Yes, Boeing's Troubles Are Indeed "Far From Over"

The headline, 'Boeing's Troubles Are Far From Over' appeared on the front of the 'Heard On The Street' page of the Business & Finance Section of the WSJ (January 30th,  p. B12).  But why be surprised when I've already noted the  ongoing MAX 737  MCAS problems as well as Boeing's history, i.e.

Boeing's History Shows Nothing It Says Can Be Trus...

With the latest WSJ report we learn that Boeing in 2018 raked in a profit of $10.46b  and last year that became a loss of $636m.  Much of this is attributed to the grounding of the MAX -    the company having to compensate airlines for the extended delay in getting the planes they expected. (Though given the 737 MAX design flaws I don't understand why any pilot - or crew - associated with any of these airlines would be in a hurry!)  As the WSJ piece notes:

"The MAX crisis has increased the program's future costs which Boeing brings forward as a matter of accounting. Together with other charges and costs such as additional compensation for airlines and extra expenses required to restart  production this year, Boeing expects the total MAX bill to be $18.9 b."

And that's assuming the MAX even gets back in service this year. I already predicted that eent would not be before next year, if ever.  The fundamental design flaws are just too great  and a software fix like MCAS just isn't enough to fix them.

From the same WSJ article other bad news for Boeing includes:

- Defense revenue falling - due to a one time charge- in this case relating to the Starliner capsule that failed to reach the right orbit in December 

- Boeing once again lower future production rates on the 787 Dreamliner

- The U.S. trade spat with China (despite Trump's bragging) lowered that nation's imports of American planes - and hence lowered sales profits, much like the losses from agricultural products.

- More worrying is the "structural slowdown in demand for wide-body aircraft, which are becoming less popular in an era in which elongated versions of smaller, more fuel efficient jets - like the Airbus A321 - can fly long distances."


The last affects both the 787 and 777X which flew for the first time last Sunday.   Right now, as the piece observes, it is only the Dreamliner which keeps Boeing afloat during the MAX crisis.   Alas, though, while the 787 has proven "a massive hit with airlines"  its delays gave Airbus the chance to come out with a direct rival. 

Still,

"Now that the company is in deep crisis it needs to milk the Dreamliner"

And this will have to be the case long after the MAX is returned to service, if it ever is. (Because carriers will likely ask for bigger discounts to buy it.)   As if all that isn't enough there's now a new issue ('Boeing Faces New Hitch For MAX',  Feb. 3, WSJ, p. B1) wherein we learn:

"Potentially hazardous wiring inside Boeing Co.'s 737 MAX jets  is the latest flashpoint between U.S. and European regulators and a further complication in the grounded fleet' return to service"

Adding: 

 "Technical experts at the European Union Aviation Safety Agency want certain electrical wires relocated to reduce what they say are dangers from potential short circuits, which in a worst case scenario could disrupt flight control systems"  

And the EU agency is currently "vetting such changes."

What's the big deal? Well the wires help to control movable panels in the tail and power other related systems.   This is in at least a dozen locations, from the rear of the aircraft to the main electronics compartment beneath the cabin and behind the cockpit.  Any short circuit or "arcing"  of the current between the wires has the potential to cause control problems for pilots which the MCAS may not be able to correct.
 
Boeing's and the FAA's response thus far?  They contend that "moving the wiring isn't necessary."      They  argue this because it will take up to 2 weeks to re-arrange the wiring for each plane. Figure in 100 planes total  for 3 airlines and you are talking about a delay of  200 weeks or nearly 4 more years before a recertification.    So Boeing (and their FAA clones) would rather roll the dice.

In corporate speak,  the cost to benefit (in terms of profits to Boeing) ratio of making such a change isn't worth it. In other words, in the length of time for such a worst case scenario to manifest - say with another MAX crash- Boeing could lose billions more in profits.  Such thinking is, of course, anathema to the Europeans - who place a higher benefit on saving lives of their citizens.

There is little doubt that Boeing is in a world of hurt and much of that can be blamed on its cost-cutting  mania  exposed in this New Republic piece:


https://newrepublic.com/article/154944/boeing-737-max-investigation-indonesia-lion-air-ethiopian-airlines-managerial-revolution

Wherein we read:

"Boeing's acquisition of McDonnell Douglas in 1997 foreshadowed its downward spiral in terms of the quality of decision making, and becoming hostage to Wall Street shareholder imperatives.  Thereby Boeing adopted the "Hollywood model" for dealing with engineers: Hire them for a few months with project deadlines approaching then fire them "when you need to make numbers"

Will Boeing's sobering experience and mega losses on its balance sheet now make use of the Wall Street model less likely? Yeah, about as less probable as aliens landing from Tau Ceti system and  abducting Trump before the ' election,  especially after (nearly all)  the cowardly Reepos gave him a pass for his crimes.