Moon of Alabama Brecht quote
January 22, 2020

Can Boeing Survive Its MAX Problems?

The Boeing 737 MAX saga continues and it now threatens to bring the company to the brink of insolvency:

Boeing now projects the 737 MAX won’t get Federal Aviation Administration (FAA) clearance to fly until midyear, about three months further out than previously expected, in a delay that could stretch the plane’s grounding to more than 15 months.

The MAX was grounded in March 2019 after two crashes of the plane type cost the lives of 346 people and revealed significant problems with the ill constructed Maneuvering Characteristics Augmentation System (MCAS) and other parts of the plane.

The cause of the new delays are additional problems with the planes' Flight Control Computers:

The issue is in the plane’s flight-control computer software. It was confined to how it performs validation checks during startup and doesn’t involve its function during flight, the people said.

The problem came to light when the latest version of the software was loaded onto an actual aircraft, according to one of the people. While it has been tested on planes in flight, most of the software reviews have occurred in a special simulator used by engineers on the ground.
Boeing has been working for more than a year on fixing software to ensure that MCAS is safe. The process has been bumpy at times as new glitches arose and tension flared with regulators.

This will come as no surprise for Moon of Alabama readers. Last June we discussed in detail how the necessary changes to the software of the old FCCs were likely to lead to new trouble:

Boeing says that it can again fix the software to avoid the problem the FAA just found. It is doubtful that this will be possible. The software load is already right at the border, if not above the physical capabilities of the current flight control computers. The optimization potential of the software is likely minimal.

MCAS was a band aid. Due to the new engine position the 737 MAX version had changed its behavior compared to the older 737 types even though it still used the older types' certification. MCAS was supposed to correct that. The software fix for MCAS is another band aid on top of it. The fix for the software fix that Boeing now promises to solve the problem the FAA pilot found, is the third band aid over the same wound. It is doubtful that it will stop the bleeding.
Boeing's latest announced time frame for bringing the grounded 737 MAX planes back into the air is "mid December". In view of this new problem one is inclined to ask "which year?"

It is estimated that each month the 737 MAX stays grounded will cost the company at least $1.5 billion. This month Boeing halted its 737 production line but it has not laid off any of its workers. This will further increase its costs. The cost per month will increase if the grounding continues for long. A slow delivery of the 400 mothballed 737 MAX Boeing built last year will have to be followed by an equally slow ramp up of the production of new planes. It will take until 2023 for Boeing to come back into some normal state. 

After the previous CEO Dennis Muilenberg was fired, the new CEO, former Boeing board member David Calhoun, will try to blame everything on his predecessor. On January 29 Boeing is expected to announce its fourth quarter results. It will likely take a very large charge on top of what it had already announced:

Analysts expect further large charges on top of the $9.2 billion in costs that was projected through September, the first six months of the grounding.

That consisted of a $5.6 billion write-off to cover compensation to airline customers and suppliers, plus $3.6 billion in increased future 737 manufacturing costs due to the extended period at lower production rates.

Next Wednesday, Boeing must now update those cost projections for a further nine months from September through June.

The total loss due to the 737 MAX failure is now estimated to reach $25-30 billion.

Under its previous policies Boeing increased its share price by buying back huge numbers of its own shares. That money should have been invested in new airplane types or be kept as reserve. Boeing is now bleeding cash and needs to take up more debt to stay solvent:

The first thing to know about Boeing’s mad scramble to line up “$10 billion or more” in new funding via a loan from a consortium of banks, on top of the $9.5 billion credit-line it obtained in October last year – efforts to somehow get through its cash-flow nightmare caused by the 737 MAX fiasco – is that the company blew, wasted, and incinerated $43.4 billion to buy back its own shares since June 2013, having become a master of financial engineering instead of aircraft engineering.
The second thing to know about Boeing’s mad scramble to borrow another $10 billion is that it already has a huge amount of debt and other liabilities, and that its total liabilities ($136 billion) exceed its total assets ($132 billion) by about $4 billion as of September 2019, meaning that it has negative net equity, that the share buybacks have destroyed its equity, which is what share buybacks do to the balance sheet.

It also means that every dime in “cash” and “cash equivalent” listed on the balance sheet is borrowed.

Taking up new debt will be costly for Boeing:

[O]n Friday, Fitch Ratings downgraded Boeing’s debt rating. It cited uncertainty about when the Max will fly again, the challenge of catching up on deliveries that were halted last April, rising debt, and risks posed by fines, lawsuits and a damaged reputation.
Moody’s Investors Service, which cut Boeing ratings on Dec. 18, signaled this week that another downgrade is possible because of a likely long and costly fight to regain confidence even if the Max returns to service relatively soon.

Boeing uses an unusual accounting method that allows it to book costs as profits:

Rather than booking the huge costs of building the advanced 787 or other aircraft as it pays the bills, Boeing—with the blessing of its auditors and regulators and in line with accounting rules—defers those costs, spreading them out over the number of planes it expects to sell years into the future. That allows the company to include anticipated future profits in its current earnings. The idea is to give investors a read on the health of the company’s long-term investments.

The method can work when the estimates of future production costs, sales prices and the number of planes to be build are accurate. But the unexpected current expenses for the MAX will now have to be shared over the number of future planes Boeing customers will be willing to take.

Future MAX pilots will have to take mandatory simulator sessions. That makes the new plane less attractive to airlines that fly the 737 NG.  While Boeing has 5,000 orders for the MAX on its books that number is likely to shrink significantly. Boeing will have to ask for higher prices or it will have to cut its margin on each future plane. The cash cow that the MAX once was might well turn into a loss creating product.

That is why Yves Smith had warned that Boeing's unusual accounting practice could kill the company:

If Boeing and the FAA are still at loggerheads in six months, with still no date for the 737 Max going into service, it isn’t just that pressure on Boeing’s suppliers and customers will become acute, perhaps catastrophic for some. Boeing’s practice of booking future, yet to be earned, profits as current income means persistent negative cash flow could lead to an unraveling. The last time we saw similar accounting was how supposedly risk free future income from [Collateralized Debt Obligations] was discounted and included in the current earnings of banks. Remember how that movie ended?

The unstable financial situation and the 737 MAX are not the only problems Boeing has.


Each of Boeing's main products has its own trouble.

Airlines flying the Boeing 787-10 have have complained about the quality of the planes:

[T]he specific issues described by numerous airlines were consistent with past whistleblower complains and news reports.

KLM Royal Dutch Airlines described the factory's quality control as "way below acceptable standards" when talking about a new 787-10 delivered in spring. Among several issues noted were loose seats, missing and incorrectly installed pins, nuts and bolts not fully tightened, and a fuel-line clamp left unsecured.

This week Boeing's new 777X twin aisles plane is supposed to take to the air for the very first time. The 777X has yet to be certified. Boeing had planned to use a so called grandfathering certification by claiming that the 777X is only a derivative of its successful triple seven airplane. The certification of such a 'changed product' is much less bothersome and faster than the certification of a new type of airplane.

But after the two MAX crashes international regulators prepared a Joint Authorities Technical Review report which heavily criticized the 'changed product' rules used by the FAA and Boeing to certify the 737 MAX:

The JATR report is damning for both, Boeing and the FAA. It describes all the known failures and makes 12 recommendations that will change the way how old plane types can be 'upgraded' into a new version. FAA exceptions like the ones above will no longer be possible:
Changed Product Rules (..) and associated guidance (..) should be revised to require a top-down approach whereby every change is evaluated from an integrated whole aircraft system perspective. These revisions should include criteria for determining when core attributes of an existing transport category aircraft design make it incapable of supporting the safety advancements introduced by the latest regulations and should drive a design change or a need for a new type certificate. The aircraft system includes the aircraft itself with all its subsystems, the flight crew, and the maintenance crew.
If implemented the recommendations will make another 737 MAX impossible. A future upgrade of an old plane type will have to conform with the current regulation to a much larger extent and can no longer rely on the old rules to which it was originally designed. If this gets applied to the currently grounded 737 MAX, which may be possible, the plane will never fly again. Current Boeing plans to upgrade its 777 with new wings and engines might also be in trouble. Thoughts about upgrading the 767 will have to be put aside.

Compared to the original 777 the new 777X has many significant differences. Its fuselage inner diameter was made larger by using different ribs to hold up its skin. Its hull also has a different length with changed door locations and more and larger windows. The landing gear tracks are wider than on the 777. The wings are new, longer and have foldable tips. The tail is bigger and has a new composite empennage. The engines are newly developed. Its new flight systems will be adopted from the 787.

There is no way that this new airplane can be claimed to be a 'changed product'. It will need a new type certification. The plane is already one year late and $1 billion over its budget. The certification as a new type likely means that at least two additional years will pass before the plane is allowed into service. Important customers like Emirates Airlines and Etihat Airlines who had ordered the 777X are already jumping ship. It may well turn out that the plane is no longer a viable product.

The new Boeing KC-46 tanker for the U.S. military, a variant of the civil Boeing 767, is still not able able to refuel other planes:

“We require your attention and improved focus on the KC-46,” General David Goldfein, the Air Force chief of staff, warned in a letter four days before Dave Calhoun took over as chief executive officer of the company. “The Air Force continues to accept deliveries of a tanker incapable of performing its primary operational mission.”
Despite agreement on a plan to repair the Remote Vision System, Goldfein said in the letter, “to date, progress has been unsatisfactory. More than a year has elapsed and Boeing has yet to provide” a design “that instills confidence in the way forward.”

“None of the timelines” in the agreement “has been met,” he said, “and Boeing’s latest proposal slips delivery of the final fix to the warfighter by over two years,” which he called unacceptable.

The U.S. military had originally decided to buy the KC-45, a derivative of an Airbus plane, as its new tanker. Boeing then used its political muscle to get the Airbus contract canceled. But while the Airbus tanker has been delivered to other countries and successfully flown for years Boeing is still not able to provide a functioning plane. Airbus will be back when the military decides about a new tranche of such planes.

Last month the Starliner capsule and service module which Boeing is building for NASA failed to reach the Space Station during its first test flight. While this was blamed on a timing error in the on board computer later analysis found additional problems:

The NASA source said eight or more thrusters on the service module failed at one point and that one thruster never fired at all.

Some 5% of the legacy 737 NG, of which Boeing sold some 7,000 planes, have structural problems which require expensive repairs.

Not one of Boeing's large projects seem to be without significant problems. The company has disgruntled its suppliers, its workforce, its customers and its regulators. This is the outcome of a 20 years process that changed the company culture into one where cost cutting and shareholder value were the highest priority. It will take years to change that back into one where good engineering and safety are the most valued attributes.

As a recent note by Credit Suisse summarized:

The competiveness of [Boeing Commercial Airplanes]’s product portfolio vis-à-vis Airbus—[is] a position of weakness that if not resolved impairs the long-term investment story, and if it is resolved impairs the short-medium term investment story (entering a cash heavy investment cycle). This, layered in with broader cultural issues at the company, execution missteps at [Boeing Defense Systems], 777X [Entry Into Service] risk, and other items keep us firmly on the sidelines.

Boeing, as it currently exists, may not have enough time or money to achieve the necessary changes. The company could be split up into a military and a civil one. The civil part would then be put into a chapter 11 bankruptcy to shed its debt. Boeing's commercial aircraft business would then be reborn as a smaller company with likely less plane types on offer and less market share. But it would at least have a future.

It might be either that or a continuing slow death on the altar of shareholder value.

Previous Moon of Alabama posts on Boeing 737 MAX issues:

Posted by b on January 22, 2020 at 16:46 UTC | Permalink

next page »

Does this mean Boeing needs a war?

Posted by: Otto | Jan 22 2020 17:17 utc | 1

fantastic question.. but a 200 trillion dollar contract might do..// start the press..

Posted by: snake | Jan 22 2020 17:22 utc | 2

I'm sure this has been mentioned, but most of the issues we're seeing with Boeing can be traced back to around the time the company moved its headquarters from Seattle to Chicago while at the same time transferring a significant amount of its production facilities to non-union states. Now as b has stated, accountants have more control over the design parameters of "new" planes than the engineers do, and we're reaping the whirlwind of that reality.

Obviously unions aren't the end all, be all in terms of quality control, but there's also something to be said for specialization and the division of labor, attention to detail, and reasonable work demands and how those characteristics can move in unison with the amount of wages and other benefits associated with a given job. Negotiating that balance has always been the role of unions, and the constant assault by the forces of capital have essentially removed them from most jobs these days.

In its incorrigible quest to maximize shareholders equity, the triad of Wall Street/Harvard Business School/Chicago School of Economics has collectively hollowed out this nation's manufacturing base, destroyed its blue chip companies and, stolen both the present and future from tens of millions of middle-class people.

I'm rambling so I'll stop, but it would be nice if for a change we could see positive change in any aspect of our lives; it's been at least 20 years since I could remember anything positive developing in any way in this country, and things on the horizon definitely do not look better. Godspeed, I guess.

Posted by: Information_Agent | Jan 22 2020 17:35 utc | 3

The last part where Boeing reorganizes and severes its military and space divisions from its commercial one, and bankrupting the latter; was the obvious answer a year ago. But, it doesn't end there. The Boeing culture is morally bankrupt, and how does one fix that. Maybe after the separation Elon Musk, with his new found wealth, buys the commercial division and tweets it into solvency.

Posted by: Joetv | Jan 22 2020 17:39 utc | 4

Yes I agree with the bankruptcy prediction. This will be done to dump their pension plan and reorganize the civil division under a new name. Pension plans holding Boeing stock and small investors will be hosed as the share price drops to zero. Pensioners living near expensive Seattle will be in a world of hurt, like so many other people. I will be surprised if the MAX ever flies again under that label. It will need a new company name and a new model label.

Maybe they will divide half-built planes into little cubicles for the impoverished pensioners to move into.

Posted by: Trailer Trash | Jan 22 2020 17:41 utc | 5

Very unlikely that Boeing will survive. They are involved in so many negative, and life threatening, behaviors in their operation that they cannot unentangle themselves. They are in deeper doodoo than most people realize.

Posted by: Josh | Jan 22 2020 17:45 utc | 6

I read an interesting article on the Boing's accounting methods today - possibly in Wall Street On Parade - but I'll have to get back to you on the source. Regarding the 787 development - Boing has not been expensing development costs as they occur but rather has an apparently legal alchemy where in the costs will be somehow deducted against future individual sales of individual airplanes. I wonder how they bought, I mean acquired, that particular treat? Anyway, Boing is effectively bankrupt already.... Taxpayers - bend over! (again)

Possibly it was in Zero Hedge. I'll be back. PS, Hahvahd, which brought you napalm, seems to have become the new orange - and I don't me Trumplestiltskins.

Posted by: Miss Lacy | Jan 22 2020 17:45 utc | 7

Sorry, the penultimate word should be "mean" Feeling a bit disgusted by the entire disgusting charade.

Posted by: Miss Lacy | Jan 22 2020 17:47 utc | 8

Speaking of robbing pension plans to pay for the shortcomings of management, the USPS is currently required to pre-fund its pension obligations 75 years into the future because of a federal law. Yet anytime the corporate media reports that the USPS is operating in the red, this funding obligation is never mentioned. When they finally succeed in killing the post office in this country, that massive pool of pension money which had been set aside will be the prize for whichever private equity hustler is able to buy the operations for pennies on the dollar.

These thieves think ahead, and if we're ever going to beat them we ought to do the same.

Posted by: Information_Agent | Jan 22 2020 17:47 utc | 9

"This will come as no surprise for Moon of Alabama readers. "

The really smart point MofA made early on was that the MAX scandal was hugely damning for the FAA. Well done.
It is now becoming clearer that most of Boeing's later problems have been the result of the sloppy FAA supervision, which not just allowed Boeing to get away with stuff, but has affected the whole Boeing culture.

(it was recently trendy to talk about aircraft supervision - how every crash was learnt from in great detail - perhaps there just haven't been enough crashes in the last 10 years.)

Can we expect an American assault now on Airbus and the European Aviation Safety Agency (EASA)?

Posted by: Michael Droy | Jan 22 2020 17:56 utc | 10

re the USPO - yes, that pension swindle has been around for some years. Estimable Con=gress animal Diane Feinstein's hubby was a beneficiary of that when the USPO sold of some prime properties to cover the "red." Hubby is said to have acquired the lovely old downtown San Francisco office for - a song... He's a RE guy, don't ya know. And of course Pelosi's hubby is a MIC guy - as is Teresa May's. Those kids made a few shekels off the retaliatory bombing of Syria after the nasty
Ruskies poisoned those sweet blameless now missing spies in perfidious ablion. Sigh.

Posted by: Miss Lacy | Jan 22 2020 17:56 utc | 11

Yesterday’s NYTimes has an additionally damning article on Boeing’s effort to suppress criticisms of its sensor-based landing system arising from a 2009 crash in outside of Amsterdam. They’ve been peddling control systems that put additional burdens on pilots for decades.

Posted by: dadooronron | Jan 22 2020 17:56 utc | 12

The NY Times ran an article yesterday on the crash of a Turkish Airlines 737NG in the Netherlands in 2009. Aside from similarities in the technical aspects (a powerful computer command system triggered by a single sensor; a manual that hid information from the pilots), it highlighted how Boeing and U.S. government allies got the Dutch safety board to tailor its final report to de-emphasize problems with the aircraft in favor of dumping everything on the dead pilots.

This is further illustration that Boeing’s real expertise is – along with stock price support – in bureaucratic maneuvering and public relations. Unfortunately, neither of those skills keeps airplanes in the air.

Posted by: David G | Jan 22 2020 18:01 utc | 13

If the Fed is "bailing out" hedge funds now, why would it not bail out Boeing??

Buy the dip!!! LOL

Posted by: Perimetr | Jan 22 2020 18:12 utc | 14

b writes: "The competiveness of [Boeing Commercial Airplanes]’s product portfolio vis-à-vis Airbus—[is] a position of weakness..."

If I was an Airbus executive (CEO, CFO, etc), I will be very careful when traveling, lest be arrested like Huawei CFO.

Posted by: d dan | Jan 22 2020 18:13 utc | 15

#14...Another "bail-in"? Say it ain't so!
Seriously, although I am not an analyst in any sense of the word, the company seems to have dipped below the imaginary level where things are recoverable. As David G. noted, it's clear to se what Boeings forte really is...and that doesn't keep planes in the air. Add to that the failed attempt to get out of the gravity well, and it looks like they may just have to go back to using Russian rockets.

Posted by: Chevrus | Jan 22 2020 18:24 utc | 16

Maybe the remnants of Boeing (less any previously existing pension obligations, of course) will be scooped up for pennies on the dollar by the Carlyle Group, Lockheed Martin, or even Raytheon, while the PBGC will socialize those pension obligations at a greatly reduced rate.

Posted by: Information_Agent | Jan 22 2020 18:39 utc | 17

Rather than booking the huge costs of building the advanced 787 or other aircraft as it pays the bills, Boeing—with the blessing of its auditors and regulators and in line with accounting rules—defers those costs, spreading them out over the number of planes it expects to sell years into the future. That allows the company to include anticipated future profits in its current earnings. The idea is to give investors a read on the health of the company’s long-term investments.

If that is so then it was already bankrupt before the MAX crashes - it has effectively put borrowed profits from future soon-to-be-cancelled MAX sales into its past balance sheets, so presumably massive assets claimed on the balance sheet don't even exist in reality.

$132 billion in total assets??? How much of that is virtual (fabricated) "profits" spread over 20 years into the future, and which will never exist?

As I said long ago, when you see such a broadly spread pattern of corrupt practices and misbehaviour and total absence of honesty and integrity, it is obvious that those problems that are coming out are only the tip of the iceberg - 10% visible, 90% still covered up.

Yet more Boeing problems to come out then? - Ye aint seen nothing yet!

For the last 20 years Boeing has been bankrupting every aspect of it's existence. That bankrupting has been hidden under the carpet and building up so much that the stream of new revellations just can't stop growing - soon enough it will be a flood. When this company finally explodes it will be an almighty BANG!

Divesting the military sector will be impossible, I say - both because the military sector itself has too many problems, and because the scale of the explosion of the whole company will just be so huge and so pervasive.

Posted by: BM | Jan 22 2020 18:40 utc | 18

This month Boeing halted its 737 production line but it has not laid off any of its workers.

It's another story for its suppliers. Spirit AeroSystems of Wichita Kansas, a major Boeing supplier for the 737MAX, recently announced the layoff of 2800 workers.

Posted by: pokums | Jan 22 2020 18:49 utc | 19

"The method can work when the estimates of future production costs, sales prices and the number of planes to be build are accurate."

This is total baloney and shows why accountants have been allowed to create the worlds bubbles. How b thinks that this is in anyway an acceptable way of producing accounts that can be relied upon fails me.

Posted by: J Butties | Jan 22 2020 18:53 utc | 20

The GAAP rules of revenue recognition don't allow theoretical future sales to be recognized as revenue until such time as the product has been delivered, if I recall correctly. And also, capitalization of expenses is common practice in situations where the initial investment is realistically going to be paying dividends for years, if not decades, into the future, as would be the case for the development costs of something like the 787 Dreamliner.

More than inflating the actual profitability of the entity, this practice smooths out the variance between when those expenses are actually incurred - in the near term during development - and when the revenues derived as a result of said expenses are realized - in the out years. This smoothing out theoretically allows investors to make better decisions regarding the long-term viability of an investment in a given concern.

I'm not justifying the practice so much as explaining how it was taught to me back when I used to work in equity research.

Posted by: Information_Agent | Jan 22 2020 18:55 utc | 21

SNAFU's like this will continue until American businesses reset the paradigm of "profits uber alles."

Posted by: ben | Jan 22 2020 19:01 utc | 22

I become more impressed all the time with the way the Boeing meltdown encompasses the entire spectrum of imperial lunacy:

The finance sector destroying everything real it touches; the preventable surplus danger of civilian aviation on account of cutting corners and reliance on corporate-loyal "regulators"; the scientism/technocrat ideology hostile to human agency on principle (thus the 737MAX system deliberately was designed to abolish as much pilot discretion as possible); bloated military spending; delusions about space travel.

And aggressive war-mongering: Although this piece doesn't mention it, how symbolically appropriate that the first de jure exchange of volleys in the self-destructive US war of aggression against Iran included the US shooting down or causing the shootdown of a Boeing jetliner. And it remains likely that Boeing's negligence played a role there as well.

Yes, given how quintessentially typical a US-imperial corporation Boeing is, same as how Trump is the most typical post-war president, there's little doubt the government will conjure however many billions in digital dollars are necessary to bail it out. The government already is fully committed to infinite-trillions-unto-collapse to keep Wall Street propped up. Once your commitment already is infinite, there's no point limiting it anywhere.

Posted by: Russ | Jan 22 2020 19:02 utc | 23

@Information_Agent 3

Who did this? Jim McNearny?

Posted by: Nathan Mulcahy | Jan 22 2020 19:08 utc | 24

Boeing's board ought to have voted to rescind all retirement benefits for Muilenburg, yet he walks with @$80 Million:

"Muilenburg is equipped for a comfortable retirement, though, as he’s set to walk away with a package worth about $80 million from 'pre-existing retirement benefits,' including stock options, performance awards and other assets, Boeing revealed in an SEC filing on Friday."

Boeing also announced:

"Boeing CEO says it will keep paying its dividend despite Max crisis"

Which US-based Vulture Fund is going to lend Boeing the rope so it can hang itself via the debt it will incur to that entity?

Posted by: karlof1 | Jan 22 2020 19:25 utc | 25

So are the software programmers Indians?

Posted by: Robert Browning | Jan 22 2020 19:28 utc | 26

"The last time we saw similar accounting was how supposedly risk free future income from [Collateralized Debt Obligations] was discounted and included in the current earnings of banks. Remember how that movie ended?"

Yes. The government bailed out the big banks to the tune of tens of trillions of dollars and still counting, and the people in charge walked away with crazy money.

Posted by: TG | Jan 22 2020 19:33 utc | 27

As others have said and have been saying here, the risk of Boeing going de facto bankrupt is exactly zero: it is simply geostrategically too important for the USA to let it disappear on such a technicality.

If needed, the USG will bail out Boeing.


About Boeing's creative accountancy.

Even though it "may work", it is scientifically incorrect to write your expenses in fixed and constant capital (i.e. "investment") as a revenue. Investment is never a revenue in capitalism: it is the necessary evil needed to extract surplus value and realize profit. Indeed, that's the reason capitalists prefer financial profit: it skips the boring and burdensome phase of production.

Capitalism is only viable in a non-relativistic time-space. The capitalist reproduction process always happens in a unidimensional arrow of time with a single direction: past, present and future. The phase of investment always happens in a precise point in the arrow of time: the capitalist spends an exact amount of money (money-capital) to purchase an exact amount of fixed and variable capital in another very specific point in the arrow of time, in order to produce an exact amount of commodities (commodity-capital) which is sold in the free market at another, posterior but still exact, point in the arrow of time.

The overall process can be summarized as: M -> C -> M', as Marx scientifically and thus definitively demonstrated in his Capital.

This "arrow of time with no way of travelling back" seems silly at first glance, but is essential to the very existance of capitalism: if we lived in a society with matricial pattern of time (multiple time-lines concurrently), then it would be impossible for profit to exist. A capitalist could invest, produce and sell and have either an indefinitely big loss, an indefinitely big profit or zero gain, no matter the prices or the quantity of commodities he sold at the free market. The reason for this is that values and prices would change in real time, with no parameter at all.

But we know this isn't the case: the capitalist calculates his odds and get to the exact amount of money-capital he needs in order to extract the highest - but still perfectly predictable - profit rate (with its given band of oscillation). Losses are also scientifically calculated in capitalism: just see how insurance companies and hedge funds thrive in capitalism.

So, Boeing financial reports do not reflect the real world - not even in approximation. Even if you trust your political muscles and presuppose you're going to sell everything you produced, you still have to face the fact that you don't know how much you'll profit in the far future (beyond the first rotation) for the simple fact you can't know how much the USD will be worth then, and, therefore, of the laborforce being used in its productio process. This is true even if you can predict inflation, since inflation only reflects the ration between money and non-money commodities, and not the stage of development of the productive forces (value of labor).

Posted by: vk | Jan 22 2020 19:41 utc | 28

Boeing will have to merge or be bought out. There is nothing else it can do to salvage its reputation.

One of the big news items trending on Twitter right now is Tulsi Gabbard suing Hillary Clinton for saying she works for Russia. Why did Hillary do that in the first place? This explains how the neocons fear Tulsi being chosen as VP. The Ballad of Tulsi and Hillary

Posted by: Kali | Jan 22 2020 19:44 utc | 29

@9 Information_Agent that massive pool of pension money which had been set aside will be the prize for whichever private equity hustler is able to buy the operations for pennies on the dollar. That would be Amazon you are talking about.

Posted by: goldhoarder | Jan 22 2020 19:50 utc | 30

@Nathan Mulcahy | Jan 22 2020 19:08 utc | 24

Based on his resume, you'd think it would have been Jim McNearny, but the move to Chicago was completed in 2001 and he didn't become CEO until 2006. Seriously though, Yale, Harvard Business School, GE, and McKinsey would otherwise make him the perfect candidate to "trim the fat", so to speak. Philip Condit was the CEO when the move to Chicago happened, although McNearny was likely at the helm when production moved to South Carolina.

Hilariously, here's the Wikipedia entry on McNearny:


On June 30, 2005, The Boeing Company hired McNerney as the chairman, President and CEO. McNerney oversaw the strategic direction of the Chicago-based, $61.5 billion aerospace company with a focus on spending controls.[10] With more than 160,500 employees, Boeing is the largest manufacturer of commercial airliners and military aircraft, with capabilities in aircraft, rotorcraft, electronic and defense systems, missiles, satellites and advanced information and communications systems.

As Boeing's first CEO without a background in aviation, he made the decision to upgrade the 737 series to 737 MAX instead of developing a new model.[11]

It looks like if nothing else the decision to completely focus on cost controls and non-union workers, he's our guy.

Posted by: Information_Agent | Jan 22 2020 20:18 utc | 31

Kali @29--

As for why the mad screamer keeps on smearing Russia and anyone she else, see my comment here. Bottomline is it's all about the Class War, ongoing now for 3,000+ years--the only right that matters is the Right to own Property, and anything or anybody attempting to mitigate or regulate that one core Aristocratic Right must be vilified, attacked, MeTooed, Anti-Semeticized, pilloried, run out of town, etc.

Once upon a time, the Hebrews made it the Law that everything--people and property--belonged to their god--talk about Socialism!

Posted by: karlof1 | Jan 22 2020 20:19 utc | 32

@goldhoarder | Jan 22 2020 19:50 utc | 30

Don't rule out UPS and FedEx as potential suitors, too, not to mention any of the myriad actual private equity bottom-feeders.

Posted by: Information_Agent | Jan 22 2020 20:20 utc | 33

So are the software programmers Indians?

Posted by: Robert Browning | Jan 22 2020 19:28 utc | 26

Maybe they are cowboys?

There are more than several commenters at MOA who have a STEM background. The schadenfreude at Bongs profit vs competency problems is immense.

Posted by: tucenz | Jan 22 2020 20:20 utc | 34

The best solution is separate the military part of the company and let Embraer take over, just like MD did.

Posted by: Zico the Musketeer | Jan 22 2020 20:31 utc | 35

I was expecting you to comment on the latest not-news about Boeing's screw-ups, good.

Like many others, we're wondering what Embraer was thinking when they went on board with these clowns. Whatever, I hope Boeing doesn't fully disappear, or that at the very least some smaller but significant competitors to Airbus will rise. Just as it was dangerous to have a too powerful Boeing around, having Airbus as the uncontested big guy around wouldn't be good news - sooner or later, they'll assume they're the dominant power and can do whatever they want, and they'll end up doing crap, being sloppy, and causing debacles like the MAX because they thought they were so powerful they wouldn't need to do a good job to prosper.

Posted by: Clueless Joe | Jan 22 2020 20:45 utc | 36

Boeing’s to big to go bust, a bit like the banks !
They will be seen to be in big trouble. It will be stated that Tthey are to important (militarily) to be allowed to go bust and then bailed out by the US tax payer !
Will we never learn ?
This looks relevant! A cash cow/ free meal


Profit from war, solve that and we have peace !!

Posted by: Mark2 | Jan 22 2020 20:58 utc | 37

I think that Boeing is the prime example of the madness of the stock market. Being bought back enough stock that it could finance a totally new product instead of adding patches and improvements to a forty year old frame. But why did they do it? Because it was increasing the stock price. In a sane world, this would not work. But algorithms used by stock market analysts and believed by "the masses" of investors more or less require that.

At some point, phony accounting became a new religion. With an honest approach, the stocks would be, say, twice cheaper, if not four times, and the first duty of the CEO, company board etc. is delivering value to the owners, the holders of the stock. Preferably, not killing too many people in the process.

It is too early to write obituaries. USA launches a war against Airbus, and to defend Google, against EU, unleashing a slew of sanctions. Some sanction may stimulate air travel, to enjoy French wine, Scottish whisky and finest cigars you will have to take a flight, to Canada or Europe (I guess Antilles will also do). With subsidies slashed, Airbus may not be in position to grab the market while Boeing is down, but European regulators can help. In 2-3 years the number of competitors will increase, Russians and Chinese readying their planes, will sanctions be unleashed again? How long can USA maintain its trade position by sheer brutality?

Posted by: Piotr Berman | Jan 22 2020 20:58 utc | 38

Those planes were knocked down by the invisible hand of the market. I'll bet capitalists will be leading the charge to fly on Boeing airliners now to affirm to the public that less regulation is better for everyone.

Posted by: NoOneYouKnow | Jan 22 2020 21:01 utc | 39

vk: The phase of investment always happens in a precise point in the arrow of time: the capitalist spends an exact amount of money (money-capital) to purchase an exact amount of fixed and variable capital in another very specific point in the arrow of time, in order to produce an exact amount of commodities (commodity-capital) which is sold in the free market at another, posterior but still exact, point in the arrow of time.

me: vk is translating poetry to prose, here is the original

The Moving Finger writes; and, having writ,
Moves on: nor all thy Piety nor Wit
Shall lure it back to cancel half a Line,
Nor all thy Tears wash out a Word of it

Incidentally, not only the size of expenditures matters, but also their wisdom. Saving weight of an automobile by using bicycle wheels would most likely fail. From the point of view of control science, Boeing did something similar, putting weighty task on a feeble processor. The disparity of the weight and the carrying capacity is comparable. Then there is a question why engines were making the frame unstable -- inherent, or fixable with a design? In principle, engines that make every plane unstable should not be tolerated, so I guess it was fixable. Indeed, it seems to be the time of Tears.

Posted by: Piotr Berman | Jan 22 2020 21:14 utc | 40

many companies foolishly buy back massive amounts of stock to inflate the share price and justify raises for the board. This company is pretty much done for at this point

Posted by: DannyC | Jan 22 2020 21:15 utc | 41

Good evening,

I think this is literally not the case with Boeing. Too bad the government handed Embraer over to Boeing, if that was not the case with Embraer getting ready to grab this big market. Unfortunately a government of surrender and submissive. (Brazilian government)

Posted by: Brunno Barbosa | Jan 22 2020 21:25 utc | 42

The Boeing/FAA "self regulation" model has been implemented in many Western countries' essential infrastructure. Used to be US nuclear power plants and suppliers had very strict record keeping/incident-investigation requirements and gov't agency reporting regimes. One major US-based supplier actually farmed out their record-keeping/incident-investigation system to an EU-based company, and of course the quantity and quality of same was no where near the quality of the original... but it's cheaper...

The handing of delivery/oversight on formerly 100% public infrastructure and services is happening across the entire spectrum... Charter Schools are simply handing a public service into private hands, but still drawing on the public purse. Look around, the corporatization of everything from water (think Flint Mich.) and medicine in the EU/Canada (mostly to US-based corporations).

Boeing is just one symptom of a sick US/ZATO economy, and they will continue despite a couple downed planes or rising idiocracy.

Posted by: A P | Jan 22 2020 21:25 utc | 43

This was an excellent article! Thank you.

Posted by: Gregory | Jan 22 2020 21:27 utc | 44

One of your best articles, b.

I don't like to think of how the world airlines who fly Boeing planes are going to react. There's nothing else but to bluster, and order Airbus in the next round. I'd already decided not to fly Boeing, unless I don't have a choice.

Posted by: Laguerre | Jan 22 2020 21:41 utc | 45

Just booked international flights. The first thing I checked was that it wasn't Boeing - even before the price! I'm sure I'm not the only one. Even if the US props up Boeing, it will fail because of market forces. Airlines will be able to measure very precisely the public's aversion to anything Boeing, and will act accordingly.

Posted by: cdvision | Jan 22 2020 21:58 utc | 46

When Boeing decided to go for a stretch too far on the 737 they already had on their books an airframe that was already around the desired size, the 757.

Although dated the 757 could have relatively easily been updated to perform the 737MAX role. But it had a huge problem, crew training on airlines moving from a 737NG to a 757NG. The irony is that that problem also now applies to the 737MAX.

Perhaps there is now panic work being done on that 757NG ensuring it came within the grandfathering rules. Wonder how much of the 737MAX could be used?

Posted by: JohninMK | Jan 22 2020 21:59 utc | 47

Remember the Challenger.

Posted by: steve laudig | Jan 22 2020 22:08 utc | 48

I’d like to see boeing go under ...the big shots running the company deserve to have their bonuses clawed back by angry shareholdrers ....but alas, this will not happen. The ptb will find a suitable white knight to take over the skeleton, incentivised by gov largess that won’t be reported to the public. ITs all agame you know. And as saint george put it:
“It’s a big club and you aren’t in it. Nuff said.

Posted by: James j | Jan 22 2020 22:23 utc | 49

@ Information_Agent 31

Thanks for the info. “McNerney was Boeing's first CEO without a background in aviation”, and “he made the decision to upgrade the 737 series to 737 MAX instead of developing a new model”. Bingo and bingo.

What is unknown, but equally important, is the role his long shadow has played in this sad saga. By long shadow I mean the cadre of Back Belts he had groomed during his tenure at Boeing, and who now infest every level of decision making function at Boeing. If any Boeing insider is reading these comments, I’d love to hear their take on this.

Posted by: Nathan Mulcahy | Jan 22 2020 22:38 utc | 50

@JohninMK | Jan 22 2020 21:59 utc | 47

It's a shame Boeing didn't go the route of the 757, because with it's taller landing gear putting larger engines wouldn't have necessitated moving them forward on the pylons to avoid hitting the runway or ingesting foreign object debris on take-off, which is how we got to this place with the low-slung 737 in the first place.

My father was an airline pilot and while he didn't fly the 757, it was always my favorite airliner. They looked like birds of prey and took off so steeply...really nice plane. Maybe they'll go that route now since the 737's reputation ain't recovering anytime soon.

Posted by: Information_Agent | Jan 22 2020 22:40 utc | 51

I am astonished that David G's comment @ 13 regarding the Turkish Airlines crash at Amsterdam Airport (Schiphol) in 2009 and the blowtorch pressure Boeing and the US government applied to the Dutch Safety Board to drown the Dekker report on the causes of the crash, and instead to blame the crash on the airline pilots, one of whom was a former Turkish air force pilot (shades of William Langewiesche's screed on the Lion Air and Ethiopian Airlines crashes), is not getting the attention here that it deserves.

Among other things, one takeaway implication from the DSB's backdown is that we can no longer trust what investigations it undertakes and any reports it writes on future plane crashes that involve Boeing passenger jets - or for that matter, any investigations and reports it has done on Malaysia Airlines Boeing passenger jets that fall out of the sky in foreign lands.

Incidentally four of the nine people who died in the Turkish Airlines crash at Schiphol Airport were Boeing employees said to have been carrying confidential military information on their laptops. The rescue effort was delayed by American officials who wanted the military information retrieved before anyone could approach the aircraft to save the cabin crew and passengers. No wonder the US government might have been keen to see the Dekker report dead and buried.

Posted by: Jen | Jan 22 2020 22:43 utc | 52

Job Shop Accounting allows a Project to recognize revenue as a percent complete to the total order during the build process. I am sure Boeing is not on a distribution model which is ship and bill.

Posted by: Linda Amick | Jan 22 2020 22:46 utc | 53

Has anyone noticed that all the planes which have mysterious disappearances, or strange flight problems, are Boeing's, such as the planes on 9-11, the Malaysian plane which disappeared, the latest Iranian shoot down, with its electronic glitches, etc.

We have discovered that the US hates Huawei as they refuse to install the back doors for the Intelligence agencies. We can assume then that Boeing is also a back-door asset which can be controlled, remotely flown, brought down, etc, by the Agencies.

Will the flying public accept this situation, that their plane can become a 'drone' with a few key strokes at Langley, if even one of their fellow passengers is a target (e.g Iran's Soleimani)?

Airbus anyone???

Posted by: Ric G | Jan 22 2020 22:52 utc | 54

This video,, from the article by Yves Smith referred to above, is a shockingly forceful warning from the FAA Chief Administrator to Boeing to straighten up and fly right. I didn't know government bureaucrats could even speak that plainly, at least not in public. Of course the people behind this fiasco will not pay for their crimes - quite the contrary!

Posted by: carl | Jan 22 2020 23:06 utc | 55

@ Posted by: Information_Agent | Jan 22 2020 17:35 utc | 3

Your story describes the symptoms of the degeneration, but not the cause of said degeneration.

In my opinion, Boeing's degeneration is a classic case of an advanced stage of the Tendency of the Profit Rate to Fall Theory (TPRF).

To put it simply, the Tendency of the Profit Rate to Fall states that, the higher a capitalist society's organic composition of capital (OCC), the lesser its overall (social) profit rate, and that, over time, a capitalist society always tends to rise its OCC.

In other words, capitalism is a historically specific mode of production, just a phase in the overall human history of development, and, therefore, it has an expiring date. Boeing is a very illustrative example (albeit just for an individual capital) in my opinion.

The TPRF also explains @ Posted by: Information_Agent | Jan 22 2020 22:40 utc | 51 question about why didn't Boeing go the 757 route. The answer is self-evident from the point of view of capitalism: it would be less profitable for Boeing to do so; and, since its profit rate already was very depressed, it needed every drop of surplus value it could get.

Posted by: vk | Jan 22 2020 23:19 utc | 57

Boeiing. Boeiing. Splat. Sums it up.

Posted by: Dick | Jan 22 2020 23:39 utc | 58

Maybe the programmers are some of Biden's re-tooled coal miners

Posted by: les7 | Jan 22 2020 23:51 utc | 59

Never fret, Boeing.

Here are two words to soothe your anxiety: "Government Bailouts!"

Also: "Too Big to Fail/Jail."

Posted by: ak74 | Jan 22 2020 23:59 utc | 60

Nobody seems to remember anymore Mr Patrick Michael Shanahan, whom Drumpf appointed to be Deputy Secretary of War then Secretary of War after a LONG career at Boeing. In his second United States government job, he lasted less than six months.

For what it's worth from Wikipedia (always to be taken with a grain of salt):

"In late March 2019, news sources reported that Shanahan was under investigation by the Pentagon's Office of Inspector General because of allegations he improperly advocated on behalf of his former employer, Boeing Co.[37]

"In a May 2019 internal memo, Shanahan ordered new restrictions on how information about global operational plans and orders are shared with Congress, such that summaries are provided rather than an actual plan or order that was requested.[38]

"On May 9, 2019, the White House announced that President Trump would nominate Shanahan as his second defense secretary, despite skepticism and even hostility from lawmakers and officials within the Department of Defense.[5] However, Shanahan withdrew from the confirmation process in June, following increased public scrutiny of several incidents and allegations of domestic violence involving Shanahan's ex-wife and son.[3] In a tweet addressing the withdrawal of the nomination, President Trump said that Shanahan intended to 'devote more time to his family'.[39]"

Could Mr Shanahan's improper advocating on behalf of his former employer have involved adjusting existing Pentagon contracts to favor this former employer with a view to splitting off the military contracting business? Such an arrangement could make it a viable company since military contract losses and overruns are always absorbed by the buyer (the United States tax payers).

As for the post office's requirement that it fund seventy-five years of future retirement pensions, that was intended to set up an investment fund (like the Social Security Administration's surplus) that would be invested in United States Treasury bonds paying almost zero percent interest at a time when the market for Treasury bonds was stagnating and threatening to shrink.

In the end, quantitative easing (Orwellian for printing money) came into fashion to come up with trillions to bail out the banks and worked so well that it gave way to a second binge called QE2 (Cunard Line must have been flattered, not to mention Her Britannic Majesty). That worked so well that now it is standard for the Bank of the Federal Reserve to print money to buy those bonds ("monetizing the debt", another Orwellian zinger).

So, the need for the post office's investment account has been superseded by just printing money. Isn't that one of those dangerously slippery slopes a country never embarks upon unless in extremis?

Posted by: RJPJR | Jan 23 2020 0:01 utc | 61

For some Comic Relief on this Clusterfuck, find out about the movie Boeing Boeing, which was rather funny at the time, involving sex, not crashes.

Posted by: karlof1 | Jan 23 2020 0:05 utc | 62

Another thing, Boeing absolutely CANNOT be allowed to go out of business.

After all, where would American spook agencies get civilian airliners for their false flag operations (like the Sept. 11th attack) and other highly suspicious provocations like the Malaysia Airlines Flight 17, Malaysia Airlines Flight 370, or Ukraine Airlines Flight 752 incidents?!?!

Posted by: ak74 | Jan 23 2020 0:06 utc | 63

Boiing will join a long list of Zombie enterprises. Sooner or later they will cause wall street to blow out their brains. This is not just one bad decision, its a culture of short cuts in a place where passengers have zero tolerance.

Posted by: steve | Jan 23 2020 0:08 utc | 64

Boeing has a monopoly in commercial aircraft production along with Airbus. Airbus is running at top capacity with no hope of increasing production much soon. With the 737 max out of commission airlines are cutting flights as they don't have enough planes. Planes are getting more crowded, prices will increase and there are fewer scheduling options

The CEO who got fired received a 60 million dollar payout. He also likely holds a bunch of shares he can dump. The other managers and new CEO could care less about other shareholders, they buy back stock for Boeing with profits rather than returning the profits to shareholders with dividends or reinvesting it back into the company to inflate the value of of their own stock options. If the stock price starts to slide they will simply renegotiate compensation packages, but Boeing as a company could care less about stock prices since the company got its money when they sold to the shareholder.

The ability to borrow cheap is important, but even at higher interest rates the added costs reduce profits and taxes. Profit losses can be accumulated and offset future profit taxes when good times resume.

Boeing is also too big to fail. Meaning any run on its stock will be supported by the Feds muted role as the head of plunge protection team. Why else do you think stock prices of the large caps have wildly inflated despite a 10 year recession masked by manipulated economic figures of the BLS. Every time there is a dip they buy futures to reverse the trend. Investors know the Fed has their back on large cap ownership and have no fear. Maybe at some point the Fed pulls the plug but you can be sure the big players will be forewarned to they can short the stocks to offset their losses on the shares they hold.

In any case, Boeing will not fail, it is too big to fail. The global economy requires many planes to fly. Airbus cant handle the load in the short haul, nobody else can. Now maybe over a longer term China can take the opportunity to move in on Boeings weakness, but you can be sure the US will slap tariffs on their sales in the US if needed to protect Boeing

As for the expected losses in the short term. Investors will want to recover lost dividends at some point. Boeing is hard at work developing pilotless planes. Hefty salaries for all those pilots may be a thing of the past soon. Frankly most flights are on autopilot 90% of the time anyways. Robots will replace flight attendants at some point as well, something that will be possible by reducing services even more. They may keep human attendants for first class, but not the cattle class. Air marshals paid for by the government can be expanded to provide onboard security.

Posted by: Pft | Jan 23 2020 0:12 utc | 65

To expand on my comment on pilotless planes and robot attendants while this mainly benefits the airlines it also makes Boeings planes more valuable so they can sell at a higher price, and indeed might encourage Boeing to start its own airline and compete with its customers.

Posted by: Pft | Jan 23 2020 0:20 utc | 66

Boeing share price- $308
This is why the US is headed for an economic explosion.

Posted by: Paul | Jan 23 2020 0:41 utc | 67

vk | Jan 22 2020 23:19 utc | 57

I would say that the cause of the degeneration is rooted in the American cultural preference for authoritarianism. It wasn't always the case in the U.S., but somewhere around 1980 American culture changed, and I started hearing sayings like: 'Winning isn't everything, it is the only thing'. What it meant was that one could do whatever it takes to win, and if that means cheating, so be it. But when you cheat, you may win once, but you destroy the game, the system. Nobody wants to play a rigged game.

Boeing wanted to 'win', but they couldn't win honestly so they cheated. It seems that they've been cheating ever since the authoritarians took over about 20 years ago. But as I said above, when you cheat you destroy the system.

Building an airplane is an extremely complex task, requiring extremely complex systems. But these systems, which require shared authority, collaboration and trust, are fragile and easy to destroy. When the authoritarians running Boeing over-rode the authority of the professionals (in order to cheat), they were essentially destroying the systems that had made Boeing a great company.

For a long time Boeing appeared to be the one company that had resisted the generalized decline of U.S. industrial capability (evident since the 1980s), and could compete internationally in high technology manufacturing. But, alas, it too has fallen victim to the authoritarianism that is prevalent in U.S. culture.

In my view, Boeing cannot recover until it rebuilds its systems, and it can't do this until it gets rid of the authoritarians, currently in charge, and changes its culture, to one of collaboration and respect for the 'rules of the game'. But I don't know how they do this in a society in which the authoritarianism predominates.

Posted by: dh-mtl | Jan 23 2020 0:42 utc | 68

broadly spread pattern of corrupt practices and misbehaviour and total absence of honesty and integrity, it is obvious that those problems that are coming out are only the tip of the iceberg - 10% visible, 90% still covered up. BM @ 18 <= may be even 2% and 98"% ?

The finance sector is destroying everything real it touches Russ at 23.. <==Look at the insurance industry..

Corporate financial reports are outrageously misleading VK @ 28 <==Author Andersen and Bernie Eggers comes to mind? problem is there is no longer a real world everything is all virtual.

Boeing the prime stock market example Piotr Berman @ 38.. <= not really,the integrity disaster ts even worse when the product is intangible. Consider the FDA and the pharmaceutical industry.

Government required back-doors  Rick at 54 <=the fourth amendment maybe scheduled to be secretly amended to say => all products offered in commerce are required to provide a secret to the consumer, accessible to the private contractors back door. It might be called The unreasonable warrant-less search and seizure Clause.
pended to the fourth amendment? You can trust big brother with your information, but if you can't they will take in anyway.

 the people behind this fiasco will not pay for their crimes  Carl @ 55.. <=yes I think that's how the secret mobster exemption and bad outcome bonus plan works, it was passed the day after the day before..

Barflies should read RJPJR @61 <==very well done.. thank you for the effort.

An electrical engineer friend of mine said a year or so ago that not one modern Engineer he has seen could have passed engineering at his school in his day.. He was a Clemson Grad

Steve @ 64.. it may be that corruption in industry actually protects it, just as soon as the result of its corruption occurs, it files bankruptcy, changes its name, buys the old assets, jettisons its pension liabilities, and bends the public over for yet another round ..

The design, build, Buy, Fly and Die industry is not unique; nearly all other industries that remain in domestic America have similar stories to tell. Why, because there are few Americans with the education and experience to do the jobs.

Posted by: snake | Jan 23 2020 1:07 utc | 69

@ Posted by: Pft | Jan 23 2020 0:12 utc | 65; 66

All this 737 MAX shitfest only happened because Boeing wasn't able to redesign the chassis to fit a bigger engine.

What makes you think a company that's willing to go cheap on the chassis could make pilotless planes?

Besides, capitalism is already sweating to make pilotless cars, why would it suddenly be able to make pilotless planes at all?

I'll repeat what I commented last post about this: many Americans - including many commenters here - are still in denial about their dear Boeing, an American treasure. Only blind faith explains these expectations it will still, somehow, pull it off.

Posted by: vk | Jan 23 2020 1:17 utc | 70

Survive? They will profit from the MAX problem if they follow the Wall Street and Fed model. There is only gross extortion and self enrichment and no constraining ethics.

Posted by: uncle tungsten | Jan 23 2020 2:03 utc | 71

When I was watching Die Welt TV news this morning one of the messages running on the bottom of the screen was "Trump says Boeing disappointing"
The story in the NY Times fishwrap has orange moron criticising boeing for "making things more complicated" which for anyone who has tried to untangle the twisted,
interlaced web of shell companies & off-shore entities that is Trump Inc, a real case of pot describing kettle as black.

If boeing is on Trump's brain it can only be because someone has tried to explain the mess that is boeing to him & they would only do that if the mob is trying to sell him on a fed bailout.

Posted by: A User | Jan 23 2020 2:06 utc | 72

Almost as if Boing is slow walking it to run out the clock on FAA. They will take what Boing offer or cut throat of workers.

Posted by: jared | Jan 23 2020 2:14 utc | 73

Both the CR-21 and the C919 are in the EASA certification process. The CR-21 is certified in Russia, likely so in China, and is expected to complete EASA certification this year.
Including the russian PD-14 engines.

This specifically means Boeing / Airbus have serious competitors from Russia / China...

I read that during USSR days, it's airspace was closed to western airliners and airlines, which required flying a circuitous route either south or north between europe and asia.

Don't be surprised if Russia/China/SCO countries refuse to certify Boeing aircraft for overflights, and / or flights to their cities, citing safety concerns, while "suggesting" airlines buy their planes instead.


Posted by: Dr. George W Oprisko | Jan 23 2020 2:25 utc | 74

Why can't Boeing revert to the original design?

The issue seems to have been largely a case of fuel efficiency of the engine. I presume that in the intervening years engines have improved their fuel efficiencies, including the engines used in the original design. Even if this is not the case they should be able to sell the planes at a discount (to account for lower efficiency).

A better option than not flying the planes at all? After all we are talking about 1000 planes.

Posted by: jiri | Jan 23 2020 2:47 utc | 75

"Under its previous policies Boeing increased its share price by buying back huge numbers of its own shares. That money should have been invested in new airplane types or be kept as reserve."

I respectfully disagree with the underlying notion of that statement. Non-engineers never seem to give a thought as to how a highly technical piece of equipment comes to fruition. Fundamentally, the plane has to start as an idea with some knowledge of what's actually required, what works, what doesn't. Then someone (a group, typically, in the case of something as highly complex as an airplane), has to design the thing. This usually requires knowledge of physics, chemistry, underlying forces, metallurgy, electronics, computing, power generation (both electrical and propulsion), aerodynamics, etc. and the entire package must be then stitched together in a way that will produce the desired technical result within a tolerance that doesn't exceed safety or operational limits.

THe issues you raised, share buy-backs and even coming out with a new aircraft are besides the point in the MAX-737 tragedy. What they should have spent that money on is more engineering, more engineers and the best ones. And then more engineers and experts to test and retest and retest. Alas, it is "finance" that has taken center stage for a long time now in the West, and it is showing up in disasters like this. What we need is more engineers and scientists, not more bankers and hedge-fund managers.

One can have "capital" but without the knowledge and experience of scientists and engineers, that money would not be able to accomplish much, and, arguably, vice-versa.

Posted by: engineer | Jan 23 2020 2:54 utc | 76

@engineer – one can’t compensate a design flaw through a software accommodation and don’t tell the pilot or set up a learning through making hours on the flight simulator. Going for competition on price, lost out on quality. The commercial boys won the plight from the engineers.

The Airbus A320neo was trouble for Boeing

One of the issues for Boeing is that it takes more work to put new engines on the 737 than on the A320. The 737 is lower to the ground than the A320, and the new engines have a larger diameter. So while both manufacturers would have to do work, the Boeing guys would have more work to do to jack the airplane up. That will cost more while reducing commonality with the current fleet, and reduced commonality means higher costs for the airlines as well.

Posted by: Oui | Jan 23 2020 3:16 utc | 77

No socialism for Boeing.
Let them die a true capitalist death.

Posted by: earthling1 | Jan 23 2020 3:30 utc | 78

I will never fly any airline that uses Boeing products. I hope they go bankrupt.

Posted by: William H Warrick II | Jan 23 2020 3:34 utc | 79

Seems there is a strong majority for a bail out episode for Boeing. I wonder when they will try it on. If they do the Wall Street model it will be immediately after the election.

But then immediately after the election the tried and tested method might get a rerun by Wall Street.

Will Boeing and its establishment thieves pull a trick right in the heat of the election campaign? That would certainly divide the electorate expectations but I suspect it would hurt Trump if the voters are strongly committed to getting their share of the plunder for once.

Posted by: uncle tungsten | Jan 23 2020 3:36 utc | 80

the empire will fall and boing is make them to stumble. it is the amount of mistrust that is created in booth, the pension system and civil aviation in the same event. very black swan.

Posted by: rico rose | Jan 23 2020 5:23 utc | 81

It would be really great if any of the more optimistic predictions did come to pass eg the boeing bailout being rejected by voters or boeing's collapse being the chink on the dyke that orange moron's finger was insufficiently fat to staunch, but that damn curse of a POV called 'realistic' tells me that too many amerikans still hold their indoctrination - that which claims, "what is good for boeing (or any other fortune 500 parasite) is good for me".
The first step has to be mass truth telling in the face of the most pervasive & corrupt propaganda pushed out by the media, both halves of the Amerikan Empire Party, plus 99% of amerika's god-botherers.
More people onside - outside the bulldust of amerika's two symbiotic established and corporate controlled political 'movements'.

Posted by: A User | Jan 23 2020 6:38 utc | 82

Ya know; there are numerous ways to travel; none involving flying.
Boeing, by all standards of ethics; should a) Declare bankruptcy, b) Be prosecuted for gross negligence and criminal contempt, c) Quit business and commit mass, corporate, suicide, d) Go into comedy and satire...or all of the above.
As someone who has vowed to never set one foot on an airplane (any & all) ever again; I am prepared to go any & everywhere by other means... ;-)

Posted by: V | Jan 23 2020 9:00 utc | 83

Given how awful air travel is under the best of circumstances (and this piece doesn't even get into how airports have been turned into totalitarian indoctrination zones; anyone who puts up with the TSA perverts at the airport will eventually put up with them everywhere else in life), it would be a deviation from the norm if the air-sheeple were to shun Boeing planes on safety grounds.

Posted by: Russ | Jan 23 2020 10:30 utc | 84

What would come after Boeing? Maybe it is time to consider the post-Boeing bankruptcy aviation world.

The US won't let Airbus just have the whole market. The assets of Boeing would be purchased, at a steep discount, and separated from its liabilities. Some new company, maybe using an old name, would emerge as the new American company.

We got by without Douglas, without McDonald Douglas, without Lockheed. We could get by without Boeing.

It could be a better company. Boeing has made such a mess of things, it could hardly be worse. All it need do is, "Don't do what Boeing did."

Posted by: Mark Thomason | Jan 23 2020 11:42 utc | 85

@ Posted by: dh-mtl | Jan 23 2020 0:42 utc | 68

You "cultural degeneration" hypothesis describes the symptoms (phenomenon), not the cause (thing in itself) of American relative decline after 1978.

Marx's theory of the Tendency of the Profit Rate to Fall explains all the "symptoms" while also explaining the cause. It also explains why this decline isn't happening only in the USA, but also in all major and minor capitalist nations. It simply fits too perfectly not to be true.


@ Posted by: engineer | Jan 23 2020 2:54 utc | 76

You're speaking the truth. Money doesn't have any power by itself: it is merely the representation of all commodities in existence in a given stage of a given capitalist society. It is the simply the universal commodity, i.e. the commodity which can be exchanged by any other commodity.

Capitalism - besides being the system which has elevated human labor to its most abstract level yet - is still subject to the basic laws of society and of physics. As such, it is still subordinated to technical (horizontal) division of labor, and to the limits of the material world. The fact that the capitalist sees the production process of capital as a cumbersome, "necessary evil" to achieve profit doesn't change the fact his wealth and power emanates from human labor (working class) - and not money.

Posted by: vk | Jan 23 2020 12:20 utc | 86

Pilots are losing confidence on Boeing:

‘Like a Jenga game’: Pilots shred Boeing as it prepares to resume 737 MAX production ASAP, citing ‘positive feedback’ from pilots

“It’s like a Jenga game, [trust] gets higher and higher, and then it tumbles down,” Dennis Tajer, spokesman for the Allied Pilots Association, which represents 15,000 American Airlines pilots, told the Financial Times.

American pilots are facing a dilemma: on one side, they are patriots and want Boeing to succeed at any cost; on the other side, they don't want to die.

Posted by: vk | Jan 23 2020 12:56 utc | 87

Posted by: engineer | Jan 23 2020 2:54 utc | 76

They should also not have relied on US political power to make the Dutch safetyboard cave.

Posted by: David G | Jan 22 2020 18:01 utc | 13

Or they might have fixed the problem in 2009.

Not saving on tests might also help.

Posted by: somebody | Jan 23 2020 13:01 utc | 88

>As someone who has vowed to never set one foot on an
>airplane (any & all) ever again; I am prepared to go
>any & everywhere by other means... ;-)
>Posted by: V | Jan 23 2020 9:00 utc | 83

Add my name to that list. I refuse to voluntarily submit to the Airport Grope. I recall when the TSA was created that a bunch of people complained loudly and insisted they would never submit to TSA. Well that "movement" lasted about a month. Maybe less. Perhaps TSA is mostly a test to see how far US peons can be pushed. The result of that test is, there is no limit to what US peons will accept.

Posted by: Trailer Trash | Jan 23 2020 13:45 utc | 89


After watching Tulsi absolutely gut HRC in that Russian incident, can you imagine what Tulsi would do to Boeing and the FAA at a hearing? The bureaucratic innards would be figuratively hanging out.

Posted by: Morongobill | Jan 23 2020 13:48 utc | 90

@ Dr. George W Oprisko
Soviet aerospace wasn't closed for overflights. Such transit flights were paid-for, though: Aeroflot, than only, now major Russian airline, still receives these money in accordance with Soviet era treaties.
As to CR-21 (МС-21) both airframe and engines are not in production, capacity of Russian industry to produce tens of large commercial airliner is, well, it's not there. And Superjet fiasco showed complete lack of knowledge how to service planes you already sold. So, no Russian competitors to Boeing.
As to Chinese, their ability to produce and sell safe and commercially successful planes is yet to be proven. Even if they are up to task, Huawei example gives us some clues that it won't end well.

Posted by: wiz | Jan 23 2020 13:52 utc | 91

Boeing the financial microcosm of the complete economy of the USA. A turd circling the bowl waiting for the final flush!

Posted by: Taffyboy | Jan 23 2020 13:58 utc | 92

That's a good question. Boeing will survive as long as the U.S. is in the business of war instead of helping to save the planet. I have a better question: Can the world survive its Trump problems and Russian complacency? Never mind, I'll go back to sounding the alarm on the open thread way back where no one will see it.

Posted by: Circe | Jan 23 2020 14:22 utc | 93

I think the title should read

Should Boeing survive its MAX problems?

I don't think it should.

Posted by: E Mo Scel | Jan 23 2020 14:34 utc | 94

It is fairly standard accounting practice to defer development costs and spread them over anticipated production. However, the devil is always in the detail: what counts as development. What counts as cost. How is the anticipated remaining production volume determined? As the accountant candidates were asked at the job interview: "what is 2+2?" The one that got the job answered "what particular number did you want it to be?".

Posted by: Kaiama | Jan 23 2020 15:10 utc | 95

V @ 83 says:

Ya know; there are numerous ways to travel

flixbus is promoting travel in the USA by selling tickets for 99 cents...until March 15th. they have a great network and great prices here in Europe as well.

Posted by: john | Jan 23 2020 15:16 utc | 96

Whatever the Boeing's fate be, it's sad to see a company that was a pioneer and leader in innovations that were crucial for the development of the commercial aviation, in such a gloomy situation due to the surrendering to the turbo-financial greed.

Posted by: Geraldo Lino | Jan 23 2020 15:31 utc | 97

Oh, this is easy to predict. In five years Boeing will dominate the "free world" market even more than it does now. Its dominant stature will be ensured in two ways: (1) massive injections of American public funds and merciless reductions in pension funding; (2) crippling American sanctions imposed non any country that shows preference to Airbus, let alone considers any aircraft produced by UAC/Comac/CRAIC. In fact, I anticipate that aircraft manufactured by Russian or Chinese concerns won't even be granted landing rights in any "free world" country.

Posted by: corvo | Jan 23 2020 16:02 utc | 98

To dh-mtl: All organizations ultimately require some form of authority to function. In the best situations, that authority is shared or at least controlled by the members of the group/organization being managed. This is legitimate authority, based on knowledge or consensus. Illegitimate authority, which most current capitalist and "democratic" institutions are operating under, is the problem.

Milgram and Zimbardo show the HOW authority is so easily abused by those in power, KNOWINGLY OR NOT. The only way to prevent the unknowing abuse of authority is to teach children from an early age to recognize illegitimate authority and not accept it... but then the entire Western-style education system would have to be changed to eliminate illegitimate authority from schools and even religions.

I'm not holding my breath.

Posted by: A P | Jan 23 2020 16:44 utc | 99

there's a novel thought! - sanction countries that favour airbus, lol.... this is doable under the present usa!

Posted by: james | Jan 23 2020 17:39 utc | 100

next page »

The comments to this entry are closed.