Did a 1997 merger ruin Boeing?
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1. Domestic airlines protected by regulation had been effective monopolies and Boeing's engineer-led culture thrived in an environment where airlines didn't care about costs. But that environment died with airline deregulation in 1978 and an engineer-led culture made it more difficult to compete in a cost sensitive environment.
2. Airbus' rise put Boeing on the defensive for the first time in many decades. By 1996, Boeing's market share was less than twice Airbus' and falling rapidly enough that people could foresee the day when Airbus would overtake them. Although Airbus had good aircraft, their key advantage was they could sell them for lower prices than Boeing could.
3. Shareholders had become increasingly activist, quick to overthrow management when they weren't getting enough dividends and share price increases, and willing to install new management who would give them what they wanted.
Outsourcing, cost-cutting, and a move to an accountancy-led culture were the obvious responses to these challenges and Boeing's then CEO, Phil Condit, had already started the ball rolling on them before buying McDonnell-Douglas.
I know this is a common sentiment, but I don't quite get it. Engineering is often about optimizing multivariate functions, and cost is just another variable to optimize. If you frame it properly to engineers, they can solve cost problems too.
"Good, cheap, fast: pick two" is a law of the universe that most engineers deeply understand, and good devs will produce the best product they can according to which two are chosen.
You know what’s cooler than an expensive thing? A high quality thing with higher margins. A very well known and highly profitable company has taken that model pretty far (like trillions in valuation far).
Engineers arent really responsible for these types of attitudes though. Management are. By and large engineers will do as they are requested.
I find it far more plausible that costs ballooned due to an empire building dynamic by management than because engineers arm twisted them into building something "cool". Same reason Uber has, like, 150 people working on a mobile app.
Engineering is all about fitting within your constraints. Make budget one of those limits and life will uh find a way.
Well sure, you literally just removed the cost optimization variable. SpaceX vs. NASA is a clear example demonstrating that engineers can do this sort of optimization when it's given to them as a constraint. NASA's rocket designs were all custom, single-use, often down to the bolts because the budget was per-project/launch, where SpaceX rockets were designed for reuse and cost minimization across multiple launches.
In eng school there was a saying: An engineer is someone who can build something for $4 that any fool can build for $7.
It's obviously possible, SpaceX vs. NASA is an existence proof. Maybe you have something specific in mind when you say "technical engineering optimization problem", like a formula you can minimize mathematically to account for every little contribution, but this often isn't necessary. Like when solving physics problems using approximations, you often only need to minimize the first and second order largest contributors to the cost and you'll be in the right ballpark.
This also means you don't need to find the literally absolute minimum and capture literally all of the contributors to the cost during the design process. And of course this is what happens in the real world already, do you think accountants and pointy haired bosses guiding a bunch of engineers are going to find the absolute minimum? Of course not, they find what looks like a minimum from their limited view of a project after the engineers estimate the costs of producing parts and the labour required. Just close the loop without the accountants and bosses and engineers can do this optimization themselves.
I disagree that I was making this point. I said it currently involves accountants and bosses, and I'm saying it doesn't have to because you can make it an engineering problem. The accountants and bosses don't have any unique skills or insight here that aren't in principle also accessible to the engineers.
When I visited NITsEVT, a big-big-big organization dedicated to adapting of the stolen IBM 360/370 software to Russian language and Russian computer variants - I was amazed at how low the software culture was there. It looked like the only way to implement something was to look at how some American (but not necessarily bright) person has implemented some similar thing.
The whole “adaptation” project led to overall degradation of software culture as compared to 60s, when a lot of Russian system software was an original one. Or so a lot of people were saying.
Maybe you agree with Henry L. Stimson that "Gentlemen do not read each other's mail", but I haven't seen anything indicating that the NSA was spying on behalf of Boeing, or even directly targeting Airbus. Maybe I missed something, would be happy to learn if you have any sources to share :)
No what made Airbus start winning in the 1980s was hiring a former Boeing salesman. That's when they took off. Convincing air liners to take a chance and order Airbus planes.
>> James Woolsey, then director of the Central Intelligence Agency, recounted in a newspaper article in 2000 how the American government typically reacted to intelligence of this sort. “When we have caught you [Europeans]...we go to the government you're bribing and tell its officials that we don't take kindly to such corruption,” he wrote. Apparently this (and a direct sales pitch from Bill Clinton to King Fahd) swung the aircraft part of the deal Boeing's and McDonnell Douglas's way.
Wow, I knew national industry deals were murky, but damn.
"NSA conducting industrial espionage on Airbus"
https://www.google.com/search?channel=fs&client=ubuntu-sn&q=...
The article referencing this and Airbus is rather sensationalized and cuts off half the quote. This was said in reference to Airbus bribing foreign officials to buy from them. The full quote reads:
"When we have caught you at it, we haven’t said a word to the U.S. companies in the competition. Instead we go to the government you’re bribing and tell its officials that we don’t take kindly to such corruption. They often respond by giving the most meritorious bid (sometimes American, sometimes not) all or part of the contract. This upsets you, and sometimes creates recriminations between your bribers and your bribees, and this occasionally becomes a public scandal…"[5]
[5] R. James Woolsey, "Why We Spy on our Allies," Wall Street Journal, March 17, 2000.
The source unfortunately is locked behind a paywall so admittedly I don’t have the full context either.
To judge the credibility of the director of the CIA, start here:
I'm just a casual follower but it seems their glory days are from the 60s and 70s and they've been coasting along since then.
1971: Will the Last Person Leaving SEATTLE — Turn Out the Lights
I’d argue the 757, 767 and 737 Classic (i.e. -300 to -500), all of which much more 80s than 70s were much more glorious.
And the 90s brought us the 737NG and 777 which continue to carry more than everything else today and for that matter anything else ever, other than maybe the A320ceo.
[0] https://oxide-and-friends.transistor.fm/episodes/flying-blin...
[0] https://oxide.computer/podcasts/on-the-metal/oxide-and-frien...
1. Company is product-quality focused
2. Beats competition and creates mini-monopoly
3. Sales becomes somewhat inelastic to changes in quality
4. This leads "cost-cutting" and marketing focused execs/decision making to beat out product quality execs/decision making
5. Company's product quality takes predictable linear path to the bottom
https://hbr.org/2012/04/the-real-leadership-lessons-of-steve...
It's the same basic message from Jobs, but this time about Xerox.
With how Apple has avoided ever becoming a monopoly in pretty much any area, and instead tries to just take the top most profitable customers, it really meshes well with this idea of not becoming a monopoly and having the company rot.
Edit: looks like this might be from Triumph of the Nerds, a series released on PBS in 1996. So before Jobs' return to Apple and Apple's turn around.
I think they are only the majority in tablets, right? And tablets seem to be, oddly enough, a bit stagnant.
Of course, this could be overthinking a plate of beans, maybe Apple just aims for a high price point and high profit margin. But if you did want to take most of the current profits, and most of the future profits, you'd ensure you got enough feedback to not become a monopoly. You'd aim to take only the high profit margin customers and intentionally ignore the lower profit margin customers to let some form of competition continue to push on you.
Thanks for sharing!
From what I understand, their network was overengineered and they generally put out a very high quality product, and didn't need to do a lot of marketing.
And considering the landfills that are filled with things that replaced "expensive" goods like a Bell phone—maybe the tradeoff isn't worth it?
I doubt any consumers then had heard about 'economic externalities' (in fact, I'm not sure enough have heard about it now).
"Because they were taught to believe that the efficiency of capital was a virtue, financiers began measuring profitability not as dollars, yen, or yuan, but as ratios like RONA (return on net assets), ROIC (return on invested capital), and IRR (internal rate of return)...
All of this makes market-creating innovations appear less attractive as investments. Typically, they bear fruit only after five to 10 years; in contrast, efficiency innovations typically pay off within a year or two. What’s worse, growing market-creating innovations to scale uses capital, which must often be put onto the balance sheet. Efficiency innovations take capital off the balance sheet, however. To top it off, efficiency innovations almost always seem to entail less risk than market-creating ones, because a market for them already exists."
https://hbr.org/2014/06/the-capitalists-dilemma https://www.youtube.com/watch?v=rHdS_4GsKmg
Sounds like a plan to me. (Oh, wait, because lobbying. NM.)
[Yes, I'm a yankee.]
> There were certain things about the business where it was obvious – speaking to people who had been on that journey for 25 years before I joined – that they were not likely to change in the future because they hadn’t changed in the previous 25 years. The first thing that struck me was an absolutely rock-solid commitment to gaining the trust of the customer, the employees, the suppliers and business partners. Almost every rule or method or procedure of the company was built around ensuring that.
https://inpractise.com/articles/aldi-culture-and-operations-...
Now layer that on top of the decade it takes to get a new plane from drawing board to delivery.
From what I've read, it sounds like Boeing completely lucked into it. It wasn't some smart person who could accurately predict the future.
And to be honest, a lot of companies we think of as being "innovative" and having "foresight" are that way. They made the best business decision they could, based on what was known at the time, and the stars lined up to make it a huge hit.
Saying that a company can plan for future profitability isn't supported by the facts.
And regardless, I have quite a lot of flexibility as a grocery customer. I can go to Safeway, Whole Foods, Grocery Outlet, or my local small grocery around the corner. Target and Walgreens even have some groceries too.
>But when the McNamara discipline is applied too literally, the first step is to measure whatever can be easily measured. The second step is to disregard that which can't easily be measured or given a quantitative value. The third step is to presume that what can't be measured easily really isn't important. The fo[u]rth step is to say that what can't be easily measured really doesn't exist. This is suicide.
Cutting corners on something can save money now and can be measured but the hit to reputation can't be.
Hard times create strong people
strong people create good times
good times create weak people
weak people create hard times
Of course that’s not a guarantee either as they’re liable to take a few billion and run off into the sunset.
Cost-cutting is always unpleasant, and never done just for fun. Typically companies cut costs when they're feeling squeezed, i.e. they have to.
A company with a "mini monopoly" would not feel squeezed - quite the opposite.
"Enshittification" is not based on cost-cutting or optimizing for profits. It's when a product that's already "perfect" and widely used, has lots of money/effort invested in it to chase further growth, and the changes end up making the product worse for its existing userbase.
4.1 Company starts to talk about politics instead of products in their marketing campaigns
4.2 Company starts to cut cost on workforce by pushing out experienced people and hiring cheap newbies
4.3 As a result of the previous one, expertise drops rapidly and product quality starts to drop
4.4 As the product quality decreases, bleeding experienced people makes it impossible to stabilize
4.5 There is nobody left to innovate. The cafeteria manager is the best path to become an IT director (real case: 3 consecutive cafeteria managers in the same office were promoted as IT directors in one of these companies), so the best expertise the management has is to pick the right beverages for the automated vending machines in the office
4.6 Principles and values disappear, corruptions grows, while internal controls don't even bother to look into frauds less than $1 million per incident
4.7 stock price drops, even if the company continuously spends money on shares buybacks
When 4.1 changes the direction into politics, you start doing it internally. That leads to the next points.
And therefore, B2B companies run ads, e.g. to sway public opinion on government policies, or (now) to restore flyer confidence in their product. If US airlines get enough emails and letters from customers saying "I'll never fly a 737 MAX again!", that gives the airlines huge negotiating leverage against Boeing.
As other sibling posters have mentioned, it feels like there was a lot more to it. Sure, the McDonnell Douglas executives taking over Boeing after the merger certainly didn't help, but the regulatory, competitive, and economic environment had changed drastically by that time. I do wonder if the causality is a little reversed: the McD-D CEO taking the reigns at Boeing may have been more the effect of these shifts, a reaction to the relatively new shareholder pressure to control costs.
I do not know why the author decided to “simplify” things. In my field of experience such simplifications end very badly. I guess if someone decided to really just build great airplanes no matter the costs - his enterprise would have ended very badly too.
Now, the question of finding a proper balance, as each engineer knows - this is the question of real pain and real beauty. But - is it possible to write an article about a struggle to find a proper balance in something? anything? Will anyone read such an article? Imagine, how many things should be explained before the problem becomes clear…
And according to this article, the 737 MAX is Boeing's best selling plane ever.
Why? Why are airlines so eager to buy such a compromised model from a company that destroyed its reputation? Is it really that cheap?
Most orders were before the accidents but the vast majority haven't been canceled. Boeing has only delivered a fraction of them; they have another 3,000 to deliver before they get to the orders placed after the accidents (~1400).
Basically: Switching cost are stratospheric.
I can’t resist pointing out that an airline of all businesses should be comfortable with anything stratospheric!
You would think so, but it’s actually not. I used to work at an airline in IT, and asked that question of the Ops folks when the airline was evaluating switching fleets to Airbus. They said switching fleets or operating a mixed fleet is not cost prohibitive. This was midsize regional airline fwiw.
In particular, I've heard that maintenance and pilot training are big issues. If you've got half your pilots on the 737 and half on the A320, you're much less resilient to scheduling issues than having all of them on one or the other. Similarly, I believe maintenance facilities tend to be one or the other, so if you've got half your facilities for each, at the margins you're going to have more scheduling issues for maintenance.
There are economies of scale with anything to do with scheduling flexibility, and dividing like this essentially halves those economies of scale.
A quick google suggests that in optimal conditions (all parts available), it would take minimum of 2 months to assemble a large airliner plane. 6 months is suggested as a common time frame. As far as needs go, a plant would need suppliers for all pieces (over 350k by one count for one type of airbus). And you'd need a place where you can assemble the plane, with a sufficiently large runway attached. Possibly in an area where testflights would be acceptable.
All in all: perhaps current suppliers are at or close to their limits, and a new facility would need a completely new supply chain. If not, I'd imagine that if the bottleneck is exclusively with the builder, a solution could be found.
What a load of bull. Just last week the Seattle times was mentioning that the MAX had had 1200 orders cancelled.
And here is a Reuters article citing 480+ MAX orders cancelled, just for the first 9 months of 2020.
The older models are also now out of production.
Unless you are a sociopath and only care about your balance sheet I suppose.
well, there you go
Because of this all good airlines won't operate old airplanes. The few bad airlines can't operate very well because any country with a functional government will not allow you to fly an expired airplane. And so Boeing and Airbus have long order books to replace planes as they hit end of life. Of course airlines are limited to airplanes still in the current catalog, so they often cannot order the model that was working great for them 20 years ago.
Me, crying while flying a 50 year old Cessna 172.
Oh, luckily you are wrong this time: most planes at top airlines are replaced with more competitive ones, not because they depleted the airframe. The rest is replaceable - airplanes replace engines more often than some people change their socks and everything else is either regularly checked or replaced based on a strict schedule.
Replacing the airframe with a more competitive one is part of it, but part of the competitiveness is that you reach a point where you're having to do much more inspections and maintenance than a new plane.
Also note that the GP pointed out that it depends on what the plane is made out of, so older construction from 50 years ago can have more longevity in a way that more recently-built planes will not.
For comparison, a car's life expectancy is maybe 3,000 hours or so. Airframe quality is way, way higher than car quality.
Has this ever happened for an airliner?
* https://en.wikipedia.org/wiki/China_Airlines_Flight_611
This one only took 7 years from a bad repair until catastrophic failure though:
* https://en.wikipedia.org/wiki/Japan_Air_Lines_Flight_123
So "repair stuff properly" seems to be the important thing there. ;)
- The pilots are already trained (this is a big one and is part of the reason behind the MCAS debacle - new features mean retraining which costs money and limits which crews can fly which aircraft) [0]
- The 737 generally fits easily at a lot of airports since it's been around for a while - no need to reconfigure your gates/jet ways/etc to accommodate another aircraft at your gates)
- Airlines more recently prefer twin engine jets for better fuel economy and some changes in regulations [1]
- The MAX upgrade to the 737 platform was mostly to jam larger, more fuel-efficient engines into an existing airframe to save on manufacturing, certification, and training costs (see first point)
- In the US many airlines have shifted to single-aisle "mid-sized" planes for domestic routes due to deregulation around direct service - instead airlines can use a hub-and-spoke model with several connecting flights as opposed to only providing direct routes with enough demand to fill a plane [2]
[0] https://www.theverge.com/2019/5/2/18518176/boeing-737-max-cr...
[1] https://simpleflying.com/two-engines-vs-four-engines/
[2] https://science.howstuffworks.com/transport/flight/modern/ai...
The reason given at the time was the desire to simplify maintenance and parts logistics.
Now Alaska's fleet is all 737, a mix of MAX and NG models. The MAX is about a quarter of their fleet, so the current grounding has hurt them.
How would this help them? A large % of the fleet is still grounded.
As Alaska is based in Seattle, they've been pushing this ridiculous all-Boeing nonsense for a while. Horizon still exists as a wholly owned subsidiary of Alaska. Their fleet is all Embraer. In fact I'd be hard pressed to think of a time when Alaska was ever all Boeing.
I think this is no longer strictly true. In the early days of deregulation, yes, absolutely, airlines went to a hub-and-spoke model and eliminated a bunch of their direct routes.
But it turns out that customers don't actually like this, and they'll leave for a different airline that has the direct (or at least more-direct) routes they want.
So I believe it's sorta in the middle now: sure, airlines have hubs, and they don't do quite as many direct routes as they used to. But it's also common for there to be direct flights between airports that aren't what you might call hubs.
(Note that the article you linked to in support of this point is from 2001; a lot has changed over the past 23 years.)
The A380 had long range, but not to the extent of the 787 or A350, and it didn’t have their fuel efficiency, and there are structural choices that make freighter conversion difficult (like a middle floor too weak for cargo without reinforcement) and less economical in the first place (more volume available than weight it can support).
737 MAX uses 20% less fuel.
Incidentally, this fuel-efficient design is what lead to the design defect. The fuel efficiency is thanks to larger engine (larger engines burn hotter and use less fuel). To make the larger engine fit under the wing without raising the fuselage, they had to reposition the engine forward. This forward-positioning of the engine causes the nose to pitch up when accelerating quickly (and this can cause stall) and they fixed this defect using software to push the nose down.
MCAS was not intended to be an anti-stall system.
The only purpose of MCAS was to have the 737 MAX exactly mimick the 737 NG's (previous gen) pitch dynamics so that airlines wouldn't have to retrain their pilots on the 737 MAX.
Commercial pilots are generally pretty good at not stalling planes and understanding flight dynamics, they don't need MCAS to avoid stalling even when the plane pitches up during thrust.
This video is about bledend-wing designs, but it touches on the 737 MAX problem with illustrations,
https://www.youtube.com/watch?v=59A8-rKRs-0&t=705s
at minute 11:45 , but it's also worth watching the part at 4:31 , where another illustration explains the forces at work in an aircraft, using a classic 737 as an example.
It is on a different subject but the whole video is very interesting.
That said, it's true the MCAS was intended to address some comments from test pilots during development.
This grand-fathering of 737 is the reason it still does not have fly-by-wire in 2024: it simulates the antique original 737.
Or was misleading people on the invasive nature of the changes always the point? And MCAS is easier to hide than new wings?
> This grand-fathering of 737 is the reason it still does not have fly-by-wire in 2024
The 737 does not have fly-by-wire? Then how does MCAS work?
I thought it was mostly due to the much higher bypass-ratio than burning temp?
The same improvements are being made to electric utility turbines.
"The new two-stage High Pressure Turbine section adds advanced coatings for cooling metal parts that will enable the same metal temperatures as today’s engines despite hotter gas path temperatures."
https://web.archive.org/web/20150418191419/http://airinsight...
https://www.aircraft-commerce.com/wp-content/uploads/aircraf...
It could be argued it was an appropriate design.
The critical error was in that 737 MAX has two angle of attack sensors that feed data into the cockpit; however, the MCAS software only used input from one of them. In the Lion air case the one considered sensor had been improperly calibrated after being flagged for maintenance by the crew.
The fix is fairly comprehensive. If an angle of attack disagree occurs between the two sensors the system is inhibited from activation.
> Why are airlines so eager to buy such a compromised model from a company that destroyed its reputation?
They don't see it as compromised. The purchase price was set based on the fact that airlines would _not_ need to retrain existing 737 pilots for the new model, that it was type equivalent.
With the software changes and with additional training there are cost implications but not necessarily safety considerations with the model.
China spent ~15 years developing the C919, and it's finally entering mass production. But it also appears to be sold out until the 2030s.
There's an apparent contradiction here.
China spent ~15 years developing the C919, and it's finally entering mass production. But it also appears to be sold out until the 2030s.
And here.
Airbus and Boeing are commercially viable, and they have customers all around the world. Comac is more of a political project, as China tries to reduce their dependence on Western technology. There are 1000+ orders for the C919, but effectively all of them are Chinese.
Similarly, the USSR had domestic passenger aircraft industry, and Russia retains some capability to manufacture them. Their latest model is the Irkut MC-21, which has a few hundred orders. Again, effectively all of the orders are Russian.
Then there is Embraer, which is the biggest manufacturer of regional jets. They have been decades in the business, but they have not made any attempt to build a competitor for the A320 and B737.
Back to topic, Comac is not starting with a bang like Airbus did - but they don't have to. Same quality, slightly different, slightly cheaper could work after reaching governement-aided critical mass. Such government aid got Airbus started and notably did not cripple it.
So Bombardier sold it all to Airbus. Now Airbus has two series of single-aisle aircraft that are more competitive than Boeing's 737 (the A220 and A320.)
It doesn't exactly help that nobody wants to work with Russia for reasons.
>They [Embraer, Brazil] have been decades in the business, but they have not made any attempt to build a competitor for the A320 and B737.
They are actively attempting precisely this:
https://en.wikipedia.org/wiki/Embraer_E-Jet_E2_family
To contextualize, both Irkut, now called Yakovlev, and Embraer received massive support from their respective governments to get started.
They are much smaller, with 2-2 seating, compared to 3-3 in the bigger jets. There are some routes and airlines where these are competitive; but they are not similar planes.
Both the E2 195 and the CSeries are well above the threshold of 100 passengers that Wikipedia uses as the maximum for a "regional jet", with the former holding up to 146 passengers and the latter up to 160. However, this is well behind the 737 MAX at 220 passengers. This classification apparently varies by source; 49 USC 41714 considers the maximum to be 71 passengers, while some sources take a threshold as high as 150 seats.
In any case, Embraer has gradually ramped up the maximum seating capacity on its planes, though you correctly point out that it has yet to take the middle-seat plunge.
I thought Airbus was heavily subsidized
It's fine that governments have decided to prop up these industries in their own ways, of course. Just hard to expect "free market" participants to show up and take on such a capital intensive industry
So not really a contradiction unless you are reading it too literally.
China spent ~15 years developing the C919, and it's finally entering
mass production. But it also appears to be sold out until the 2030s.
no.
Since 2022 Comac has delivered a grand total of four C919s. The only non-Chinese airline to order any is owned by a rich Chinese guy. The rest are Chinese airlines that have been browbeaten into ordering some. Nobody outside of China is in any rush to order a Comac anything because:
1.) Comac hasn't gotten any non-Chinese certification
2.) Comac's support infrastructure is even weaker than Sukhoi and Bombardier (both of whom struggled to sell and support their aircraft that were actually certified in the west).
As I understand it, to torpedo these companies by dumping prices would be to indirectly torpedo the EU's and the UE's defense aircraft production. A cost based production battle would be never won against China. And I guess many taxes would be earmarked to counteract this, again.
By other side, the rampant lack of quality in Chinese products and the inability to produce enough planes if they were contracted, in my guess would translate into the quick construction of factories with the worst production quality yet to be seen, for to feed the dumping.
The matter is, in such scenario we as consumers would be deeply affected, as civil aircraft manufacturing is already at the limit of what can be done without compromising safety (seriously, some managers should have been fired a few years ago, The aim should not be to imitate the lack-quality of the Chinese industry).
I don't want to think about what would happen if a race to cut manufacturing costs were endemically launched in the civil aircraft sector. As European I don't want to see it. If it were, lets say, the Japanese industry, the high quality one, not the one that is offshoring production to China, I wouldn't be worried about it or comment on it.
This is mere guessing, I'm not in the sector (It would be interesting to find objective researches on this matter in fact).
You can look at other models. Their Xian Y-20 freighter has also never had an accident and flies tens of thousands of hours per year.
This isn't 1992 anymore where the only things coming out of China are plastic molded injection crap.
Why do you assume out of hand they would be low quality?
https://theaircurrent.com/china/china-eastern-comac-c919-ret...
> Launch airline China Eastern’s tentative February 28 entry-into-service date never materialized [..]
> After regularly operating as part of its route proving, the aircraft appeared to change tempo on February 2. The aircraft flew a half dozen more short flights before February 27 then sat for nearly a month before being ferried from Hongqiao to nearby Pudong on March 23 when it was last seen. There’s been no definitive explanation for the jet’s return to the manufacturer.
Apparently they didn't copied well the stolen designs from American and European manufacturers[1] or there was a quality issue with the delivered aircraft. I think the Chinese government wants EU approval to use European citizens as alpha-testers.
https://www.reuters.com/business/aerospace-defense/china-eas...
> China Eastern Airlines (600115.SS) said on Thursday it will buy another 100 C919 airplanes in a deal worth $10 billion at list prices, in what would be the largest ever order for the jet made by the Commercial Aircraft Corporation of China (COMAC).
> The state-owned carrier said it had received a "substantial discount" for the deal and that the planes will be delivered in batches from 2024 to 2031. The list price for the C919 is $99 million but aircraft can be sold at discounts of up to 50%, especially for new models.
50% of the EU and the UE aircraft prices. It should be expected prices dumping, the same that happened when Hawuei and ZTE was subsidizing antennas and selling equipment at lower prices than manufacturing costs in the European Union.
[1] https://en.wikipedia.org/wiki/Comac_C919#US_espionage_allega...
the need for MCAS in the first place is a major design flaw and results in additional failure modes that other aircraft do not have. the "fix" was to prioritize human inputs over MCAS, making these planes more vulnerable to human error. still worth avoiding IMHO.
in most industries, the fat part of the market is the lower end, so your smallest cheapest product is your biggest seller. McDonalds sells more regular hamburgers than they do Big Macs. BMW sells more 3 series than they do 7 series.
There are many other factors that go into selecting the brand of the next plane you buy than simply "zomg they made a mistake".
Boeing still has a leading technology and engineering position in the aerospace field, and their product line overall is a very good fit for what many carriers need to buy. This problem of some loose bolts is easily remedied, and is just not a dealbreaker. despite an exaggerated title, TFA is very light on making any case that there's a set of deep problems inside Boeing that rise to any level of statistical significance. A software problem and some loose bolts.
The plane may be OK after the fixes and now when the pilots are no longer (?) being actively misled by Boeing, so perhaps no need to scrap the whole fleet.
But MCAS was not a “software problem”.
Yeah, it was. And so was the fix.
There was also a pilot training issue, in that of the 3 crews that experience MCAS failure, only one of them thought to turn off the trim system (and landed safely).
The problem was not the aerodynamic design. It was the software that granted too much authority to the MCAS system and the MCAS system relying on a single sensor.
Both those problems have been fixed.
A further problem was two crews not remembering how to deal with runaway stabilizer trim (it's supposed to be a "memory item").
Generally what is in the popular press about the MAX is wrong.
Yes, Embraer, Sukhoi, Bombardier, and Mitsubishi have/had limited offerings but only in very select configurations. None sell an A321/737 equivalent.
So, the airlines bet that Boeing is not going to keep selling deadly airplanes, and will fix the Max, and they can keep their place in line.
It's a problem that the airline manufacturing industry is a duopoly but interestingly, it doesn't seem like the market can support more than a small number of players. Despite the fact that the airline industry has exploded and demand for new airplanes has grown with it, certain econonomies of manufacturing have meant that a lot of mergers and bankruptcies and consolidation happened.
Also it's extremely simpler for a 737 airline (the biggest being Southwest in the US and Ryan Air in the EU) to put another 737 in their arsenal rather than switch to a different manufacturer's plane. Anything from in-house maintenance to training to rostering to having the right type-rated pilots etc is easier for those cheaply run airlines to do when they're running just one type of aircraft.
Why airlines still order 737s at this point is beyond me. I guess some value having every type of aircraft in their arsenal for just-in-case one gets grounded while other airline groups are just caring about getting the cheapest thing (Lufthansa)
(Of course, I'm an engineer ... I don't know how to sell a good design to big pockets, I just know why the technical design sucks ...)
The fuel economy is driving the switch. The 737MAX was created to compete with the a320neo. For airlines, especially with rising fuel prices, even a small % improvement in fuel efficiency gives huge returns.
In fact I wouldn't think an airline is the kind of company that needs nor should have an engineer at the helm. They're a transportation/marketing company, not a manufacturing company.
An airline markets a flight to a public which they perform on leased or purchased third party equipment based on negotiated route pairs/airport slots in a competitive market environment.
Even their 'digital' offerings are mostly outsourced (GDS, website/app, in-flight-entertainment) as they have low core competency in that, nor do they need to.
Even for an engineering-heavy company, an engineer running it doesn't necessarily work out. The last time Intel had an engineer as CEO, it was a disaster.
If you need single aisle planes, your only option would be to book the Max, the A320 is decades out on order.
My friend also recommends the book Flying Blind which I haven't read yet, but both seem like better info sources than the linked article.
I used to work in aerospace adjacent to Boeing and their competitors and suppliers. This joke was oft repeated by everyone in the industry 10-15 years ago, maybe longer.
You have these massive manufacturing plants, including the worlds largest building, and tons of aircraft engineering talent built over 100 years in Everett. On the other hand, all of the executives are 2000 miles away? How on earth do they keep an eye on what's going on? The answer apparently is that they don't!
Also, they have been trying to move more manufacturing to South Carolina to avoid paying union wages... but again, there's over a century of experience building aircraft in the Puget Sound, and you can't easily replicate that elsewhere. There were constant stories of aircraft assembled in South Carolina being shipped to Everett where all of the work had to be redone, because everything was done wrong the first time.
Would you feel safe flying in a plane like that? You just have to hope the Everett workers caught everything the South Carolina workers screwed up.
I’m curious - how much of it is true? Is it really systemic, or has it manifested only with one specific model plane?
It seems to fit very well with the “financialization is bad” narrative, too, but is there any other data to support the claims?
It’s possible that engineer-driven Boeing could have fucked up the Max, too.
I am skeptical of simple, tidy explanations regarding actions and arcs of any organizations as large as Boeing.
But there are now several serious safety issues. The 2 crashes killing hundreds in 2018. The quality issues with the manufacturing of the pressure bulkheads with "snowman" holes thst had to be fixed or the rudder bolts that thst hold the assembly to the fuselage that an employee noticed that weren't the same as the spec drawings?
There are probably more cases...
With the multiplication of these problems. It's obviously a systemic issue and a corporate culture that doesn't put as much importance on safety.
Ho and there's this one where Boeing is asking the FAA for a safety exemption so they can ship planes faster while they try and fix the problem...
https://fortune.com/2024/01/06/boeing-737-max-safety-exempti...
https://simpleflying.com/boeing-737-max-10-certification-fli...
That's the real counterfactual here. Would Boeing have iterated yet again on the 737, or would they have done a clean sheet design instead?
It’s more like non-engineering culture resulted in a push to create a new plane as quickly and cheaply as possible. In other words, the execs at the start of the process created an impossible task that the downstream employees couldn’t follow through on. In this sense, it is consistent that under “normal” conditions, Boeing could still produce a good plane; the problem is that nobody wants to or is able to enforce those conditions.
And that space capsule, Starliner, was contracted in 2011 and has yet to be safe enough to carry humans. Meanwhile in the same time, the upstart competition has gone from zero to flying some 11 crewed missions (not all were to ISS) and charged the government much less than Boeing charged, and that despite Boeing's storied 100 year aerospace history and culture.
Boeing said at the time the changes would improve quality.
https://www.seattletimes.com/business/boeing-aerospace/boein...
https://www.seattletimes.com/business/boeing-aerospace/boein...
https://www.cbc.ca/news/business/boeing-fifth-estate-costs-s...
This was all done to reduce costs by squeezing suppliers, yet when the suppliers only work for Boeing, my theory is that eventually the cost cutting started to hit engineering and quality control.
Additionally, it hilarious that the MAX was made to save money and avoid a new airframe, yet this decision is probably one of the most costly moves they have ever made.
Punitive damages, take a bow.
Anyone have a better link?
Which is fine for privately-owned company, but not for publicly traded company that is going to take a pounding for the expenses over multiple quarters.
And similarly Boeing wanted to have a happy path over designing and certifying a completely new plane, which is frankly what they should have done - the 737 design could not be enhanced further without at least major recertification part (for example, going full fly by wire).
Although he wasn't the only one, Jack Welch was probably the biggest figurehead of the "shareholder value" movement, and was given deity status by the business press back in the 80s. The revelation that his amazing numbers at GE were based upon deceptive accounting practices, hasn't seemed to dampen his influence one bit.
My thought is that taking out baby Jack Welch probably wouldn't have that much effect, and someone very similar would have come along not much later. I think a big part of the reason many big American companies were able to function the way they did (basically not worrying so much about profits) was because America got rich by being the one untouched industrial power at the end of WWII, and this gave them the luxury of building these companies into powerhouses that didn't have much competition to worry about and that could be idealistic and also wasteful. But this advantage eroded after several decades so it eventually became more important to maximize profitability and this required (or facilitated) someone like Welch.
You've got it backwards. The current state of US business is ideologically driven and wasteful. Two economies that were wrecked during WWII -- Germany and Japan -- are less shareholder driven than the US and therefore actually able to produce quality goods and services.
That's true, but it seems like you're blaming Jack Welch for this. I think it was something that was going to happen anyway, and is simply a product of American culture.
We need to pierce the corporate veil and directly go after the responsible individuals when they, either directly or by deliberate ignorance, cause problems that lead to people dying etc. No shielding behind a corporation if your decisions to make lots more bucks led to avoidable deaths.
in my opinion, it seeems to have been enormously on the rise since the end of world war 2 and especially after the end of the cold war.
https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.?wprov=...
The problem is that because Boeing has a US monopoly and global duopoly on large jets neither the regulators or customers are willing to punish them when they under perform. Boeing has become too big to fail.
As for the notion that Boeing has prioritized shareholder value over safety: just look at their share price over the last few days. It tanked by 10% since this accident occurred. Clearly, making safe planes is a prerequisite for generating shareholder value. There is no conflict there.
The time horizon of these jokers is too short. If they had a 10 or even a 5 year risk horizon, they would not make these short-sighted decisions. The Welchian approach isn't just value destruction, over a longer time horizon it's quantifiably unprofitable for the business as a whole.
Forgive me a tangent here, particularly relevant with the 737, about how leaders regularly mistake economies of scope for economies of scale.
Scale and Scope are fundamentally different things, but M&A specialists and related finbros often treat them as equivalent. This is unfortunate. Scalar efficiencies are largely functions of density - more people buying the same thing over a given space. Scope involves equivalence - more people buying things that are just similar enough. This is a trap. In order to evaluate equivalence, you need domain knowledge, but in order to consolidate operations, you've already jettisoned that same domain knowledge. Also known as "Why do I need fuselage experts in three different places? It's just a tube! Let's just hire one outsourced Fuselage Expert".
Economy of Scope takes a truly heroic amount of domain knowledge among the M&A team to make it work, but if you're already convinced that finance contains the secrets of the universe, you're probably going to be dismissing domain knowledge as a basic concept.
Again - not for the first time - I marvel at the structural similarities of end-stage Soviet industry and our own late-stage financier capitalism.
Concerning.
https://www.businessroundtable.org/business-roundtable-redef...
Hell, people will commit financial crimes that result in significant prison terms and they still do it.
Change humans and maybe you can solve the problem.
The state should wield power it derives from the mandate given to it by it's people, and it should defend the capability to influence the economy with that.
This fact seems to have been forgotten since the end of the cold war, when neoliberal theory seems to have been the defacto "truth" in economics.
It was enabled by deregulation, so regulation seems important.
That was enabled by more overt bribery of politicians (PACs, super PACs, etc.). So stop the bribes.
That happened simultaneously with changes in how business was depicted by media, whether news or entertainment. So . . . convince the heads of that small handful of companies to change their representations.
And so far that's just the US. All of these things are global.
My point is that just combating the existing problems is akin to whack-a-mole. A new pervasive philosophy will replace neoliberalism, though. Maybe put effort into pushing whichever of those seems best?
Mind you this happened around the same time many foundations of a lot of european institutions where formed, and airbus is the primary example of a intra-european company in both its bussiness form (being an S.E[0]) aswell as in the way its products get build across different member states.
Airbus has done the thing that the EU aims to do on a political scale, merge many different smaller european entities to stay competitive against both the US and China on the global scale.
So it's not a company built by politicians from many European companies AFAIK.
This article is not compelling to me at all
They're seriously trying to blame the problems of Boeing on a merger from nearly 3 decades ago. The culture of the company surely should have evolved radically over 3 decades
At some point, the past is the past
For those who can't get past the paywall, you can read the raw text here: https://marcellus.in/story/the-long-forgotten-flight-that-se...
No way in the world will airlines, or the US government, accept a world where Airbus is the only company able to sell you a passenger airliner. Nor would they accept a word where the alternative to Airbus was Comac.
Technically of course, Air Force One is a call sign, not an aircraft. The quote is from an FT article which indicates the Boeing bill for retrofitting two custom 747-8s was $3.9B USD, marked down from 5B after Trump called the price "ridiculous". I agree with him.
https://www.ft.com/content/d2bd472b-0e5d-459f-8503-04633aefe...
People's lives are at risk. And No, I DO NOT work for Boeing and never have. I work for a company that makes a product that does not involve any risk to people's lives, we make a dumb thing.
I live in Seattle, and yeah, I know a lot of people who currently do, or have worked for Boeing. So, yes, this is not a scientific study, again, down vote button is in the lower left over there. Have fun with that.
But from what I have heard, there is something "wrong" at Boeing. And yeah, this is not scientific, got it.
But, from my, unscientific study, that plant in Renton seems to be especially problematic and it sounds like from what I have heard, the Renton operation where the Max 9 and all the other Max N's are were made, there is something especially "wrong:' there. I just cannot NOT say something.
It seems like there is a pattern here, I know this is all anecdotal and all that. But it seems like that particular operation has a management problem that is putting peoples lives at risk.