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[*] posted on 26-4-2019 at 05:21 PM

Boeing Defense backlog hits $67bn on surveillance aircraft orders


Boeing Defense, Space & Security’s revenue in the first quarter of 2019 increase 2% to $6.6 billion year on year due to higher sales volume of satellites, weapons and surveillance aircraft.

The company’s first quarter profit increased 12.8% to $847 million.

The firm booked $12 billion of new orders including a multiyear contract for 78 F-18E/F Super Hornets for the US Navy (USN); five E-7 airborne early warning and control system aircraft for the UK Royal Air Force (RAF); and 19 P-8 maritime patrol aircraft for the USN, Royal Norwegian Air Force and the RAF. The defence order backlog grew 15.5% to $67 billion.

US Navy Boeing P-8 Poseidon

The USN’s resurrection of Boeing’s F/A-18E/F Super Hornet – a fourth-generation fighter that many had thought would be slowly displaced by the stealthier Lockheed Martin F-35C – is also making the company optimistic about its fighter business line’s future.

“Our fighter line is in one of the healthiest positions since the start of the decade. We continue to see support for the F-18 through the recent multiyear award, which will take deliveries through 2023,” says Boeing’s chief executive officer Dennis Muilenburg during an earnings call on 24 April. “We expect to continue delivering Super Hornets off our production and service modification lines to the US Navy into the 2030s, where they will be at the forefront of naval aviation for decades to come.”

The company also noted that it delivered seven KC-46A Pegasus in-flight refuelling tankers to the US Air Force (USAF) in the quarter. Twice in the first quarter deliveries of the KC-46 were interrupted by the USAF refusing to accept the tankers after foreign object debris (FOD) was found inside the aircraft. After cleaning up the aircraft and implementing new FOD removal procedures, Boeing was able to deliver its eighth KC-46 on 19 April.

Boeing Global Services, the company’s MRO division, reported quarterly revenue grew 17% year on year to $4.6 billion. A significant portion of that came from defence-related awards, such as a performance-based logistics contract granted by the USN for the Bell Boeing V-22 Osprey and P-8 training contract for the RAF.

Correction on 25 April: The P-8 is ordered by the Royal Norwegian Air Force and UK Royal Air Force, not the navies of those countries.
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[*] posted on 16-5-2019 at 08:26 PM

Inside Boeing’s Secret Formula to Win T-X

May 15, 2019 Steve Trimble | Aerospace Daily & Defense Report

ST. LOUIS -- Ever since Boeing’s winning bid for the T-X trainer contract came in last September at least $10 billion less than the U.S. Air Force’s original estimate, blowing away two established competitors with a clean-sheet aircraft design, the question has persisted: Did the Boeing and Saab team “buy in” to the program by submitting a money-losing price to secure a franchise defense contract?

The answer carries strategic implications for the company.

If yes, then Boeing can expect to lose money up front as it delivers at least 351 T-X trainers through the next decade and hope to recoup the losses over the long-term with revenue from sustainment, modernization and potential derivatives. If no, then Boeing has created a disruptively affordable template for new product development that can be applied widely across the company, just as new opportunities arise to develop a new mid-market airplane for the civil market, and a new class of high-speed rotorcraft and fixed-wing combat aircraft in the military sector.

Not surprisingly, Boeing insists the answer is the latter, and, for the first time, provided details of the secret formula that helped the company shock the market and impress the Air Force with its winning proposal for the T-X program.

The origins of Boeing’s T-X strategy started with recognizing the scale of the challenge. When Boeing officials partnered with Saab to design a clean-sheet aircraft for the T-X program in 2013, they knew they were competing with two proven mature aircraft designs — Korea Aerospace Industries (KAI)/Lockheed Martin’s T-50 and Leonardo’s T-100, a derivative of the M346. Both had emerged over the last two decades as the clear leaders in the market for advanced jet trainers.

“We were competing against proven, in production aircraft, so we had to do things differently if we were going to compete and have an aircraft that was viable for that campaign,” said Paul Niewald, Boeing’s T-X chief engineer, who briefed reporters during a media tour of the company’s factory complex in St. Louis on May 15.

The team decided to adopt an extreme approach to model-based engineering. It’s a discipline of product design that calls for constructing an elaborate, three-dimensional digital model of the entire aircraft. The model allows engineers to analyze aerodynamic flows and loads, create a manufacturing plan and distribute the design seamlessly throughout the supply chain. Although the concept of model-based engineering is not unique to Boeing in the aerospace industry, Niewald believes that Boeing took it further than the competition.

“Yes, 3D design has been out there. But to be able to put it all together through the process, all the way through production, this gave us the opportunity to prove it out and show that it does have time-savings,” he said.

Another factor was adopting an agile approach to software development. Instead of building up large blocks of software over several months or even years, the functions are broken down into smaller increments that are integrated at the system level every two months.

“This had us basically releasing software every eight weeks,” Niewald said. “By doing this in such a disciplined manner at a frequency it allowed us to reduce our software [lines of code] by 50% [compared to a traditional aircraft development program].”

The approach allowed Boeing to build and fly two aircraft within three years of the program launch in 2013. When this journalist referred to the two T-X aircraft built so far as “prototypes” and implying they don’t represent the production standard, a Boeing spokesperson stepped in to point out that they are not considered prototypes internally.

Instead, the aircraft are close to the baseline design of the aircraft ordered during the engineering, manufacturing and development (EMD) phase to support ground and flight testing, said Ted Torgerson, Boeing’s T-X program manager.

“Obviously we didn’t have the final specification when we designed the first two, but we got really close,” Torgerson said. “There are some things that needed to be modified. But that’s what EMD is about. It’s that delta work to get the next EMD aircraft done. But I will tell you that the mold line doesn’t change in the airplane. That’s why we call it ‘EMD-ready.’”

The model-based engineering approach saved time in more ways, Niewald added. Informed by the digitally accurate design, suppliers delivered parts fit precisely the first time, he said. The first two aircraft were assembled without shims on minimal tooling with a re-work rate of 0.3%, he said. Overall, the assembly process took 80% fewer hours than an estimate of how long it would take to build the aircraft under traditional processes, he added.

To provide specific examples, Niewald cited the schedule for attaching the canopy transparencies to the cockpit frames. Using a traditional process, Boeing’s estimated it was a six-week job. But Boeing used a new approach on the T-X aircraft. By applying sealant technology to effectively glue the transparencies to the frames, Boeing finished the job in eight days, Niewald said. Moreover, a planned, 24-hr. effort to splice the fuselage sections instead took 30 min., he said.

Boeing also took a different approach to selecting suppliers for T-X. Instead of going to traditional sources for key systems, such as the mission and flight computers, Boeing developed the technology internally. Boeing’s Phantom Works division had developed the ability to produce such subsystems for a range of aircraft. Last year, Boeing launched the in-house AvionX brand to capitalize on the capability, and the T-X is the first acknowledged application.

“By having some of the vertical integration it allows you to go faster because you don’t have to work through contractual lines,” Niewald said.

The ground-truth of Boeing’s aircraft and simulator prices on T-X are still a mystery. The Air Force announced the value of the contract is worth $9.2 billion, but even Boeing executives admit they don’t understand the Air Force’s math. The request for proposals called for delivering a minimum of 351 aircraft and 42 simulators over the life of the program. But the contract award included priced options on an annual basis. If all the options are exercised, Boeing could deliver up to 475 aircraft and 125 simulators. It’s not clear what mixture of aircraft and simulators matches up to the $9.2 billion in the contract award.

But it is clear that Boeing expects the T-X program to turn a profit during development and production instead of a loss. To make that happen, Boeing will have to avoid the mistakes that led the company to report over $3.5 billion in losses on the fixed-price KC-46 contract, which the company won after under-bidding Airbus by $4 billion in 2011.

In some ways, T-X presented an ideal test case for Boeing’s new model-based design and engineering approach. It’s a single-engine, all-metal aircraft that is simple compared to advanced, state-of-the-art combat aircraft or new airliner with commercial airworthiness requirements.

“I think this was a great opportunity to be able to — with this type of platform — to demonstrate it and prove it out so that people have confidence it can scale [to more complex aircraft,” Niewald said.
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[*] posted on 23-5-2019 at 09:19 AM

Boeing’s International KC-46 Sales Pitch: Let USAF Pay For R&D (excerpt)

(Source: Air Force magazine; posted May 21, 2019)

By John A. Tirpak

As Boeing gears up for the Paris Air Show, its sales pitch to countries shopping for a new or first aerial tanker capability will be that the US Air Force will pay to keep the worldwide KC-46 fleet up to date, saving countries money and assuring them the product will have long-term support.

In a briefing for international journalists on May 15, Boeing KC-46 and P-8 international sales director Matt Carreon said the Air Force is committed to a buy of at least 179 KC-46s, and supporting them with upgrades and modifications “for the next 30-plus years.” If a customer were to buy a tanker that didn’t have a large worldwide fleet, each customer would have to pay to develop upgrades, modifications, and new capabilities, he said. While the customer would pay for installations, the Air Force will develop the fleetwide enhancements at its own expense.

“We tell customers that’s the reason you buy the KC-46,” Carreon said. “If you buy a different tanker, a one-off, …who’s going to pay for that certification” of receiver aircraft types, and maintain certifications into the future? “The KC-46 will be certified for 64 aircraft, and any other aircraft the US Air Force deems appropriate,” he said, noting USAF will pay for performing those certifications, even those of aircraft it doesn’t operate, because of the value of being interoperable with allies.

That means there’s a lot of cost avoidance for customers choosing the Pegasus, he argued. Allies can also be assured that “Boeing will be there” to support the product for decades, and customers won’t have to worry about logistical and technical support evaporating.

Carreon declined to discuss quality control issues experienced with the KC-46 relative to its remote viewing system or foreign objects left in aircraft during manufacture. “Every aircraft has its problems,” he said, insisting that Boeing and the Air Force “will handle those.” (end of excerpt)

Click here for the full story, on the Air Force Magazine website.

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[*] posted on 23-5-2019 at 09:22 AM

Horseshit, I wonder if he understands that Airbus has sold more than one tanker, and that it's a worldwide fleet?!!

I also wonder IF the USAF has been told about this "offer"? They usually try and recover costs for developments as a charge to the new buyer..........
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[*] posted on 28-5-2019 at 03:45 PM

Boeing Defense CEO On Redefining Defense Competitions

May 28, 2019 Jen DiMascio and Joe Anselmo | Aviation Week & Space Technology

'The Real Change Is How We Did It'

AW&ST: How are you strategizing for the upcoming U.S. Air Force programs such as the Next-Generation Air Dominance, Sixth-Generation Fighter and Advanced Battle Management System? Will you use the same kind of low-cost approach that you did on MQ-25 and T-X? The easy premise for everyone was, “Boeing bought in.” The reality is that the investments we’ve made in our model-based systems engineering and our assembly processes allowed us to do what we did. And we’ve had several generations of advancements in each of those areas. We decided a few years back that perhaps Sixth-Generation is more about the design and build process. We shifted some of our investments over to doing just that.
The real change was how we did it. Think about an F/A-18. It takes three shifts to merge the forward and aft fuselage, 24 clock hours. T-X takes less than an hour. No shimming. No holes being drilled.

So essentially you would be able to offer the same kind of low-cost bid on future programs because of your advanced techniques? We believe we will be extremely competitive. Because who knows how the government is going to evaluate. But it’s not just on the acquisition, because 70% of any program is the life cycle, the support and sustainment. What we also did on T-X and MQ-25 has provided the digital thread through the life cycle. Customers are already looking at that angle. That’s never been done before. And it really is revolutionary.

Is it simply a case of bringing commercial practices to the defense side, or is there some tweak you’re bringing from commercial manufacturing? It is a hybrid. We have incredible commercial advancements. We’ve also been doing complementary advancements on the defense side. And we’re bringing them together. What we do well on defense is the up-front development. What our commercial enterprise does is large-scale production. So, it’s how do you merge the best of both of those worlds? Then, you add in the services side. It really has changed the way we look at the value stream. We’re looking at areas of opportunity to drive out cost, drive in efficiencies for our factories and to help with support so the Navy, Air Force and Army have a better chance of reducing their ownership and maintenance costs.

The KC-46 tanker program has not been a smooth ride. I was not thrilled with how we have performed throughout the years. We were late, and you all reported on much of that. Then, to have the issue of foreign object debris was unacceptable. It is not who we are as a company. It was humbling. It was embarrassing. I have made apologies in person to the Air Force leadership. As a team we are using this as a catalyst. This is about daily execution on every level of the business. Not just on new franchises, our big deliveries, but about first-time quality in everything we do.

Leanne Caret, president and CEO of Boeing’s Defense, Space & Security unit. Credit: Jen DiMascio/AW&ST

[img]How do you ensure you execute on time and maintain the focus on the Space Launch System rocket program to keep it on track? [/img]Space is hard. Having a program that starts, stops, starts, stops provides impediments along the journey. This is about bringing the very best daily execution that we have. But it is also about making certain we are focused on robust systems engineering and understand the qualifications required. We’re talking about something that’s 34 ft. tall! We recently joined a couple of the sections. You’re talking about something on a scale that’s never been done before.

Do you really think we’ll see boots on the Moon in 2024, as the Trump administration is planning? If we don’t, it will be because of a collision of all the environmental factors. I believe the technology will be there. But we all know that this is about more than just the technology. It’s about making certain there is a focused approach. I don’t know exactly what that will mean, but we’ve had boots on the Moon before, so we know how to do that as a nation, right?

What do you think about the Moon lander concept announced by Blue Origin owner Jeff Bezos? Is that a threat to your business? I don’t view it as a threat. This is going to be a community effort. There is going to be manufacturing in space. I am firmly convinced that before we die, getting on a vehicle and going up to low Earth orbit is going to be no different than if somebody wanted to take a helicopter ride to see the Grand Canyon.

Can we turn to the 737 MAX, from your Boeing Defense and Space angle? In a business sense, do you feel more pressure now that your division has to perform because the other side of the company is under stress? The short answer is ‘no.’ I have the same focus on how I run this business every day. It starts with safety and integrity. Those are the core tenets of who we are. One of the things I’m not sure our country understands is how much we are One Boeing. In 2018, we rolled out the “Boeing Behaviors.” From leadership all the way to mechanics on the floor, we all are held to the same expectations and standards. When [CEO] Dennis [Muilenburg] asked me to come into this job, it was with a focus on restoring the business to a growth trajectory. That meant delivering on our promises to customers. He gave me two things to focus on: Earning trust and execution. You can’t be on a growth trajectory if the customer doesn’t trust you and you’re not executing.

You and other Boeing leaders talk often about One Boeing. Have resources from your team been brought to bear to help the company bring the MAX back? Absolutely. This is a one-company effort, and it is bringing forward everyone and anyone who brings value, whether from engineering to manufacturing to supply chains. We did the same thing on tanker. If I have needed help on a commercial crew, or on T-X or on Chinook, we have brought the company together.

What are you helping Kevin [McAllister, CEO of Boeing Commercial Airplanes] with? I’m not going to go into any of the details. But good try.

What are the biggest challenges facing suppliers? It’s making certain, that the Tier 2, Tier 3, the sub-tier suppliers, understand the stability of work going forward, because many of them don’t have the same liquidity as the Tier 1s. One of our goals as we approach a supplier is to talk about our work across the company, so they understand all the different puts and takes. Similarly, when you look at a supplier, you also want to understand their supply base across all of industry. [Pentagon acquisition chief Ellen] Lord has studied the industrial base to understand risk areas that may need to be addressed. But for them, we remember that when budgets were in a steady state of decline it was about making sure there was inside transparency so they could plan their investment profiles, their staffing, whatever technology instruction they want to do. It’s really hard to make decisions with less than a year-long cycle time.

Do you see underinvestment in the sub-tiers? No, not at all. If you look at it simply through a program lens, you may find some areas of opportunity, but when I look at the industry, the biggest opportunity we have is continuing an infusion of talent. Part of this is how we attract people to the aerospace industry and make it as exciting as some of the high-tech companies. We tie that to our purpose of what we do, what the nation does, and that is where you get a lot of the energy and enthusiasm. Similarly, with space, folks thinking that they can have a part of being on the next rocket ship or engine, that’s a great recruiting tool.

What are you doing to prepare for 2020 if U.S. defense spending dips?
About 31% of my business is outside the U.S. That benefits both the international and U.S. customer. What we did with the Canadians on Chinook benefited the U.S. Army immensely. Saudi Arabia and Qatar continue to buy F-15s, and they are buying the more advanced versions. We are able to bring that technology back as the Air Force talks about what they want in their F-15s. We’re able to bring the benefit and the value from what we’ve done for other customers already. And then that just causes other international customers to want to have the opportunity perhaps to look at those aircraft as well.

Funding for Block 2 Chinook has been a struggle this year. What does that mean for the CH-47 production line, for that program and for international heavy-lift helicopter competitions?
I continue to be a strong believer in Chinook. I used to run the program, the whole site and the factory, so Chinook is near and dear to my heart. We’re having great conversations with the Army in terms of modernization and next steps across all of our rotorcraft platforms, and I remain confident in the Chinook production system and the benefit it provides.

Boeing had been the industry leader on hypersonics and directed energy. We haven’t heard much from Boeing with the announced programs such as the Advanced Rapid Response Weapon, the Hypersonic Conventional Strike Weapon and on the directed energy side. Why has the company been so quiet? We continue to invest in that area. It’s important to get signs from the government on where they are going. It’s important that we understand where we’re going to bring the best value and where we’re going to compete. We have some focused efforts in those areas, but there’s more going on on the classified side than out in the white world. Don’t you all hate it when we do that to you?
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[*] posted on 19-6-2019 at 08:47 PM

PARIS: Boeing looks to F/A-18 E/F Block III for overseas boost

19 June, 2019 SOURCE: BY: Greg Waldron Paris

Boeing is optimistic on the international prospects for the Block III version of its F/A-18 E/F Super Hornet.

The company sees an opportunity to sell more than 350 aircraft across six major fighter competitions, and is in discussions with other unspecified countries, Boeing vice-president Thom Breckenridge says.

The key publicly-known opportunities for the type are fighter requirements in Canada, Switzerland, Germany and Finland, as well as separate competitions for the Indian air force and navy.


Finland has also been cleared by the US government to possibly obtain the EA-18G Growler electronic warfare variant of the type for its HX fighter procurement, which is aimed at replacing its 62 Boeing F/A-18C/Ds.

Breckenridge says this is only the second time that the EA-18G has been approved for export. The only international operator of the EA-18G is the Royal Australian Air Force, which has 11 examples.

He listed a number of important updates for the Block III over the Block II. These include conformal fuel tanks for longer range, better connectivity with other assets, an infrared search and track (IRST), an advanced tactical data link and a new distributed targeting processor.

The Block III also has a lower radar cross-section, but Breckenridge notes that Boeing “didn’t overinvest in this". The airframe life have also been extended to 10,000hr, up from 6,000hr for the Block II.

“Each and every one of these capabilities had to earn their way onto this programme and platform," Breckenridge says. "It was a very deliberate set of choices about what was going to go on here, and obviously we'll let the navy speak for themselves about why. Each one of these things had to earn their way, and other choices were not made.”

In March 2019, Boeing secured a three-year contract from the US Navy for 78 F/A-18E/F Block III Super Hornets, with a total contract value of about $4 billion. It also has a programme to upgrade the navy’s existing Block IIs to the Block III standard.
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[*] posted on 22-6-2019 at 02:06 PM

Boeing to relocate space division to Florida

Beth Stevenson, London - Jane's Defence Weekly

21 June 2019

Boeing has announced the relocation of its space and launch division headquarters from Arlington in Virginia to the so-called Space Coast of Florida.

This is in an effort to be nearer space-related activities at Kennedy Space Center, Cape Canaveral Air Force Station and Patrick Air Force Base (AFB), and is in preparation for an expected increase in tempo for the company in work supporting defence and commercial space-related programmes.

Work under way includes: the X-37B unmanned, reusable space vehicle for the US Air Force (USAF); the CST-100 Starliner commercial spacecraft development; study work with the US Defense Advanced Research Projects Agency (DARPA); and a focus from Boeing on mission integration and launch system operations for the air force at Cape Canaveral, Patrick AFB, and the Air Force Space Command in Colorado and Vandenberg AFB in California.

(160 of 353 words)
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[*] posted on 9-7-2019 at 11:36 AM

What Will It Be, Boeing? Great Airplanes That Generate Cash Flow or Great Cash Flow, Period? (excerpt)

(Source: Seattle Times; published July 05, 2019)

By Stan Sorscher

Employees come to work to do their jobs. We aren’t usually aware of workplace culture, even over a span of years.

We learn culture from co-workers and managers when they make decisions and demonstrate problem-solving skills. Leadership messages affect thousands of decisions that add up to success or failure of the organization.

For many years, Boeing competed with Airbus and other producers for airline customers based on performance of its products. As a recent news report put it, Boeing now competes for investors with Exxon and Apple.

Boeing rose to the top of the airplane business as an engineering company, focused on performance of its products. Boeing made bold decisions that “bet the company” and prevailed over competitors.

In the ’90s, Boeing business culture turned to employee engagement, process improvement and productivity — adopting the “quality” business culture that made Japanese manufacturers formidable competitors.

In the late ’90s, Boeing’s business culture shifted again, putting cost-cutting and shareholder interests first.

Some business cultures are well-suited to commodity-like products but are a bad fit with performance-driven products.

Ask a financial analyst, “Are airplanes commodity-like or performance-driven?”

Business instinct is to cast the question as a market transaction. Airline customers worry about price, delivery dates, training costs, spares, maintenance and other factors, but, overall, those considerations come out very close in the end. The last major innovation in air travel was the jet engine in the 1950s. A business analyst would say the airplane business is “mature,” the products are standardized, innovation is slow, so airplanes are commodity-like.

Now ask a different question: “Are the design, development, testing and manufacture of airplanes commodity-like or performance-driven?” Whoa. Tough question.

Actually, making airplanes is performance-driven.

Success or failure of an airplane program turns on productivity. The first airplanes off the production line sell at a loss. Costs come down over time, the quicker the better. If your business model emphasizes productivity, employee engagement and process improvement, costs go down faster. This was the essence of the “quality” business model Boeing followed in the mid-’90s. The 777 had the best “learning curve” in the business.

On the other hand, if your industry is mature, and your products are commodity-like, business-school theory says a cost-cutting model is appropriate.

Wal-Mart perfected its particular version of the cost-cutting business model. Amazon adapted that model to its industry. Boeing has adapted it to high-end manufacturing. These companies are super-stakeholders with market power over their supply chains. The point of this business model is that the super-stakeholder extracts gains from the subordinate stakeholders for the short-term benefit of investors.

Subordinate stakeholders are made to feel precarious and at-risk. Each supplier should see other suppliers as rivals. Similarly, each work location should know it competes on cost with rival work locations. Each state or local government should compete for incentives against rival states.

In this model, subordinate stakeholders never say “no” to the super-stakeholder — not workers, not suppliers, not state legislatures.

This cost-cutting culture is the opposite of a culture built on productivity, innovation, safety, or quality. A high-performance work culture requires trust, coordination, strong problem-solving, open flow of information and commitment to the overall success of the program. In a high-performance culture, stakeholders may sacrifice for the good of the program, understanding that their interests are served in the long run.

Delivered bright and early weekday mornings, this email provides a quick overview of top stories and need-to-know news.

In the productivity-based 777 program, it would have been career-limiting to withhold negative information from managers. They needed timely information to find a solution as far upstream as possible.

According to Boeing’s annual reports, in the last five years Boeing diverted 92% of operating cash flow to dividends and share buybacks to benefit investors. Since 1998, share buybacks have consumed $70 billion, adjusted for inflation. That could have financed several entire new airplane models, with money left over for handsome executive bonuses.

Boeing’s experience with its cost-cutting business culture is apparent. Production problems with the 787, 747-8 and now the 737 MAX have cost billions of dollars, put airline customers at risk, and tarnished decades of accumulated goodwill and brand loyalty.

Stakeholders throughout the industry want our trust restored. This is a leadership moment for Boeing executives and its board of directors. Will Boeing make great products, which generate cash flow, or will it continue being a company that generates great cash flow — and makes airplanes?

Stan Sorscher was a physicist at Boeing for 20 years and has been on staff at the Society of Professional Engineering Employees in Aerospace union since 2000.

Click here for the original story, on the Seattle Times website.

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[*] posted on 11-7-2019 at 10:42 AM

Boeing Defense catching up with helicopter and tanker deliveries

10 July, 2019 SOURCE: BY: Garrett Reim Los Angeles

After struggling with manufacturing and parts design problems last year, issues which delayed dozens of deliveries, Boeing Defense, Space & Security matched its 2018 delivery totals in the first six months of the year, with 96 military aircraft received by customers.

Many of the company’s deliveries in the first two quarters of 2019 were new and remanufactured examples of the AH-64 Apache attack helicopter. The company delivered 45 Apaches in the first six months, compared to just 23 of the aircraft of all last year. The difference was mainly because the US Army suspended acceptance of all AH-64E aircraft in 2018 due to safety risks and inspection expenses related to the helicopter’s strap pack retention nut.

Boeing AH-64 Apache attack helicopter
US Army

In fact, Boeing Defense’s second quarter military aircraft deliveries fell 40%, compared to the first quarter. The company appears to have played catch-up on AH-64s in the first quarter that were supposed to be delivered last year and then settled down into a slower pace in the second quarter. The company is also on pace to deliver slightly more than the 30 remanufactured and new CH-47 Chinooks it handed over to customers in 2018, with 16 delivered thus far.

For its part, Boeing declines to explain specific difference between the quarters. “Rotorcraft deliveries reflect normal quarterly fluctuations,” says the firm.

Nonetheless, a faster delivery pace in the first half of the year comes as the company has to work through a growing order book. In June, US Special Operations Forces signed a $194 million contract to buy seven additional MH-47G Chinooks. In July, the US Army gave notice that it plans to grant a multiyear contract for the production or remanufacture of up to 600 AH-64E Apache attack helicopters.

Outside the company’s rotorcraft business unit, continued foreign object debris issues has caused the US Air Force (USAF) to slow delivery of the Boeing KC-46A Pegasus in-flight refuelling tanker. While the company delivered its first seven tankers in the first quarter, it only delivered five in the second quarter.

FOD found inside new KC-46As delivered to the USAF is a result of cultural problems, said Will Roper, USAF assistant secretary of the air force for acquisition, technology and logistics, at the Paris air show in June. The service is finding tools, rubbish and left-over parts such as loose nuts during inspections, he said. As a result of additional inspections, the USAF is accepting aircraft at a pace of about one per month.

Additionally, the company has delivered a total of five F-15 fighters in the first six months of 2019, compared to 10 for the whole of 2018. It has delivered 10 F/A-18E/F fighters in the first six months of 2019, compared to 17 for the whole of 2018. And, the firm has delivered eight P-8 Poseidon maritime patrol aircraft in the first six months of 2019, compared to 16 for the whole of 2018.
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[*] posted on 12-9-2019 at 09:50 AM

Boeing's travails show what's wrong with modern capitalism

Matt Stoller

Deregulation means a company once run by engineers is now in the thrall of financiers and its stock remains high even as its planes fall from the sky

Wed 11 Sep 2019 20.00 AEST
Last modified on Wed 11 Sep 2019 20.01 AEST

The plight of Boeing shows the perils of modern capitalism. The corporation is a wounded giant. Much of its productive capacity has been mothballed following two crashes in six months of the 737 Max, the firm’s flagship product: the result of safety problems Boeing hid from regulators.

Just a year ago Boeing appeared unstoppable. In 2018, the company delivered more aircraft than its rival Airbus, with revenue hitting $100bn. It was also a cash machine, shedding 20% of its workforce since 2012 while funneling $43bn into stock buybacks in roughly the same period. Boeing’s board rewarded its CEO, Dennis Muilenburg, lavishly, paying him $23m in 2018, up 27% from the year before.

There was only one problem. The company was losing its ability to make safe airplanes. As Scott Hamilton, an aerospace analyst and editor of Leeham News and Analysis, puts it: “Boeing Commercial Airplanes clearly has a systemic problem in designing, producing and delivering airplanes.”

Something is wrong with today’s version of capitalism. It’s not just that it’s unfair. It’s that it’s no longer capable of delivering products that work. The root cause is the generation of high and persistent profits, to the exclusion of production. We have let financiers take over our corporations. They monopolize industries and then loot the corporations they run.

The executive team at Boeing is quite skilled – just at generating cash, rather than as engineers. Boeing’s competitive advantage centered on politics, not planes. The corporation is now a political machine with a side business making aerospace and defense products. Boeing’s general counsel, former judge Michael Luttig, is the former boss of the FBI director, Christopher Wray, whose agents are investigating potential criminal activity at the company. Luttig is so well connected in high-level legal circles he served as a groomsman for the supreme court chief justice, John Roberts.

The company’s board members also include Nikki Haley, until recently the United Nations ambassador, former Nato supreme allied commander Edmund PGiambastiani Jr, former AIG CEO Edward M Liddy, and a host of former political officials and private equity icons.

Boeing used its political connections to monopolize the American aerospace industry and corrupt its regulators. In the 1990s, Boeing and McDonnell Douglas merged, leaving America with just one major producer of civilian aircraft. Before this merger, when there was a competitive market, Boeing was a wonderful company. As journalist Jerry Useem put it just 20 years ago, “Boeing has always been less a business than an association of engineers devoted to building amazing flying machines.”

High profits masked the collapse in productive skill until the crashes of the 737 Max .

But after the merger, the engineers lost power to the financiers. Boeing could increase prices, lay off workers, reduce quality and spend its cash buying back stock.

And no one could do anything about it. Customers and suppliers no longer had any alternative to Boeing, and Boeing corrupted officials in both parties who were supposed to regulate it. High profits masked the collapse in productive skill until the crashes of the 737 Max.

Boeing’s inability to make good safe airplanes is a clear weakness. It is, after all, an airplane aerospace company. But because Boeing is America’s only commercial airplane company, the crisis is rippling across the economy. Michael O’Leary, CEO of Ryanair, which ordered 58 737 Max planes, says his company cannot grow as planned until Boeing, “gets its shit together”.

Contractors and subcontractors slowed production of parts for the airplane, and airline customers scrambled to address shortages of airplanes.

Far from being an anomaly, Boeing is the norm in the corporate world across the west. In 2016, the Economist noted that profits across the corporate sector were high and persistent, a function of a lack of competition across swaths of the economy. If corporations don’t have to compete, they can raise prices to buyers, lower what they pay to suppliers and workers, and reduce quality.

High profits result in sloth and corruption. Many of our industrial goliaths are now run in ways that are fundamentally destructive. General Electric, for instance, was once a jewel of American productive capacity, a corporation created out of George Westinghouse and Thomas Edison’s patents for electric systems.

Edison helped invent the lightbulb itself, brightening the world.

Today, as a result of decisions made by Jack Welch in the 1990s to juice profit returns, GE slaps its label on lightbulbs made in China. Even worse, if investigator Harry Markopoulos is right, General Electric may in fact be riddled with accounting fraud, a once great productive institution strip-mined by financiers.

These are not the natural, inevitable results of capitalism.

Boeing and GE were once great companies, working in capitalist open markets.

So what went wrong? In short, the law. In the 1970s, a host of thinkers on the right and left – from Milton Friedman to George Stigler to Alfred Kahn to the current liberal supreme court justice Stephen Breyer – argued that policymakers should take restraints off capital and get rid of anti-monopoly rules. They used many terms to make this case, including deregulation, cost/benefit analysis, and the consumer welfare standard in antitrust law. They embraced the shareholder theory of capitalism, which emphasizes short-term profits. What followed was a radical consolidation of market power, and then systemic looting.

The disease of inefficiency and graft has spread to the government.

Today, high profit margins are a pervasive and corrupting influence across the government and corporate sectors. Private equity firms moved capital from corporations and workers to themselves, destroying once healthy retailers like RadioShack, Toys R Us, Payless and K-Mart.

The disease of inefficiency and graft has spread to the government. In 1992, Harvard Professor Ash Carter, who later become the secretary of defense under Obama, wrote that the Pentagon was too difficult to do business with. “The most straightforward step” to address this, he wrote, “would be to raise the profit margins allowed on defense contracts.” The following year Prof Carter was appointed assistant secretary of defense for international security policy in the first Clinton administration, which followed his advice.

Earlier this year, the defense department found that one defense contractor run by private equity executives had profit margins of up to 4,451% on spare parts it sold to the military.

Consulting giant McKinsey was recently caught trying to charge the government $3m a year for the services of a recent college graduate.

The ultimate result of concentrating wealth and corrupting government is to concentrate power in the hands of a few.

We’ve been here before. In the 1930s, fascists in Italy and Germany were gaining strength, as were communists in the Russia. Meanwhile, leaders in liberal democracies were confronted by a frightened populace losing faith in democracy.

American political leaders were able to take on domestic money lords with a radical antitrust campaign to break the power of the plutocrats. Today we are in a similar situation, with autocrats making an increasingly persuasive case that liberal democracy is weak.

The solution to this political crisis is fairly simple, and it involves two basic principles. One, policymakers have to increase competition for large powerful companies, to bring profits down.

Executives should spend their time competing with each other to build quality products, not finding ways of attracting former generals, or administration officials to their board of directors.

Two, policymakers should raise taxes on wealth and high incomes to radically reduce the concentration of wealth, which will make looting irrational.

Our system is no longer aligning rewards with productive skill.

Despite the 737 Max crisis, Boeing’s stock price is still twice as high as in July 2015, when Muilenburg took over as CEO. That right there is what is broken about modern capitalism. We had better fix it fast.
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[*] posted on 14-9-2019 at 01:20 PM

Things just get better for Boeing...…..NOT!

Business NewsSeptember 13, 2019 / 5:08 AM / a day ago

U.S. House panel wants Boeing CEO to allow employee interviews on 737 MAX crashes

David Shepardson

WASHINGTON (Reuters) - Congress on Thursday asked Boeing Co’s chief executive to make several employees available for interviews as part of a congressional probe into the design, development and certification of 737 MAX aircraft involved in two crashes that killed 346 people.

House of Representatives Transportation Committee Chairman Peter DeFazio and Representative Rick Larsen, who chairs the aviation subcommittee, said in a statement that while Boeing has provided substantial documents and shared senior management’s perspective, “it’s important to the committee’s investigation to hear from relevant Boeing employees.”

The committee plans another Boeing hearing in the coming weeks and previously asked whistleblowers to come forward with any information about the plane’s development. Boeing has provided more than 300,000 pages of documents, a person briefed on the matter said, speaking on condition of anonymity.

Boeing said in a statement it was “deeply disappointed the committee chose to release private correspondence given our extensive cooperation to date. We will continue to be transparent and responsive to the committee.”

The 737 MAX, Boeing’s best-selling jet, was grounded globally in March, days after the crash of an Ethiopian Airlines flight that followed a similar Lion Air disaster in Indonesia in October. A total of 346 people died in the two crashes.

Federal prosecutors aided by the FBI, the Department of Transportation’s inspector general and several blue-ribbon panels are investigating the 737 MAX as well as how the Federal Aviation Administration (FAA) certifies new aircraft.

Major U.S. airlines have canceled flights into December as a result of the MAX grounding, including American Airlines Group Inc and United Airlines, while Southwest Airlines Co has canceled flights into early January.

CEO Dennis Muilenburg said at an investor conference on Wednesday that the company is still targeting “early fourth quarter for getting the airplane back up in the air” but added that “ultimately return-to-service timing will be determined by the regulator.”

The FAA has repeatedly said it will not certify the plane to fly again until it is safe to do so.

The European Aviation and Space Agency said on Tuesday it “intends to conduct its own test flights separate from, but in full coordination with, the FAA. The test flights are not scheduled yet, the date will depend on the development schedule of Boeing.”

Muilenburg said it is possible not all regulators around the world will concurrently approve the MAX to fly again. Boeing has said it plans to conduct a certification test flight in the “September time frame” but Muilenburg did not give a specific date when asked on Wednesday.

Some officials do not expect the 737 MAX to actually resume flights until early 2020.

The Wall Street Journal reported on Sept. 1 that a Boeing briefing in August was cut short by U.S., European and other regulators who complained the company failed to answer specific questions about modifications in the operation of MAX flight-control computers.

A U.S. official, speaking on condition of anonymity, confirmed frustration with the lack of some answers from Boeing.

Reporting by David Shepardson; Editing by Lisa Shumaker and Jonathan Oatis

© 2019 Reuters. All Rights Reserved.
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[*] posted on 25-9-2019 at 10:51 AM

Exclusive: Boeing Bid for Embraer Unit Faces EU Antitrust Probe – Sources (excerpt)

(Source: Reuters; published Sept. 23, 2019)

By Foo Yun Chee

BRUSSELS --- Boeing is set to face a EU antitrust investigation of up to five months into its bid for a controlling stake in the commercial aircraft arm of Brazil’s Embraer, people familiar with the matter said on Monday.

The deal, marking the biggest shift in commercial aerospace in decades, would reshape a global passenger jet duopoly and reinforce Western planemakers against newcomers from China, Russia and Japan.

It would give Boeing a foothold in the lower end of the market, enabling it to better compete with the CSeries jets designed by Canada’s Bombardier Inc., and backed by European rival Airbus SE.

The deal values the Embraer unit at $4.75 billion.

The European Commission, which has set an Oct. 4 deadline for its preliminary review of the deal, did not respond to a request for immediate comment. (end of excerpt)

Click here for the full story, on the Reuters website.

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[*] posted on 27-9-2019 at 09:38 AM

Airbus Trade Feud Spurs New Trump Risk for Boeing, Airlines (excerpt)

(Source: Bloomberg News; published Sept. 25, 2019)

By Justin Bachman

U.S. tariffs on European airplanes and luxury goods are emerging as a new threat not just for Airbus SE but for U.S. airlines. The risk is rising for Boeing Co. as well if the European Union seeks to retaliate.

The World Trade Organization will authorize the U.S. to impose tariffs on nearly $8 billion of European goods due to illegal state aid provided to Airbus, Bloomberg News reported Wednesday. The U.S. duties, which could hit as soon as October, will target planes and aircraft parts as well as luxury products such as wine and leather goods, according to the U.S. Trade Representative’s office.

The WTO decision marks an escalation in a long-running dispute that the U.S. and EU have waged over aircraft-manufacturing subsidies, and will further test trans-Atlantic relations that are already under stress from President Donald Trump’s “America First” strategy. The deterioration endangers the cross-border ties that Boeing, Airbus and global airlines rely on.

“I’m a little concerned because this certainly fits the Trump administration’s aggressive approach to trade,” said Richard Aboulafia, aerospace analyst with Teal Group. “Not crossing borders isn’t an option in this industry. Exports aren’t gravy in this business -- they’re absolutely the lifeline.” (end of excerpt)

Click here for the full story, on the Bloomberg News website.

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[*] posted on 27-9-2019 at 09:47 AM

Aerospace Investment to Take-Off Following US Trade Mission

(Source: UK Ministry of Defence; issued Sept 25, 2019)

Boeing today (Wednesday, September 25) welcome a delegation of 34 UK aerospace suppliers to the Boeing Future of Flight Museum in Seattle as part of the company’s initiative to integrate more UK products and services into its supply chain.

Boeing’s long-term partnership with the UK Government has seen the aerospace giant commit to doubling its presence in the UK, increase bidding opportunities for UK companies for Boeing work, and boost R&D opportunities.

The aerospace sector is one of the UK’s most open and international industries and the Government is backing this delegation to increase ties between both US & UK aviation communities.

The UK’s aerospace industry turned over £39 billion last year, the vast majority of which was exported, which is why the sector plays a major part in the government’s global trade promotion work.

The event is supported by the Department for International Trade (DIT), the Ministry of Defence (MOD), the Department for Business, Energy & Industrial Strategy (BEIS) and supported by the Aerospace Technology Institute (ATI) and will showcase British expertise in advanced engineering and its thriving digital sector.

President of Boeing Europe and Managing Director of Boeing UK and Ireland, Sir Martin Donnelly said: “Boeing recognises the UK as a world leader in the aerospace sector. We are proud of our close partnership with business and universities across the UK, and our partnership with Britain’s superb armed forces. Boeing is growing in the UK, and we are looking for ways to develop further our presence here as a key part of Boeing’s global supply chain.”

Minister for Investment, Graham Stuart said: “British aerospace companies lead Europe and use the UK’s unique science base to deliver world class solutions. With expertise in complex products such as engines, wings, aerostructures and advanced systems the sector is overwhelmingly export oriented and attracts significant inward investment into the UK.

“DIT is proud to lead and facilitate trade missions such as this one to Boeing where UK companies can demonstrate their expertise, build relationships and seek to join one of the most demanding supply chains. Exports from and inward investment to the UK are at their highest ever levels and help sustain our position as the leading destination in Europe for foreign direct investment and a world leader in technology and its application.”

This trade delegation comes as the Royal Air Force Aerobatic Team, the Red Arrows, touch down in Seattle on Monday 23 September as part of their 2019 North American tour. The day-long programme will be aimed at supporting trade and investment between the UK and the US, and STEM education.

U.K. suppliers part of the delegation include:
--ASG Aerospace
--Advanced Innovative Engineering (Uk) Ltd
--Bombardier (UK)
--Causeway Aero
--CCP Gransden
--Collins Aerospace Motors & Controls (UK)
--Eaton (UK)
--Gardner Aerospace
--GE Aviation (UK)
--Heroux Devtek
--JW Kane Precision Engineering
--Martins Rubber
--MSB Group
--Poeton Industries
--Safran Landing Systems
--Senior Aerospace BWT
--Smiths Harlow
--Southbourne Rubber
--Spirit Aerosystems (UK)
--Thales UK

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[*] posted on 1-10-2019 at 09:37 AM

Unexpected Cracking Found on Critical Boeing 737 Next-Generation Part (excerpt)

(Source: KOMO News radio; posted September 28th 2019)

By Charlie Harger

Things just get better for Boeing...….NOT! Of concern to all Military Users because of the use of 737 derivatives in AEW and P-8 aircraft...………...

Boeing engineers and safety investigators are scrambling to find out how many Boeing 737NGs have cracked 'pickle forks' after finding several in the jets.

A pickle fork is the part that helps attach a plane's fuselage to its wing structure. It helps manage the stress, torque and aerodynamic forces that bend the connection between the wings and the body of the jet.

Engineers design pickle forks to last the lifetime of the plane, more than 90,000 landings and takeoffs, a term known as "flight cycles" in the aviation industry, without developing cracks. There could be dire results if the pickle fork system on the jet fails in flight.

During a recent inspection, workers found a severely cracked pickle fork on a Boeing 737NG. The plane is relatively young, having logged approximately 35,000 flight cycles when the damage was found.

A retired Boeing engineer who asked to remain anonymous tells us, "It's unusual to have a crack in the pickle fork. It's not designed to crack that way at all. Period." He says it's particularly concerning because it was found so early in the plane's service.

Another source tells us Boeing quickly reported the issue with the single plane to the FAA last week, and now more planes with similar cracking have been found.

We're told this is very much an ongoing investigation, and that it's unclear whether or not this is a widespread issue.

Boeing confirmed to KOMO Friday that there is a cracking issue.

"Safety and quality are our top priorities. Boeing has notified the FAA and been in contact with 737NG operators about a cracking issue discovered on a small number of airplanes undergoing modifications. No in-service issues have been reported. Over the coming days, we will work closely with our customers to implement a recommended inspection plan for certain airplanes in the fleet. This issue does not affect any 737 MAX airplanes or the P-8 Poseidon," a Boeing spokesperson wrote. (end of excerpt)

Click here for the full story, on the Komo News website.

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[*] posted on 5-10-2019 at 02:17 PM

Boeing-Embraer Strategic Partnership Taking Shape

(Source: Boeing-Embraer joint release; issued Oct. 03, 2019)

CHICAGO & SÃO PAULO --- Boeing and Embraer continue to work closely together to establish their strategic partnership, positioning both companies to deliver greater value to airline customers and the flying public, and to accelerate growth in global aerospace markets.

Since receiving approval for the partnership from Embraer shareholders in February this year, the companies have undertaken diligent planning for the creation of a joint venture made up of the commercial aircraft and services operations of Embraer. Boeing will own 80 percent of the new company, to be named Boeing Brasil – Commercial. Embraer will hold the remaining 20 percent.

The transaction remains subject to regulatory approval; the two companies are actively engaged with authorities in relevant jurisdictions and have obtained a number of regulatory approvals. Following a detailed assessment by the U.S. Federal Trade Commission, the parties' strategic partnership has received clearance to close in the United States. The European Commission recently indicated it will open a Phase II assessment in its review of the transaction, and Boeing and Embraer look forward to assisting with that review.

Based on this development, however, the companies now expect the transaction to close in early 2020.

Boeing and Embraer are also preparing to launch a joint venture to promote and develop markets for the multi-mission medium airlift KC-390. Under the terms of the proposed partnership, Embraer will own a 51 percent stake in the joint venture and Boeing will own the remaining 49 percent. Two KC-390 milestones were recently achieved by Embraer: the first KC-390 was delivered to the Brazilian Air Force, and the first international purchase was announced by Portugal.

The comprehensive Boeing-Embraer strategic partnership, embodied through these two joint ventures, will position the companies to compete in the global marketplace, to deliver greater value to customers, and to boost the Brazilian aerospace industry as a whole.

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[*] posted on 9-10-2019 at 09:30 AM

Boeing military aircraft deliveries jump 114% in Q3

08 October, 2019 SOURCE: BY: Garrett Reim Los Angeles

Boeing Defense, Space & Security delivered 77 military aircraft in the third quarter of 2019, a 114% jump over the number of aircraft it delivered in the second quarter, as the company continues catching up on orders delayed by quality issues.

Much of the production lift comes from a boost in deliveries of new and remanufactured AH-64 Apache attack helicopters, as well as of KC-46A Pegasus in-flight refuelling tankers, the company disclosed in a media release.

The US Army suspended acceptance of all AH-64E aircraft in 2018 due to safety risks and inspection expenses related to the helicopter’s strap pack retention nut. Foreign object debris (FOD) found inside new KC-46As caused the US Air Force (USAF) to suspend delivery of the tankers this summer, before resuming acceptance at a slower pace.

Boeing C-17 Globemaster III delivered to the Indian air force

Strap nut retention nut problems with the AH-64 have been resolved and the US Army resumed acceptance in September 2018. The USAF says it accepted its first FOD-free KC-46A in September 2019.

Boeing delivered 17 new AH-64s and 21 remanufactured AH-64s in the third quarter, a 124% increase in the total number of Apaches delivered compared to the second quarter.

The company delivered nine KC-46A tankers in the third quarter, an 80% increase from when it delivered just five aircraft in the second quarter, the financial period during which FOD became a problem. Boeing has said it aims to deliver 36 KC-46As by the end of 2019, a goal which would require the company to substantially increase its monthly deliver rate in the final quarter.

Boeing delivered two C-40A Clippers transports in the third quarter to the US Navy. Separately, the US Marine Corps also had put out a notice in December 2018 that it intended to buy two C-40A aircraft by August 2020 to replace its two McDonnell Douglas C-9B Skytrain executive transports.

Boeing also delivered its last C-17 Globemaster III strategic air lifter to the Indian air force in August, bringing New Delhi’s fleet to 11 aircraft.

The airframer also delivered six new CH-47 Chinook cargo helicopters, seven renewed CH-47 Chinook cargo helicopters, two F-15 fighters, six F/A-18 Super Hornet fighters and six P-8 Poseidon maritime patrol aircraft in the third quarter. In total, the company delivered 173 military aircraft through the end of the third quarter.

Updated: This article was updated to note that the two C-40A aircraft were delivered to the US Navy.
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[*] posted on 12-10-2019 at 05:01 PM

Boeing’s top executive relinquishes chairman title in wake of 737 MAX crisis

By: Valerie Insinna   7 hours ago

NEW YORK, NY - OCTOBER 02: Boeing CEO Dennis Muilenburg waits to speak at an Economic Club Of New York event on October 2, 2019 in New York City. The FAA has recently ordered additional inspections of Boeing's heavily used versions of its 737 NG models for cracks in wing supports. The news is another blow to Boeing, already dealing with the grounding of the newest version of the 737 Max model after two crashes in five months. (Photo by Drew Angerer/Getty Images)

WASHINGTON — Boeing’s board of directors on Friday removed its top executive from the chairmanship position in the wake of the 737 MAX safety crisis, the company announced Friday evening.

Dennis Muilenburg will continue to lead the company as chief executive officer, president and a director. David Calhoun, currently the independent lead director, was elected by the board to serve as its non-executive chairman.

The board made the decision to separate the CEO and chairman positions in order to allow Muilenburg to focus on day-to-day operations, particularly the task of returning the 737 MAX airliner to commercial service, according to a Boeing statement.

The 737 MAX has been grounded since mid-March due to two crashes — one in Oct 2018 and another in March 2019 — that resulted in the deaths of 346 people.

A report, conducted by a task force that included officials Federal Aviation Administration and other regulatory bodies and released earlier on Friday, stated that changes to the aircraft’s Maneuvering Characteristics Augmentation System were not adequately explained by Boeing, and that the FAA “lacked the expertise” to fully evaluate the system, according to the Associated Press.

"The board has full confidence in Dennis as CEO and believes this division of labor will enable maximum focus on running the business with the board playing an active oversight role,” Calhoun said. “The board also plans in the near term to name a new director with deep safety experience and expertise to serve on the board and its newly established Aerospace Safety Committee."

Through the Boeing statement, Muilenburg said that he supported the board’s decision and was focused on returning the 737 MAX to service.

The statement did not clarify whether the division of the chairman and CEO positions will be permanent.
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[*] posted on 18-10-2019 at 06:28 PM

Opinion: Has Boeing Lost Its Way?

Oct 18, 2019

Anthony L. Velocci, Jr. | Aviation Week & Space Technology

Culture Shock

There’s a funny thing about a company’s corporate culture: You cannot measure it directly and, with very few exceptions, you cannot see it. There is little, if any, reference to it in the description or mission statement of many companies, and it is difficult to imagine most employees giving it much more than a passing thought. Yet a company’s culture is its heart and soul, playing a vital role in an organization’s long-term success as a business—and over time it evolves, for better or worse.

A timely case in point is the Boeing Co., whose functional orientation has long revolved around the pursuit of innovation, engineering excellence and customer care. For much of its history, Boeing has been a model of industry leadership and trust among all stakeholders.

That premise may no longer be valid in the wake of two crashes of the company’s 737 MAX aircraft, in October 2018 and March 2019, which killed 346 people and have been linked to the MAX’s Maneuvering Characteristics Augmentation System (MCAS). While the company remains highly innovative, the air disasters exposed a culture that is frayed, if not outright broken.

The company’s culture apparently has been geared more toward short-term financial performance than the values on which Boeing built its iconic reputation. It has become characterized by hubris, false pride and a disdain for accountability. That is a summary of how five former CEOs of large aerospace companies, as well as a handful of widely respected industry practitioners with deep knowledge of the company, now perceive Boeing.

Credit: Boeing

How could an objective observer argue otherwise, as exemplified most dramatically by Boeing’s ill-advised strategy of deflecting responsibility for the crashes to its customers, Lion Air and Ethiopian Airlines, and its reluctance to recommend that 737 MAX aircraft be grounded amid mounting evidence that the MCAS may have been the root cause? Never mind that two months passed before Boeing apologized.

Then there is the abuse of the trust that misguided regulators put into Boeing—enabling the company to certify its own products—Boeing’s apparent willingness to bow to competitive pressures to rush the 737 MAX into production while effectively keeping the MCAS a secret from airline customers and the pilot community. Connect the dots and what you see is the picture of a corporate culture that does not exactly inspire confidence, much less trust.

An internal review panel has recommended a reorganization of engineering and the possible formation of a new permanent committee to oversee aircraft design and development, with the goal of improving the transparency of engineering decisions and speeding efforts to share safety-related information as widely and swiftly as possible.

While laudable, these recommendations speak volumes about the necessity for such measures after the crashes. And where was Boeing’s board of directors, which is supposed to provide oversight on matters that could have a material impact on the company and whose composition lacks any real systems engineering expertise? Is its role largely one of rubber-stamping management’s recommendations?

The cost of the debacle almost certainly will run into the billions of dollars, but that may pale next to the long-term damage to Boeing’s reputation and trustworthiness. “In the long run, they’re more important than the bottom line, as the company will discover,” declared the retired CEO of one of the largest U.S.-based aerospace contractors.

“The ethos of the old Boeing for uncompromising standards in aircraft design and safety, perhaps best exemplified by [former Chairman and CEO] Frank Shrontz, has swung too far in a race for market share, legal protection and overconfidence based on its financial performance, and that’s unfortunate,” says Tom Captain, a respected 40-year industry veteran and retired leader of one of the largest aerospace consultancies.

He pointed to the 1985 crash of a Boeing 747 operated by Japan Airlines, which killed 524 people as a result of a faulty repair by Boeing technicians. “Boeing took responsibility, and Shrontz apologized almost immediately,” he notes. “Engineering was king back then. The company would do well to swing back toward the ethos built on faith and trust.”

The enormous pressure Boeing is under to maximize shareholder value by no means is unique to Boeing. Every other publicly traded aerospace company is feeling the same pressure. And so companies across the industry should be asking themselves what they can learn from Boeing’s experience, starting with two questions: What value do we place on our reputation as a vital part of our corporate culture? And what business-driven decisions could potentially harm or destroy that reputation?

Anthony L. Velocci, Jr., was editor-in-chief of Aviation Week & Space Technology from 2003 to 2012.

The views expressed are not necessarily those of Aviation Week.
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