As Fallout From The 737 Max Crisis Continues, The Cost To Boeing Is Growing
AUDIE CORNISH, HOST:
As the fallout from Boeing's 737 Max crisis continues, the cost to the company is growing. Boeing today reported a 50% drop in profits in the third quarter, largely because the 737 Max remains out of service. Yesterday, Boeing fired its top airplane executive. It's still not clear when the Max will be approved to fly passengers again. From Chicago, NPR's David Schaper has more.
DAVID SCHAPER, BYLINE: Boeing CEO Dennis Muilenburg held a conference call today to announce the aerospace giant's lackluster third quarter financial results. And he stressed one theme over and over again.
(SOUNDBITE OF ARCHIVED RECORDING)
DENNIS MUILENBURG: Nothing is more important to us than the safety of our customers and the flying public.
SCHAPER: Safety is what the focus on the Max has been all about. Investigators in Indonesia are scheduled to release a final report Friday on the crash of a Lion Air 737 Max a year ago that killed all 189 people on board. And it's expected to blame the activation of a flawed flight control system, compounded by pilot error. Investigators fault that same design glitch in a second 737 Max crash in Ethiopia in March that killed 157 people. Since then, all 737 Max planes have been pulled from service as Boeing works on software fixes. While that work has encountered one delay after another, Muilenburg insists the fixes are now ready and could be approved by U.S. regulators by year's end.
(SOUNDBITE OF ARCHIVED RECORDING)
MUILENBURG: With the changes we're making to the Max software and training, we're confident that the Max will be one of the safest airplanes ever to fly.
SCHAPER: But regulators in Europe say they won't certify the Max until at least early 2020, and it may take passengers even longer to be convinced to fly on the plane again. Meanwhile, the costs are mounting. Boeing reports today close to another billion dollars in Max-related losses in the quarter, bringing the total to a whopping $9 billion.
BJORN FEHRM: Now they have actually consumed almost the money it would have cost them to do a new aircraft instead of updating the 737.
SCHAPER: That's Bjorn Fehrm, an aviation industry analyst with Leeham Company. He says instead of taking the time to develop a new plane, Boeing quickly developed the Max as a new version of the old 737 to compete with a new offering from rival Airbus. But to keep costs down, Boeing downplayed significant changes it made to the plane, especially the new flight control system called MCAS that is partly to blame in the two crashes.
FEHRM: And the culture which has produced this mishap is the culture of cutting corners in order to maximize the profits of the company. And it will cost them in upright money. It'll also cost them in reputation with the flying public.
SCHAPER: Dave Lassman teaches organizational management at Carnegie Mellon University and agrees that a cultural problem contributed to Boeing's flawed 737 Max design. So he's not shocked that the company forced out the head of the commercial airplanes unit yesterday.
DAVE LASSMAN: I would be surprised if more heads wouldn't roll at Boeing.
SCHAPER: But he thinks turning around Boeing's culture will take more than a few demotions and firings.
LASSMAN: There is a systems or a procedure problem that allowed this to occur.
SCHAPER: Fixing that and rebuilding confidence both inside Boeing and out will take time. Meanwhile, several investigations into the design and certification of the Max continue. And for the first time, CEO Dennis Muilenburg and other Boeing officials will appear before congressional committees next week to face what will almost certainly be intense questioning.
David Schaper, NPR News, Chicago.
(SOUNDBITE OF PYE CORNER AUDIO'S "DESCENT") Transcript provided by NPR, Copyright NPR.