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The Boeing 737 first flew in 1967. That model plane, the 737-100, along with a slightly longer version, the -200, were the original generation. In 1979, Boeing began to develop a major revamp of the 737. Making their debuts in the 1980s and early 90s, the 737-300, -400, and -500 came to be known as the 737 Classic series. In the early 1990s, Boeing began working on another 737 update. These planes, which entered service in the late 1990s and early 2000s, were known as the 737NG. The “NG” meant “next generation.” The 737 has been one of the best-selling commercial jetliners of all time. More than 10,000 have been delivered worldwide. By the 2000s, the 737 had become the best-selling commercial aircraft in history, with airlines around the world relying on its performance for short and medium-haul flights. In 2006, Boeing began to discuss a successor for the 737NG. For a while, as the plane maker mulled the next step, it considered both replacing the 737 with a brand-new airplane, or re-engining the 737NG with more efficient engines, and making other changes for a newer generation. In December 2010, rival Airbus announced the A320neo family (neo = “new engine option”)- it offered superior fuel efficiency and lower operating costs due to its state-of-the-art engines and aerodynamic enhancements. W. James McNerney, Jr., Boeing’s CEO at the time, received a call from American Airlines’ chief executive, Gerard Arpey. Arpey reportedly said that his airline was close to a deal for hundreds of Airbus narrow-body aircraft, warning that Boeing had to be more aggressive and timely to win its business. Until that point, American Airlines had exclusively purchased from Boeing for more than a decade. All this put pressure on Boeing. Boeing now faced significant competition from Airbus. There were fears that if Boeing did not act fast enough, then it risked losing market share to a rival.
Desperate to win the order, Boeing ditched the idea of designing a whole new airplane — which could take up to 10 years to get in the air — and instead pivoted to placing new engines on the 737 to create another new generation of the workhorse. It took a few months to finalize the design and Boeing announced the 737 Max family, consisting of three differently sized models: the 737 Max 7, Max 8, and Max 9. However, in the meantime, American Airlines announced its order for 130 A320ceo and 130 A320neo jets, with an option for 365 more. It also said that it would order 100 of Boeing’s not-quite-ready next-generation 737.
The 737 Max retained a great degree of commonality with its predecessors, meaning one pool of pilots and ground staff could work on both planes, with some supplementary training, rather than having to be certified on a new aircraft type. Pilots ultimately were only required to take a brief tablet-based course, rather than training in a simulator, like they would for a new plane. The fact that it was an existing, already certified airframe, which comprise the body and wings of the plane, only with new engines and avionics, it meant that Boeing would not have to undergo the same lengthy certification process it would for an all-new airplane. The engines on the Max were larger, positioned further forward, and higher up on the wing than the engines on the 737NG. That caused the plane to behave differently. For example, it could cause the nose of the plane to pitch upward in some situations, like low-speed flight, or flight with a high angle-of-attack, when the plane is being flown manually. To compensate for that, Boeing designed automated software called Maneuvering Control Augmentation System (MCAS), which would automatically activate to stabilize the pitch and nudge the aircraft’s nose back down “so that it feels and flies like other 737s.” However, Boeing did not include training on MCAS in the pilots’ manual, reasoning that the software would work in the background. When the 737 Max was announced, it already had a not-quite-firm order from American Airlines. By November 2011, Boeing said that it had 700 commitments. In August 2015: the first 737 Max fuselage rolled off the factory line, and in December, the first plane — a 737 Max 8 named “Spirit of Renton — was finished. The plane was eventually delivered to Southwest. Following a year of test flights and data-gathering, the Max gained certification from the FAA in March 2017, followed by other global regulators later that month. The first 737 Max delivery was made on May 16, 2017, to Malindo Air, a subsidiary of the low-cost Indonesian carrier Lion Air. The first passenger flight took off on May 22. Other airlines were now placing orders for the 737 Max. By May 2018 — a year after the first delivery — more than 130 Max planes were in service with 28 different airlines around the world. The Max had flown almost 42,000 flights in that time, moving about 6.5 million passengers, according to Boeing stats.
On 29 October 2018, an Indonesian Lion Air Boeing 737 Max plane, carrying 189 people on board, crashed into the sea just 13 minutes after taking off. The flight was departing from the airport in Jakarta, the capital of Indonesia. The Lion Air flight JT 610 left the Jakarta airport at 6:20 on Monday morning (local time) and was supposed to arrive to its destination an hour later at the western city of Pangkal Pinang at the Bangka Belitung Islands. Just shortly after taking off, the pilot of the flight JT 610 had requested to return to the Jakarta‘s Soekarno-Hatta airport. Minutes after that, ground control lost the contact with the plane. brand new Boeing 737 MAX 8. The plane had been in operation since August, a mere three months. It had logged only 800 hours of flight time, according to the head of the Indonesian National Transportation Safety Commission, Soerjanto Tjahjano. The incident was the first major accident involving a Boeing 737 Max – an updated version of the 737. There are four models – the Max 7, Max 8, Max 9 and Max 10. According to Boeing, the 737 MAX series is the fastest-selling plane in its history, and has accumulated almost 4,700 orders. The MAX 8 has been ordered by airlines including American Airlines, United Airlines, Norwegian and FlyDubai. Questions were now being raised as to how a brand new plane could crash?
After the crash, Boeing issued a bulletin disclosing that this line of planes, known as the 737 Max 8, was equipped with a new type of software as part of the plane’s automated functions. Boeing said it was weighing plans to launch a software upgrade for its 737 MAX in six to eight weeks that would help address a scenario faced by crew of Indonesia’s Lion Air, sources told Reuters.
A meeting between Boeing executives with pilots at the Allied Pilots Association’s held in Fort Worth, Texas, saw a heated exchange between the pilots and the Boeing executives. Some pilots were furious that they were not told about the new software when the plane was unveiled. Captain Dennis Tajer, a 737 pilot who attended the meeting, said that Boeing executives told the pilots: “Look, we didn’t include it because we have a lot of people flying on this and we didn’t want to inundate you with information.” “I’m certain I did say, ‘Well that’s not acceptable,'” said Capt Tajer, a leader in the association representing American Airlines pilots. Boeing did not respond to questions about the meeting. Boeing CEO Dennis Muilenburg
On 10 March, 2019, just five months after the Indonesian crash, the same kind of malfunction caused a 737 Max jet to crash in Ethiopia, killing all on board. An Ethiopian Airlines jet crashed shortly after take-off from Addis Ababa, killing all on board. The airline, which is Africa’s largest and most profitable carrier, said 149 passengers and eight crew members were on flight ET302 from the Ethiopian capital to Nairobi in Kenya. It said 32 Kenyans, 18 Canadians, eight Americans and seven British nationals were among the passengers. The crash happened at 08:44 local time, six minutes after the months-old Boeing 737 Max-8 took off. An eyewitness at the scene told the BBC there was an intense fire as the aircraft hit the ground. “The blast and the fire were so strong that we couldn’t get near it,” he said. “Everything is burnt down.”
On 13 March 2019, federal regulators ordered the grounding of the 737 Max 8 and a similar plane, the 737 Max 9. Flight simulations that recreated the problems experienced by a doomed Lion Air plane gave pilots less than 40 seconds to fix them. The tests replicated what is believed to have gone wrong with Boeing 737 Max Lion Air flight in which a sensor failed and triggered software designed to help prevent the plane from stalling. The pilots then had seconds to disengage the system and avoid an unrecoverable nose dive, people involved in the testing told The New York Times.
25 Oct 2019. The final report by Indonesian investigators into the crash of a Boeing 737 Max plane flown by Indonesia’s Lion Air that left 189 people dead has found that problems with Boeing’s design, the airline’s maintenance of the jet and pilot errors contributed to the disaster. The report into the October 2018 crash criticised the US planemaker’s new anti-stall system, MCAS, that automatically pushed the plane’s nose down, leaving pilots fighting for control. The MCAS should be redesigned to include a backup and all systems that can take over flight control should receive closer scrutiny during certification, according to the final report published by the investigators on 25 October 2019. “The investigation considered that the design and certification of this feature was inadequate,” the report said. “The aircraft flight manual and flight crew training did not include information about MCAS.” The report also found that Boeing failed to detect a software error resulting in a warning light not working and failed to provide pilots with information about the flight control system. “The absence of guidance on MCAS […] in the flight manuals and pilot training made it more difficult for flight crews to properly respond to uncommanded MCAS,” said a presentation shown by investigators in Jakarta.
On 23 December 2019, Boeing’s Board announced that “a change in leadership was necessary to restore confidence in the company moving forward as it works to repair relationships with regulators, customers, and all other stakeholders.” Boeing CEO Dennis Muilenburg left the company with stock options and other assets worth about $80 million, but did not receive severance as part of his departure from the embattled company. Muilenburg’s exit package drew widespread criticism. “Boeing executives should be walking away in handcuffs, not with millions of dollars,” said Zipporah Kuria, who lost her father on the Ethiopian flight, in a statement. “Anguish fails to describe what we are feeling receiving this news. It is unraveling and bewildering for people taking part in atrocities to be rewarded. The payment he has received is payment that was made with our loved one’s blood.” “It’s so appalling that Boeing keeps shamelessly showing the world its culture of rewarding failures and ‘clowns,’ as the latest documents it released reveal, instead of investing and rewarding safety,” said Paul Njoroge, who lost his wife, mother in law, and three small children in the Max crash in Ethiopia, in an emailed statement. Dave Calhoun, who had been serving as chairman of Boeing since October, will assume the position of CEO.
In March 2020, Ethiopian investigators released a new analysis and concluded that the March 2019 crash of an Ethiopian Airlines flight was caused by design flaws in the Boeing 737 Max plane and not by the performance of the airline or its pilots. The interim report released by the Ethiopian Aircraft Accident Investigation Bureau, which came almost a year after Ethiopian Airlines Flight 302 went down shortly after departing Addis Ababa stated that said faulty sensor readings and automatic commands that did not appear “on the flight crew operation manual” had left the crew unable to control the plane, resulting in the fatal crash. The report also said that Boeing’s reliance on a single sensor for the 737 Max “made it vulnerable to undesired activation.” The interim assessment corresponds with a preliminary report that Ethiopia released last April, in which investigators said that the pilots had “repeatedly performed all the procedures provided” by Boeing to bypass the automated system.
On 23 December 2019, Boeing fired Dennis Muilenburg and appointed Chairman Dave Calhoun as the new Chief Executive Officer. This leadership change is seen as an attempt to restore confidence in Boeing and address the mounting crisis. In his eight weeks on the job, Boeing’s chief executive, David L. Calhoun, has come to one overriding conclusion: Things inside the aerospace giant were even worse than he had thought. To get Boeing back on track, Mr. Calhoun said, he is working to mend relationships with angry airlines, win back the confidence of international regulators and appease an anxious President Trump — all while moving as quickly as possible to get the grounded 737 Max back in the air. “It’s more than I imagined it would be, honestly,” Mr. Calhoun said, describing the problems he is confronting. “And it speaks to the weaknesses of our leadership.” He said the former chief executive had turbocharged Boeing’s production rates before the supply chain was ready, a move that sent Boeing shares to an all-time high but compromised quality. “I’ll never be able to judge what motivated Dennis, whether it was a stock price that was going to continue to go up and up, or whether it was just beating the other guy to the next rate increase,” he said. He added later, “If anybody ran over the rainbow for the pot of gold on stock, it would have been him.” Mr. Calhoun and the rest of Boeing’s board never seriously questioned that strategy, in part because before the first Max crash off the coast of Indonesia in October 2018, the company was enjoying its best run in years. What’s more, the board believed that Mr. Muilenburg, an engineer who had been at Boeing for his entire career, was so deeply informed about the business that he was a good judge of the risks involved in ramping up production. He also delicately maneuvered between accepting responsibility for the two crashes and pointing the finger elsewhere. When designing the Max, the company made a “fatal mistake” by assuming pilots would immediately counteract a failure of new software on the plane that played a role in the Lion Air and Ethiopian Airlines accidents. But he implied that the pilots from Indonesia and Ethiopia, “where pilots don’t have anywhere near the experience that they have here in the U.S.,” were part of the problem, too. Asked whether he believed American pilots would have been able to handle a malfunction of the software, Mr. Calhoun asked to speak off the record. The New York Times declined to do so. “Forget it,” Mr. Calhoun then said. “You can guess the answer.” Mr. Calhoun stopped short of saying the company has systemic cultural problems. He called the messages, in which Boeing employees ridiculed the F.A.A. and denigrated their own colleagues, “totally unacceptable,” but said they were not representative of Boeing more broadly.
The 737 Max was a staple of many airline fleets around the world. All 371 aircraft in operation were grounded after regulators in Asia took the planes out of service, which was soon followed by the FAA decision to take it out of service in North America. Boeing’s share price fell sharply after the grounding of the planes. The company states that the 737 MAX crisis has cost the company around $19 billion, and that does not include any cost of litigation and settlements with victims’ families. It faces dozens of lawsuits from victims of the two crashes and has also been criticised for potentially misleading the FAA over what it knew about problems with the software. It had hoped to have the planes back in operation but problems have dogged the company’s efforts to fix the issues with the anti-stall system, which is known as the manoeuvering characteristics augmentation system, or MCAS. The grounding of the planes has all but halted new sales of the jets and prompted Boeing to temporarily shut down production of the planes. It has also left Boeing scrambling to win back regulators and repair its tarnished image.
In early March 2020, a preliminary report by the U.S. House Committee on Transportation and Infrastructure said that production pressures and a “culture of concealment” at Boeing had contributed to both plane crashes. The report also found a conflict of interest with regard to oversight, highlighting instances in which Boeing employees responsible for representing the F.A.A.’s interest “failed to take appropriate actions” to safeguard passengers on commercial flights. The aftermath of the Ethiopian crash highlighted the sizable influence that Boeing has over regulators and oversight procedures, said Githae Mwaniki, an aviation expert with Aviation Information Consultants in Nairobi, Kenya. “That whole area of certification and modification of existing aircraft requires a total overhaul,” Mr. Mwaniki said.
Internal messages delivered to congressional investigators echoed troubling internal communications among Boeing employees and heaped further embarrassment on Boeing. The messages included conversations among Boeing pilots and other employees about software issues and other problems with flight simulators for the Max. The employees appear to discuss instances in which the company concealed such problems from the F.A.A. during the regulator’s certification of the simulators, which were used in the development of the Max, as well as in training for pilots who had not previously flown a 737. “Would you put your family on a Max simulator trained aircraft? I wouldn’t,” one employee said to a colleague in another exchange from 2018, before the first crash. “No,” the colleague responded. In another set of messages, employees questioned the design of the Max and even denigrated their own colleagues. “This airplane is designed by clowns, who are in turn supervised by monkeys,” an employee wrote in an exchange from 2017.
During congressional committee hearings, Boeing was accused of putting profits over safety and developing a cosy relationship with regulators that permitted the company to rush the 737 Max, Boeing’s most profitable model, into service. “Both of these accidents were entirely avoidable,” the Mississippi senator Roger Wicker, a Republican, said. “We cannot fathom the pain experienced by the families of those 346 souls who were lost.” Lawmakers also blasted Boeing’s compensation and pension benefits for the fired CEO. “346 people died. And yet, Dennis Muilenburg pressured regulators and put profits ahead of the safety of passengers, pilots, and flight attendants. He’ll walk away with an additional $62.2 million. This is corruption, plain and simple,” U.S. Senator Elizabeth Warren said on Twitter. Lawmakers also accused Boeing of selling safety as an “add-on feature”, referring to a warning light that advises pilots of any discrepancy in the aircraft’s pitch, which was sold as an add-on rather than included as standard. At the hearing, the Connecticut Democratic senator Richard Blumenthal sharply accused Boeing of engaging in “a pattern of deliberate concealment”, noting that Boeing’s 1,600-page pilot’s manual mentions the so-called MCAS anti-stall system just once. Blumenthal accused Muilenberg and Boeing of supplying “flying coffins as a result of Boeing deciding to conceal MCAS from pilots”.
On January 6, 2024 as Alaska Airlines Flight 1282, a Boeing 737 MAX 9, was climbing out of Portland,United Sattes, a large section of the aircraft’s structure, a fuselage door-plug, broke free in flight. With the plug gone the cabin violently decompressed. According to Boeing, the door plug on the Alaska Airlines jet was manufactured by Spirit in Malaysia and then brought to the company’s factory in Wichita, Kan., where it builds the fuselage, or body, of the 737 Max 9. There, the plug was installed on the fuselage, which was then transported by rail to Boeing’s factory in Renton, Wash., where the plane maker assembles the jet.
Boeing named a new CEO in 2024 after reporting a core operating loss of $1.4 billion in the second quarter — more than triple the loss from a year ago — as increased scrutiny of the safety and quality of its planes kept the troubled company from making enough aircraft to return to profitability. Robert “Kelly” Ortberg, former CEO of supplier Rockwell Collins was announced as its new CEO, effective August 8, replacing retiring Boeing CEO Dave Calhoun. Ortberg will have his hands full fixing the problems at Boeing, which has not posted a profitable year since 2019. Since then, its core operating losses totaled $33.3 billion, including the loss announced Wednesday. That loss was far larger than forecast by analysts. Boeing will have difficulty returning to profitability until it can convince regulators that it has fixed problems with the safety and quality of its jets. The company has admitted that two 737 Max crashes in October 2018 and March 2019 that killed a total of 346 people were the result of a design flaw. The crashes and the time it took to fix the design cost the company more than $20 billion. It recently agreed to plead guilty to charges that its employees defrauded the Federal Aviation Administration during the original certification process for the 737 Max. As part of the guilty plea, Boeing agreed to operate under the supervision of a court-appointed monitor.
Subject: MGT6211E BUSINESS ETHICS AND LAW
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Good | Average | Weak/Fail | Marks Allocated | ||
| Use of appropriate references. Quality of references. Width and depth of references | 18-20 | 15-17 |
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0-9.8 | |||
| Application of relevant laws, theories and models including decided cases. | 18-20 | 15-17 | 10-14 | 0-9.8 | |||
| Critical review of relevant laws, theories and models including decided cases. | 18-20 | 15-17 | 10-14 | 0-9.8 | |||
| Recommendations and suggestions for improvements | 18-20 | 15-17 | 10-14 | 0-9.8 | |||
| Structuring, formatting, writing style and overall presentation | 18-20 | 15-17 | 10-14 | 0-9.8 | |||
| TOTAL MARKS | /100 |
Source of Case Study:
Ernest Eshun, ‘The Defeathered Bird: A Case Study of the Boeing 737 Max Crisis’ (2020). Paper 3840. <https://dc.etsu.edu/etd/3840>accessed 25 November 2024.
Henrico Dolfing, ‘Case Study 19: The $20 Billion Boeing 737 Max Disaster That Shook Aviation’ ( Henrico Dolfing 20 August 2024)<https://www.henricodolfing.com/2024/08/case-study-19-20-billion-boeing-737-max.html> accessed 25 November 2024.
Dennis Holeman, ‘The Boeing 737 MAX: A Case Study of Systems Decisions and Their Consequences’ (Dennis Holeman, 3 July 2019)https://dennisholeman.com/the-boeing-737-max-a-case-study-of-systems-decisions-and-their-consequences/ accessed 25 November 2024.
Additional material from the following sources:
BBC, ‘Ethiopian Airlines: ‘No survivors’ on crashed Boeing 737′ (BBC, 10 March 2019) < https://www.bbc.com/news/world-africa-47513508> accessed 10 April 2020.
Simon Marks and Abdi Latif Dahir, ‘ Ethiopian Report on 737 Max Crash Blames Boeing’ (New York Times, 9 March 2020) < https://www.nytimes.com/2020/03/09/world/africa/ethiopia-crash-boeing.html> accessed 10 April 2020.
Natalie Kitroeff and David Gelles, ‘ ‘It’s More Than I Imagined’: Boeing’s New C.E.O. Confronts Its Challenges’ (New York Times, 5 March 2020) < https://www.nytimes.com/2020/03/05/business/boeing-david-calhoun.html> accessed 10 April 2020.
David Slotnick, ‘Nearly a year after it began, the Boeing 737 Max crisis still drags on. Here’s the complete history of the plane that’s been grounded since 2 crashes killed 346 people 5 months apart’ (Business Insider, 6 March 2020) < https://www.businessinsider.com/boeing-737-max-timeline-history-full-details-2019-9?IR=T> accessed 10 April 2020.
Washington Post, ‘ Pilot complaints raise questions over Boeing’s response to Lion Air crash’ (The Straits Times, 14 March 2019) < https://www.straitstimes.com/world/united-states/pilot-complaints-raise-questions-over-boeings-response-to-lion-air-crash> accessed 10 April 2020.
Edward Helmore, ‘ Flying coffins’: senators rip Boeing chief over Max jet crashes that killed 346′ (The Guardian, 29 October 2019) < https://www.theguardian.com/business/2019/oct/29/boeing-dennis-muilenburg-congress-testimony-737-max-mcas> accessed 10 April 2020.
James Glanz and others, ‘ How Did a Boeing Jet End Up With a Big Hole?’ (New York Times, 23 January 2023)<https://www.nytimes.com/interactive/2024/01/23/business/boeing-alaska-airlines-door-plug.html> accessed 18 April 2024.
Chris Isidore, ‘Boeing names new CEO after losses more than triple’ (CNN, 31 July 2024)< https://edition.cnn.com/2024/07/31/investing/boeings-losses-new-ceo/index.html> accessed 18 April 2024.
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