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737 MAX Groundings Raise Questions, Provide Few Answers
Sean Broderick and Michael Bruno
Dated
Friday, 15 March 2019 at 22:11
An unprecedented abundance of caution, driven by political and public pressure, led regulators and operators to ground the Boeing 737 MAX series in an 80-hr. window following the type’s second fatal accident in five months. The grounding in turn prompted Boeing to pause MAX deliveries. For an industry that prides itself on its deliberate, reasoned approach to complex safety issues, messaging around the uncoordinated series of groundings provides few answers and raises many questions.
The two most pressing unknowns are: What happened to the 737-8 operating as Ethiopian Airlines Flight 302 (ET302) on March 10? And what does Boeing need to do to demonstrate that its newest narrowbody is airworthy?
- Global 737 MAX fleet grounded
- Second 737-8 accident in five months triggered moves
- Software fix will be among changes
Investigators do not yet know if these two questions are linked. But regulators see enough similarities between ET302 and October 2018’s Lion Air Flight 610 (JT610) accident to consider the MAX a safety risk—at least until they are convinced it is not.
ET302 went down at about 8:44 a.m. local time, 6 min. into a scheduled flight from Addis Ababa to Nairobi. Its crew radioed that it was having “flight control” issues and requested to return to Addis Ababa’s Bole International Airport, says Ethiopian Airlines CEO Tewolde GebreMariam. Soon after, the 737-8 descended at a high rate of speed, data from online flight-tracking sites show, and was destroyed on impact. All 149 passengers and eight crew were killed.
The basic flight profiles of the aircraft operating as ET302 and JT610 are similar. Both were 737-8s delivered less than five months before their accident flights, both accidents occurred shortly after takeoff in clear weather, both crews reported flight-control problems, and both aircraft dove at high speed to impact.
The JT610 accident probe is focusing on erroneous angle-of-attack (AOA) sensor data triggering automatic nose-down inputs just after its flaps were retracted on takeoff. The source of the inputs is believed to be the aircraft’s Maneuvering Characteristics Augmentation System (MCAS) flight control law, which assists pilots in certain manual, flaps-up flying scenarios, “especially at slow airspeeds and high AOA,” Boeing explained in an operators’ bulletin issued last November. The MAX’s larger CFM Leap 1B engines create more lift at high angles of attack than the CFM56-7B used on the 737 Next Generation (NG). The MCAS was added as a certification requirement to help mitigate this.
Faulty data, such as an AOA sensor telling the aircraft that its nose is higher than it is, can cause the MCAS to push the nose down with automatic stabilizer deflections to compensate. Data from the JT610 flight data recorder (FDR) shows the crew provided regular nose-up inputs to counteract the MCAS. This caused altitude fluctuations for the last 5 min. of the flight, before it dove rapidly into the Java Sea.
Following the March 10 Ethiopian Airlines accident, on March 12 the UK Civil Aviation Authority grounded Boeing 737 MAX aircraft, including these parked at Manchester Airport, England. Credit: Christopher Furlong/Getty Images
Like the 737NG, the MAX includes two independent STAB TRIM CUTOUT switches that stop runaway stabilizer trim, shutting the MCAS off. It is a last-resort step included in a pilot checklist for when “uncommanded stabilizer trim movement occurs continuously,” the 737 MAX flight manual explains. The JT610 crew apparently did not activate the switches.
ET302’s FDR and coughpit voice recorder (CVR) were recovered March 11. Delays attributed to disagreements among the investigators meant the recorders did not make their way to a lab right away. The U.S. offered its NTSB facilities in Washington, but Ethiopian Airlines confirmed March 14 that a delegation led by the country’s accident investigation bureau flew the recorder to Paris for analysis by the French civil aviation agency, BEA. The recorders are damaged, and the BEA is among the agencies with special processes for extracting information from damaged devices.
Without FDR and CVR data providing insight, regulators and operators faced two choices: ground MAXs and wait for answers, or wait for data that points to a safety issue. Within a day of the accident, the consensus was clear: Though scant data was available, it was enough for most to ground the MAX. China was the first notable mover, as the Civil Aviation Administration of China (CAAC) on March 11 gave operators 9 hr. to park their MAXs. The CAAC cited “the management principle of zero tolerance for safety hazards and strict control of safety risks” in making the move, adding that both 737-8 accidents occurred “in the takeoff phase” and “have certain similarities.”
Most of the rest of the world soon followed, including a splintered European delegation that saw several European Aviation Safety Agency (EASA) member countries get out ahead of its regulator and issue grounding orders. EASA eventually banned MAX operations as well.
As late as the evening of March 13, Canada and the U.S. were resisting calls by many—but notably no affected operators or pilot groups—to follow suit. Senior transportation officials from each country insisted that, absent hard data to justify a grounding, their MAXs would continue to fly.
But new information received overnight March 14—refined automatic dependent surveillance-broadcast (ADS-B) tracking data of ET302 provided by Aireon—was enough to sway Transport Canada. The Canadians told their U.S. counterparts that they would ground the MAX, and at 11 a.m. Canada EDT, Transport Minister Marc Garneau told the world. The U.S. followed about 3 hr. later, with President Donald Trump—not an aviation or transportation official—making the announcement. The chain of events left a clear impression that the FAA wanted to wait for even more definitive data, but the White House had seen enough.
The FAA followed with a statement and emergency order that provided some context. “[The] investigation of the ET302 crash developed new information from the wreckage concerning the aircraft’s configuration just after takeoff that, taken together with newly refined data from satellite-based tracking of the aircraft’s flightpath, indicates some similarities between the [ET302 and JT610] accidents that warrant further investigation of the possibility of a shared cause for the two incidents that needs to be better understood and addressed,” the FAA’s order says.
FAA Acting Administrator Dan Elwell declined to provide details on the new physical evidence. “Suffice it to say, the evidence found on the ground made it more likely that the flightpath was closer to Lion Air’s,” he says.
Boeing 737-8 ET-AVJ departed Boeing Field on Nov. 15, 2018, when Ethiopian Airlines took delivery of it. The aircraft crashed shortly after takeoff from Addis Ababa Bole International Airport on March 10. Credit: Joe Walker
The tone and language of the order suggests discovery of wreckage that establishes key flight-control surface or actuator positions, such as a stabilizer jackscrew.
The wreckage and Aireon’s refined satellite data presented U.S. and Canadian aviation safety experts with a clearer picture of ET302’s 6-min. flightpath.
“The way the [initial] data was presented, it was not showing credible movement of an aircraft,” Elwell says. The new data changed that assessment.
While neither U.S. nor Canadian officials would detail their findings, both said the resulting track, including ET302’s altitude variations, lined up closely with JT610’s known track. This suggests ET302 was struggling to maintain altitude and then dove rapidly to the ground.
“We know what happened with the Lion Air flight,” Garneau says. “We wanted to see if the Ethiopian flight resembled it.” While the links between the two accidents “are not conclusive, there are similarities that exceed a certain threshold in our minds,” he adds.
“We are a fact-driven, data-based organization. We make actions based on data, findings and risk assessment,” Elwell says. “That data coalesced today, and we made the call.”
Elwell says the FAA’s reliance on the satellite data was in part due to uncertainty over delays in processing ET302’s FDR data. “We had been hopeful all along that with black boxes discovered so soon, we could get them on the table and start pulling data,” he says. “That process was lengthened more than I had hoped.”
The FAA’s order does not spell out the steps for getting the MAX back in service. The agency confirmed that validation and installation of the flight control system update being developed by Boeing in response to the JT610 findings will be part of the package. “We have not tied the [grounding] order specifically to the software patch,” Elwell says, adding that he is hopeful the update will be verified “within a couple of months.”
Elwell says removing the grounding order will hinge on learning more about the two accidents, and ET302 in particular, and ensuring that any safety issues are addressed.
“We still have a lot to learn before we can say [the two accidents] were the same cause and effect,” Elwell says. Given how the groundings unfolded, it is not clear an FAA all-clear for the MAX will satisfy other civil aviation authorities.
Boeing says the changes include updates to the MCAS as well as pilot displays, operations manuals and crew training.
“The enhanced flight control law incorporates angle of attack inputs, limits stabilizer trim commands in response to an erroneous angle-of-attack reading and provides a limit to the stabilizer command in order to retain elevator authority,” Boeing says. Flight tests are underway.
In the short term, Boeing’s reputation is suffering but—assuming the MAXs are cleared for service soon—the long-term outlook remains solid. The company’s stock price dropped more than 10% from where it was before the latest accident, but several financial analysts say they expect the whole affair will probably amount to no more than a blip. More important for Boeing, MAX deliveries are likely to continue, and for suppliers, production will not be affected.
“The Ethiopian 737 MAX crash is a near-term overhang, given it looks similar to last October’s Lion Air disaster,” Cowen and Co. analysts tell their investor clients. “But the crash’s potential root cause likely is fixable, and we don’t see this as a long-term risk for Boeing or key 737 MAX suppliers.”
Boeing revealed late on March 14 that it paused MAX deliveries due to the temporary grounding. Production will continue, and the company is assessing how capacity constraints will effect its system. There is no change to its production rate now, a spokesman tells Aviation Week, and the company still is delivering 737 NG versions.
The airframer would be expected to keep production humming because it would be more disruptive and expensive ultimately to stop, analysts say. Indeed, despite ongoing, unrelated supply issues that started in late 2017, Boeing has maintained 737 production, parking unfinished airframes on Seattle-area tarmacs. It also has kept KC-46A production going despite holdups there in recent years, as well.
In the end, Boeing weathered the production issues financially without much trace of an issue, posting record 2018 revenue of $101.1 billion and expectations of $109.5-111.5 billion this year. Analysts say the U.S. manufacturer has the wherewithal to withstand more negative headlines.
“The company has ample liquidity to deal with any impact, with $8.5 billion of cash and short-term investments and $5.1 billion of revolving credit facilities . . . as of Dec. 31, 2018,” S&P Global Ratings says. Even if costs and cash-drain due to the crashes are significant, and Boeing maintains expensive practices such as its rich shareholder returns, it still has a “significant cushion” before triggering the credit rating agency’s downgrade threshold.
Of course, the potential for a serious issue remains. Analysts say one bad scenario for suppliers and investors would be a software issue that requires a grounding of the fleet and temporary halt to deliveries. Jefferies says that could mean as much as a $5.1 billion hit to Boeing’s revenue, 5% of 2019 projected, with a $2.30 impact to earnings per share (12%) if there is no catch-up and a two-month pause in deliveries.
The 737 and the MAX specifically are critically important to Boeing and its supply chain. Canaccord Genuity estimates the 737 accounts for 25% of Boeing’s total 2019 free cash flow—the money pot that fuels shareholder returns. Some suppliers with significant exposure include Spirit AeroSystems, where around half its future annual sales are tied to the new narrowbody, as well as Triumph Group and Ducommun, each 15-20% of estimated 2020 sales.
“It is perhaps the most important program for Boeing and its suppliers,” Canaccord’s Ken Herbert says.
According to Credit-Suisse analysts, 579 MAX deliveries are expected for 2019, or 88% of total 737 deliveries. This leads to an estimated revenue from the MAX of $31.7 billion, or 48% of Boeing Commercial Aircraft’s (BCA) expected sales in 2019 and 28% company-wide. “Given lower gross profit on the other major programs such as 787, we estimate 737 overall at 82.6% of BCA gross profit (though likely lower cash profit percentage, due to 787 cash profit exceeding book profit),” the analysts say.
Still, with the FAA reiterating the MAX’s airworthiness, Boeing backing the airplane and U.S. airlines standing with it, analysts see the issue as not altering the trajectory of Boeing and its supply chain.
“The near term could look worse for Boeing, depending on what the FAA does,” Cowen analysts note. “But we don’t see this as a long-term problem, and the traveling public has had a very short memory of previous catastrophic crashes, e.g., the 1989 DC-10 crash in Iowa due to failure of its tail-mounted engine.”
