Tag Archives: Boeing

Reuters: FAA expands area to inspect for cracks in Boeing 737 NG planes

From Reuters:

“The U.S. Federal Aviation Administration (FAA) said on Tuesday it was revising its order requiring checks for structural cracks in Boeing 737 NG planes to cover a larger area after the company said additional cracks had been found.”

Read the full report.

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The New Republic | Boeing Is MAXed Out on Smoking Guns

From the New Republic:

As Boeing CEO Dennis Muilenburg faced Congress yesterday, The New Republic has published a follow up to their October issue cover story about how Boeing’s managerial revolution created the 737 MAX disaster. Author Maureen Tkacik offers an in depth analysis into the real scandal of late: the company’s penchant for lies and callousness.
Copyright Photo: Joe G. Walker.
“At the end of the day, we don’t need a smoking gun to determine exactly what Boeing knew before the first crash, for the simple reason that we saw in real time how company officials responded after the first crash—i.e., with a veritable arsenal of smoking guns in the form of obvious lies and easily contradicted misinformation,” writes Tkacik. “This is also the most crucial lesson to fix in mind as Congress renews a round of hearings on the MAX fiasco on Tuesday.”
You can reach the entire piece here.
All coverage credited to the The New Republic.

Boeing CEO Dennis Muilenburg to testify before U.S. Congress

Boeing made this announcement:

Boeing President and Chief Executive Officer Dennis Muilenburg will testify on October 29, before the U.S. Senate Committee on Commerce, Science and Transportation regarding aviation safety and the 737 MAX airplane. He will be joined by Boeing Commercial Airplanes Vice President and Chief Engineer John Hamilton. Muilenburg and Hamilton will also appear Wednesday, October 30, before the U.S. House Committee on Transportation and Infrastructure to discuss the design and development of the 737 MAX.

In prepared remarks released today, Muilenburg first and foremost expressed his deepest sympathies to the families and loved ones of those who were lost in the Lion Air Flight 610 and Ethiopian Airlines Flight 302 accidents.

 

“As we observe today the solemn anniversary of the loss of Lion Air Flight 610, we carry the memory of these accidents, and the lives lost, with us every day. They will never be forgotten, and those memories drive us every day to make our airplanes and our industry safer,” Muilenburg said.

Boeing has made robust improvements to the 737 MAX flight control software. “We have brought the very best of Boeing to this effort,” said Muilenburg. “We’ve dedicated all resources necessary to ensure that the improvements to the 737 MAX are comprehensive and thoroughly tested. When the 737 MAX returns to service, it will be one of the safest airplanes ever to fly.”

The Maneuvering Characteristics Augmentation System (MCAS) flight control software function has been updated to provide additional layers of protection, including:

  • – MCAS now compares information from both angle of attack sensors before activating and will only respond if data from both sensors agree;
  • – MCAS will only activate a single time; and
  • – MCAS will never provide more input than the pilot can counteract using the control column alone.

These changes will prevent the flight control conditions that occurred on the Lion Air 610 and Ethiopian Airlines 302 flights from ever happening again. Boeing has dedicated more than 100,000 engineering and test hours on the development of these improvements, flown more than 814 test flights with the updated software and conducted numerous simulator sessions with 545 participants from 99 customers and 41 global regulators.

“We have learned and are still learning from these accidents. We know we made mistakes and got some things wrong,” continued Muilenburg.

In his testimony, Muilenburg outlined key actions Boeing is taking to improve as a company, including:

  • – Establishing a permanent Aerospace Safety Committee of the company’s Board of Directors;
  • – Creating a new Product and Services Safety organization that will review all aspects of product safety and provide streamlined reporting and elevation of safety concerns;
  • – Strengthening the company’s Engineering organization, with all engineers reporting up through Boeing’s chief engineer;
  • – Investing in advanced research and development in new safety technologies; and
  • – Exploring ways to strengthen safety not just for Boeing products and services, but the aviation industry as a whole.

Muilenburg’s written testimony is available here.

Indonesian investigators blame a series of mistakes for the crash of Lion Air 610

Delivered August 13, 2018, crashed into the Java Sea on October 29, 2018

National Transportation Safety Committee (NTSC) of Indonesia has issued their final report on the crash of Lion Air flight 610.

The investigators faulted Boeing, Lion Air and the pilots for the tragic crash.

The report criticized the purchase of the critical sensor from a Florida repair shop that had not been properly tested and calibrated.

The report spotlighted 9 things that contributed to the accident.

Reliance on the single angle-of-attack sensor made MCAS more vulnerable to failure.

Read more from the BBC.

Boeing issued this response to the report:

Boeing Statement On Lion Air Flight 610 Investigation Final Report.

Boeing issued the following statement regarding the release of the final investigation report of Lion Air Flight 610 by Indonesia’s National Transportation Safety Committee (KNKT):

“On behalf of everyone at Boeing, I want to convey our heartfelt condolences to the families and loved ones of those who lost their lives in these accidents. We mourn with Lion Air, and we would like to express our deepest sympathies to the Lion Air family,” said Boeing President & CEO Dennis Muilenburg. “These tragic events have deeply affected us all and we will always remember what happened.”

“We commend Indonesia’s National Transportation Safety Committee for its extensive efforts to determine the facts of this accident, the contributing factors to its cause and recommendations aimed toward our common goal that this never happens again.”

“We are addressing the KNKT’s safety recommendations, and taking actions to enhance the safety of the 737 MAX to prevent the flight control conditions that occurred in this accident from ever happening again. Safety is an enduring value for everyone at Boeing and the safety of the flying public, our customers, and the crews aboard our airplanes is always our top priority. We value our long-standing partnership with Lion Air and we look forward to continuing to work together in the future.”

Boeing experts, working as technical advisors to the U.S. National Transportation Safety Board, have supported the KNKT over the course of the investigation. The company’s engineers have been working with the US Federal Aviation Administration (FAA) and other global regulators to make software updates and other changes, taking into account the information from the KNKT’s investigation.

Since this accident, the 737 MAX and its software are undergoing an unprecedented level of global regulatory oversight, testing and analysis. This includes hundreds of simulator sessions and test flights, regulatory analysis of thousands of documents, reviews by regulators and independent experts and extensive certification requirements.

Over the past several months Boeing has been making changes to the 737 MAX. Most significantly, Boeing has redesigned the way Angle of Attack (AoA) sensors work with a feature of the flight control software known as Maneuvering Characteristics Augmentation System (MCAS). Going forward, MCAS will compare information from both AoA sensors before activating, adding a new layer of protection.

In addition, MCAS will now only turn on if both AoA sensors agree, will only activate once in response to erroneous AOA, and will always be subject to a maximum limit that can be overridden with the control column.

These software changes will prevent the flight control conditions that occurred in this accident from ever happening again.

In addition, Boeing is updating crew manuals and pilot training, designed to ensure every pilot has all of the information they need to fly the 737 MAX safely.

Boeing continues to work with the FAA and other regulatory agencies worldwide on the certification of the software update and training program to safely return the 737 MAX to service.

Top Copyright Photo: Lion Air (PT Lion Mentari Airlines) Boeing 737-8 MAX 8 PK-LQP (msn 43000) BFI (James Helbock). Image: 944189.

 

 

Boeing reports third quarter results

Boeing issued this financial report:

  • Continue to engage global regulators and customers on safe return to service of the 737 MAX
  • Revenue of $20.0 billion reflecting lower 737 deliveries and higher defense and services volume
  • GAAP EPS of $2.05 and core EPS (non-GAAP)* of $1.45 per share
  • Operating cash flow of ($2.4) billion; paid $1.2 billion of dividends
  • Total backlog of $470 billion, including nearly 5,500 commercial airplanes
  • Cash and marketable securities of $10.9 billion provide strong liquidity

 

Table 1. Summary Financial Results

Third Quarter

Nine Months

(Dollars in Millions, except per share data)

2019

2018

Change

2019

2018

Change

Revenues

$19,980

$25,146

(21)%

$58,648

$72,786

(19)%

GAAP

Earnings From Operations

$1,259

$2,227

(43)%

$229

$7,812

(97)%

Operating Margin

6.3%

8.9%

(2.6) Pts

0.4%

10.7%

(10.3) Pts

Net Earnings

$1,167

$2,363

(51)%

$374

$7,036

(95)%

Earnings Per Share

$2.05

$4.07

(50)%

$0.66

$11.95

(94)%

Operating Cash Flow

($2,424)

$4,559

NM

($226)

$12,375

NM

Non-GAAP*

Core Operating Earnings/(Loss)

$895

$1,890

(53)%

($864)

$6,793

NM

Core Operating Margin

4.5%

7.5%

(3.0) Pts

(1.5)%

9.3%

(10.8) Pts

Core Earnings/(Loss) Per Share

$1.45

$3.58

(59)%

($1.13)

$10.55

NM

*Non-GAAP measure; complete definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures Disclosures.”    

The Boeing Company reported third-quarter revenue of $20.0 billion, GAAP earnings per share of $2.05 and core earnings per share (non-GAAP)* of $1.45, reflecting lower 737 deliveries partially offset by higher defense and services volume (Table 1). Boeing recorded operating cash flow of ($2.4) billion and paid $1.2 billion of dividends.

Boeing has developed software and training updates for the 737 MAX and continues to work with the FAA and global civil aviation authorities to complete remaining steps toward certification and readiness for return to service. These regulatory authorities will determine the timing and conditions of return to service in each relevant jurisdiction. For purposes of the third-quarter results, the company has assumed that regulatory approval of the 737 MAX return to service begins in the fourth quarter of 2019 and that it will gradually increase the 737 production rate from 42 per month to 57 per month by late 2020.

“Our top priority remains the safe return to service of the 737 MAX, and we’re making steady progress,” said Boeing President and Chief Executive Officer Dennis Muilenburg. “We’ve also taken action to further sharpen our company’s focus on product and services safety, and we continue to deliver on customer commitments and capture new opportunities with our values of safety, quality and integrity always at the forefront.”

Table 2. Cash Flow

Third Quarter

Nine Months

(Millions)

2019

2018

2019

2018

Operating Cash Flow

($2,424)

$4,559

($226)

$12,375

Less Additions to Property, Plant & Equipment

($465)

($457)

($1,387)

($1,227)

Free Cash Flow*

($2,889)

$4,102

($1,613)

$11,148

*Non-GAAP measure; complete definitions of Boeing’s non-GAAP measures are on page 6, “Non-GAAP Measures Disclosures.”    

Operating cash flow was ($2.4) billion in the quarter, primarily reflecting lower 737 delivery and advance payments as well as timing of receipts and expenditures (Table 2). During the quarter, the company paid $1.2 billion of dividends, reflecting a 20 percent increase in dividends per share compared to the same period of the prior year.

Table 3. Cash, Marketable Securities and Debt Balances

Quarter-End

(Billions)

Q3 19

Q2 19

Cash

$9.8

$9.2

Marketable Securities1

$1.1

$0.4

Total

$10.9

$9.6

Debt Balances:

The Boeing Company, net of intercompany loans to BCC

$22.8

$17.3

Boeing Capital, including intercompany loans

$1.9

$1.9

Total Consolidated Debt

$24.7

$19.2

1 Marketable securities consists primarily of time deposits due within one year classified as “short-term investments.”

Cash and investments in marketable securities totaled $10.9 billion, compared to $9.6 billion at the beginning of the quarter (Table 3). Debt was $24.7 billion, up from $19.2 billion at the beginning of the quarter primarily due to the issuance of new debt.

Total company backlog at quarter-end was $470 billion and included net orders of $16 billion.

Segment Results

Commercial Airplanes

Table 4. Commercial Airplanes

Third Quarter

Nine Months

(Dollars in Millions)

2019

2018

Change

2019

2018

Change

Commercial Airplanes Deliveries

62

190

(67)%

301

568

(47)%

Revenues

$8,249

$14,071

(41)%

$24,793

$40,968

(39)%

(Loss)/Earnings from Operations

($40)

$2,033

NM

($3,813)

$5,230

NM

Operating Margin

(0.5)%

14.4%

(14.9) Pts

(15.4)%

12.8%

NM

Commercial Airplanes third-quarter revenue was $8.2 billion reflecting lower 737 deliveries (Table 4). Third-quarter operating margin decreased to (0.5) percent reflecting lower 737 deliveries partially offset by a higher margin on the 787 program. During the quarter estimated costs to produce 737 aircraft included in the accounting quantity increased by $0.9 billion primarily to reflect current assumptions regarding timing of return to service and the timing of planned production rate increases. There was no significant change to estimated potential concessions and other considerations to customers related to the 737 MAX grounding.

Commercial Airplanes delivered 62 airplanes during the quarter. Given the current global trade environment, the 787 production rate will be reduced to 12 airplanes per month for approximately two years beginning in late 2020. The 777X program is progressing through pre-flight testing and remains on track for first flight in early 2020. The company is now targeting early 2021 for first delivery of the 777X.

Commercial Airplanes booked net orders worth $5 billion during the quarter, including orders for twenty 787 airplanes for Korean Air, eight 787 airplanes for Air New Zealand, and six 777 freighters for China Airlines. Commercial Airplanes backlog included nearly 5,500 airplanes valued at $387 billion.

Defense, Space & Security

Table 5. Defense, Space & Security

Third Quarter

Nine Months

(Dollars in Millions)

2019

2018

Change

2019

2018

Change

Revenues

$7,042

$6,937

2%

$20,265

$19,518

4%

Earnings/(Loss) from Operations

$755

($247)

NM

$2,577

$886

191%

Operating Margin

10.7%

(3.6)%

14.3 Pts

12.7%

4.5%

8.2 Pts

Defense, Space & Security third-quarter revenue increased to $7.0 billion primarily driven by higher volume on satellites, weapons, and T-7A Red Hawk (formerly T-X Trainer), partially offset by lower volume on F-15 (Table 5). Third-quarter operating margin increased to 10.7 percent primarily due to the absence of third quarter 2018 charges and improved performance.

During the quarter, Defense, Space & Security received contracts for the fifth production lot for 15 KC-46A Tanker aircraft for the U.S. Air Force and nine AH-64E Apache helicopters for the U.S. Army. Significant milestones achieved during the quarter included completion of the first test flight of the MQ-25 unmanned aerial refueler, first flight of the inaugural P-8A Poseidon aircraft for the United Kingdom Royal Air Force, and final assembly of the Space Launch System core stage structure. Defense, Space & Security also performed the 100th test flight of the T-7A Red Hawk.

Backlog at Defense, Space & Security was $62 billion, of which 30 percent represents orders from customers outside the U.S.

Global Services

Table 6. Global Services

Third Quarter

Nine Months

(Dollars in Millions)

2019

2018

Change

2019

2018

Change

Revenues

$4,658

$4,101

14%

$13,820

$12,148

14%

Earnings from Operations

$673

$548

23%

$2,013

$1,799

12%

Operating Margin

14.4%

13.4%

1.0 Pts

14.6%

14.8%

(0.2) Pts

Global Services third-quarter revenue increased to $4.7 billion, primarily driven by the acquisition of Boeing Distribution Services, Inc. (formerly KLX) and higher government services volume (Table 6). Third-quarter operating margin increased to 14.4 percent primarily due to improved performance.

During the quarter, Global Services was awarded contracts with the U.S. Air Force for F-15 training to Qatar, A-10 Thunderbolt II re-winging, and KC-46A Tanker Lot 5 services. Global Services also signed an agreement with IndiGo for digital solutions and delivered the first SpiceXpress 737-800 Boeing Converted Freighter following India certification.

Additional Financial Information

Table 7. Additional Financial Information

Third Quarter

Nine Months

(Dollars in Millions)

2019

2018

2019

2018

Revenues

Boeing Capital

$66

$77

$207

$214

Unallocated items, eliminations and other

($35)

($40)

($437)

($62)

Earnings from Operations

Boeing Capital

$29

$27

$86

$71

FAS/CAS service cost adjustment

$364

$337

$1,093

$1,019

Other unallocated items and eliminations

($522)

($471)

($1,727)

($1,193)

Other income, net

$121

$12

$334

$63

Interest and debt expense

($203)

($106)

($480)

($317)

Effective tax rate

0.8%

(10.8)%

(350.6)%

6.9%

At quarter-end, Boeing Capital’s net portfolio balance was $2.2 billion. The change in earnings from other unallocated items and eliminations is primarily due to increased enterprise research and development investment. Interest and debt expense increased due to higher debt balances. The effective tax rate for the third quarter increased from the same period in the prior year primarily due to a $412 million benefit related to a 2013-2014 tax settlement that was recorded in the third quarter of 2018, partially offset by larger 2019 tax rate benefits resulting from lower pre-tax earnings.

Boeing reacts to the Mark Forkner instant message

Boeing issued this statement:

We understand and regret the concern caused by the release Friday of a Nov. 15, 2016 instant message involving a former Boeing employee, Mark Forkner, a technical pilot involved in the development of training and manuals.  And we especially regret the difficulties that the release of this document has presented for the U.S. Federal Aviation Administration and other regulators.

It is unfortunate that this document, which was provided early this year to government investigators, could not be released in a manner that would have allowed for meaningful explanation.   While we have not been able to speak to Mr. Forkner directly about his understanding of the document, he has stated through his attorney that his comments reflected a reaction to a simulator program that was not functioning properly, and that was still undergoing testing.  We are continuing to investigate the circumstances of this exchange, and are committed to identifying all the available facts relating to it, and to sharing those facts with the appropriate investigating and regulatory authorities.

Boeing engaged in an extensive process with the FAA to determine pilot training requirements for the 737 MAX 8.  This process was a complex, multiyear effort that involved a large number of individuals at both Boeing and the FAA. This effort itself was just a part of a much larger regulatory process for the design, development and certification of the 737 MAX 8.

In that regulatory process, Boeing informed the FAA about the expansion of the Maneuvering Characteristics Augmentation System (MCAS) to low speeds, including by briefing the FAA and international regulators on multiple occasions about MCAS’s final configuration.  The process also included evaluation of MCAS in low-speed configurations for both training and certification. The simulator software used during the Nov. 15 session was still undergoing testing and qualification and had not been finalized, but it, too, provided for MCAS operation at low speed. Separately, a low-speed version of MCAS was installed on the airplanes used for training-related flight testing that the FAA administered in August 2016. And FAA personnel also observed the operation of MCAS in its low-speed configuration during certification flight testing, beginning in August 2016 and continuing through January 2017.

We understand entirely the scrutiny this matter is receiving, and are committed to working with investigative authorities and the U.S. Congress as they continue their investigations.

We are deeply saddened and have been humbled by these accidents, and are fully committed to learning from them.  We have developed improvements to the 737 MAX that will ensure that accidents like these can never happen again, and are committed to continuing to work closely with the FAA and global regulators to ensure the MAX’s safe return to service.

NYT: Boeing pilot complained of ‘Egregious’ issue with 737 MAX in 2016

From the New York Times:

“For months, Boeing has said it had no idea that a new automated system in the 737 Max jet, which played a role in two fatal crashes, was unsafe.

But on Friday, the company gave lawmakers a transcript revealing that a top pilot working on the plane had raised concerns about the system in messages to a colleague in 2016, more than two years before the Max was grounded because of the accidents, which left 346 people dead.”

Read the full report.