boeing is cooperating fully with the investigating authorities. We won’t comment on the lawsuits directly.”

The aviation giant still faces more than 100 lawsuits in federal court in Chicago following the Lion Air Crash and a second crash of an Ethiopian Airlines plane in March that led to the global grounding of the top-selling 737 MAX.

Boeing in July announced that it would spend $100 million on communities and families affected by the 737 MAX disasters.

On Monday, the Boeing Financial Assistance Fund said it was open to accepting claims and would spend $50 million on immediate financial assistance to families.

The families of the 346 passengers will each receive about $144,500 and will not be required to waive the right to sue the company, said Kenneth Feinberg, the administrator of the fund.

When will MAX fly again? 

The settlements come as the timeframe for the ungrounding of the MAX remains murky.

On Monday, the new head of the Federal Aviation Administration said the decision to permit the MAX to reenter service would be up to each country, an acknowledgement of the lack of consensus among global regulators on the question.

The FAA chief also said there was still no timeframe for clearing the planes to fly in the United States. Boeing has said that it expects to receive regulatory approval early in the fourth quarter for the plane to resume service.

Earlier Wednesday, Boeing announced a number of reforms to boost safety. The company has been accused by critics, including US lawmakers and victims’ families, of cutting corners on safety to boost profit.

Boeing announced it was standing up a new “product and services safety organization” whose mandate would include “investigating cases of undue pressure and anonymous product and service safety concerns raised by employees,” the company said in a press release.

Other steps include emphasizing safety-related experience as a desired criterion of future directors; and a board recommendation to Boeing to work with airlines and other stakeholders to recommend pilot training, including “where warranted, above and beyond those recommended in a traditional training program.”

Pilot training has been a key area of disagreement among international regulators, with the European Union Aviation Safety Agency favoring simulator training for MAX pilots that goes beyond the prior training protocol that centered on a computer tablet.

The FAA has viewed simulator training as unnecessary.

AFP

Head Of Boeing’s 737 MAX Program To Retire

In this file photo taken on June 27, 2019, Boeing 737 MAX airplanes are stored in an area adjacent to Boeing Field in Seattle, Washington. STEPHEN BRASHEAR / GETTY IMAGES NORTH AMERICA / AFP

The head of Boeing’s embattled 737 MAX program plans to retire, the company said Thursday, just as it gears up to persuade regulators to return the plane to the skies after two deadly crashes.

It was the most high profile departure of a senior executive since the aircraft was grounded in mid-March following two crashes that claimed 346 lives.

Eric Lindblad, who has led the MAX program since August 2018, will step down and work with his successors on a transition, Commercial Airplanes President Kevin McAllister said in a staff memo.

Boeing apologized following the two crashes and acknowledged falling short in communications with regulators. But top officials, including chief executive Dennis Muilenburg, have kept their jobs amid the crisis.

“These are unprecedented times for us, as our primary focus remains the safe return of service for the 737 MAX and driving quality and safety in all that we do,” McAllister said.

The company has been widely criticized over its development of the 737 MAX, which included a flight handling system called the Maneuvering Characteristics Augmentation System that has been seen as a factor in both crashes.

McAllester praised Lindblad for “strong leadership and timeless drive” since assuming the 737 program less than a year ago.

Lindblad “shared with me his desire to retire last year, and we will now begin to embark on a thoughtful and seamless transition plan,” McAllister said.

Mark Jenks, a 36-year company veteran, will replace Lindblad. Jenks has been leading Boeing’s effort to develop a new midsized commercial plane. The memo did not specify the timing of the transition.

McAllester also said Boeing executive Mike Sinnett, an executive in product strategy and future airplane development, will assume Jenks’ duties while continuing work to restore the MAX to service.

Sinnett “will also continue to play a pivotal role in our stakeholder and customer outreach efforts on the MAX certification and return to service efforts,” McAllister said.

Boeing has developed a software upgrade for the MCAS. But the jet has not yet been cleared by regulators to resume flights.

The Federal Aviation Administration late last month identified a fresh problem during simulator testing, further clouding the outlook for the plane’s return to service.

AFP

Boeing To Give $100 Mn To 737 MAX Crash Victims’ Families, Communities

Employees work in the cargo hold of a Boeing 727 MAX 9 test plane outside the company’s factory, on March 14, 2019 in Renton, Washington.
STEPHEN BRASHEAR / GETTY IMAGES NORTH AMERICA / AFP

 

Boeing announced Wednesday it would give $100 million to communities and families affected by two crashes on its 737 MAX planes that claimed 346 lives.

Describing the sum as an “initial investment” over multiple years, the company said it would work with local governments and non-profit organizations to provide “hardship and living expenses” and boost economic development in regions affected by crashes of planes operated by Ethiopian Airlines and Lion Air.

Boeing faces numerous lawsuits filed by the victims’ families, some of whom have appeared at news conferences or during congressional hearings probing the disasters.

The $100 million figure is less than the list price for several leading 737 MAX planes. Boeing said it would also match donations from employees to families and communities affected by the accidents.

“We at Boeing are sorry for the tragic loss of lives in both of these accidents and these lives lost will continue to weigh heavily on our hearts and on our minds for years to come,” said Boeing chief executive Dennis Muilenburg in a statement to the media.

“The families and loved ones of those on board have our deepest sympathies and we hope this initial outreach can help bring them comfort.”

Boeing referenced “multiple lawsuits” in an April securities filing, saying it was also cooperating with various regulatory probes.

“We cannot reasonably estimate a range of loss, if any, that may result given the ongoing status of these lawsuits, investigations, and inquiries,” the company said in the securities filing.

Boeing Submits Some Documents On 737 Fix

(FILES) In this file photo taken on March 28, 2019, Southwest Airlines Boeing 737 MAX aircraft are parked on the tarmac after being grounded at the Southern California Logistics Airport in Victorville, California.

 

Boeing has submitted some documents to the US Federal Aviation Administration in connection with a fix to allow the 737 MAX to resume flying, a person familiar with the matter said Monday.

The application to certify the fix of its anti-stall flight software will be considered complete following a test flight in the coming days, the source added.

The 737 MAX aircraft have been grounded worldwide since mid-March after the second of two crashes killed 346 people.

Boeing Wins Confidence Of Shareholders, Prepares For Key 737 Max Test Flight

 

Boeing executives successfully beat back shareholder challenges to their authority on Monday as the company signaled it expects regulators to take a key step next week in the effort to get the 737 MAX back in the air following two deadly crashes.

The aerospace giant, under scrutiny following the crashes that killed 346 passengers and crew and grounded the MAX worldwide, won a vote of confidence from its investors, even as company management faced tough questions over plane design and the possible missteps in getting the aircraft to market.

Boeing expects the Federal Aviation Administration to conduct a test flight by the end of next week of the software fix the company developed for the flight system on the 737 MAX, a company spokesman said Monday. That would be a critical step in certifying the aircraft as flight-worthy.

However, an FAA spokesman said the agency had not released a date or time for the flight yet.

Amid reports of missteps in developing the newest version of its most popular aircraft, concerned shareholders used the annual meeting to propose a plan to oblige more transparency by making the chairman an independent director and to disclose lobbying activities and trade association memberships.

But those proposals garnered just 34 and 32 percent of the votes, respectively, somewhat better than similar measures last year, but still well below 50 percent.

The defeat of those motions no doubt was relief for Chief Executive Dennis Muilenburg and other company brass but there was little sense of triumph at an annual meeting that included a moment of silence for lives lost.

The company faces an uncertain timetable for bringing the grounded fleet back into service and tough questions over a new plane design that crashed twice, as well as potential costs from the crisis.

Muilenburg was asked during a press conference if he considered resigning.

“We’re focused on safety and I can tell you these accidents weigh heavily on us as a company,” Muilenburg responded. “My clear intent is to continue to lead on the front of safety and quality and integrity.”

The 737 MAX has been grounded since mid-March following the crash of an Ethiopian Airlines flight and an earlier Lion Air crash, a crisis that has raised questions about whether the US giant sacrificed safety in its zeal to market a new narrow-body plane and compete with Airbus.

At the shareholders meeting, Muilenburg faced some pointed questions from shareholders but defended the design of the 737 MAX as “thorough” and “disciplined.”

Boeing has said both crashes involved erroneous information that came to the airplane through its anti-stall system, the Maneuvering Characteristics Augmentation System, which the software update is meant to address.

“We know that in both accidents there was a chain of events that occurred. One of the links was the activation of the MCAS system because of the data,” Muilenburg said at the media briefing. “We know we can break that link in the chain. The software update does that.”

‘Chain of Events’

But Muilenburg repeatedly declined to characterize the MCAS system as a design flaw, saying there is more than one factor in such catastrophic accidents and that an investigation is continuing.

“It’s a chain of events. There is no singular item,” he said. “It’s a chain of events I think it’s really important that we all focus on letting the investigation process run its due course.”

US carriers such as American Airlines and Southwest Airlines are targeting August to resume flights on the 737 MAX in the expectation that Boeing will receive approval for its fix by that time.

Boeing has submitted some of the documentation to the FAA for the fix to the MCAS system, said a person familiar with the matter, adding that the application will be considered complete following a test flight in the coming days.

Boeing expects certification of the software fix sometime after an FAA meeting with international regulators on May 23, the company spokesman said.

Fresh questions were raised over the weekend following revelations that prior to the Lion Air crash in October, Boeing deactivated a malfunction signal on 737 MAX planes owned by Southwest without telling the carrier, a feature that would detect a sensor error of the kind thought to have been a factor in both crashes.

The FAA considered recommending grounding the planes at the time as they explored whether pilots flying the aircraft needed additional training about the alerts, according to a source familiar with the matter.

They decided against that — but never passed details of the discussions to higher-ranking officials in the FAA, the source said.

Shares of Boeing declined 0.4 percent to $379.17 in afternoon trading.