The 737 Max saga may be moving towards a resolution if foreign regulators buy off on an apparent FAA change of heart. According to an exclusive story in the Wall Street Journal, the agency is now looking into a remedy for the grounded plane that it had nixed earlier, namely, mandatory flight simulator training:
Federal aviation regulators are considering mandatory flight-simulator training before U.S. pilots can operate Boeing Co.’s 737 MAX jets again, according to government and industry officials familiar with the deliberations, a change that would repudiate one of the plane maker’s longstanding arguments….
The FAA’s formal decision isn’t expected until February or later, and the situation remains fluid. An agency spokeswoman declined to comment on specifics, saying more analysis and testing is required…
Boeing has long maintained 737 MAX pilots don’t need supplemental simulator training beyond what pilots receive to fly other 737 models, a stance that many FAA officials now regard with increasing skepticism, according to the officials.
The FAA’s changed outlook on simulator training has arisen partly because Boeing and regulators are proposing rewriting some emergency checklists for pilots and creating some new ones, according to some of these officials.
In addition, one of these officials said, the FAA expects certain cockpit alert lights to be updated so they can notify crews of potential problems with an automated stall-prevention feature called MCAS. Misfires of that system led to two fatal MAX nosedives in less than five months, taking 346 lives and resulting in global grounding of the planes in March.
Frankly, if this is all that the FAA winds up asking of Boeing in the end, this seems awfully underwhelming relative to the drama of the world-wide grounding of the plane. And this might also seem like the FAA wimping out.
However, the FAA is in some ways in the perverse position that the SEC finds itself in. Admittedly, the SEC’s (and banking regulators’ generally) big act of cowardice is not being willing to force out, heavily fine, or otherwise seriously sanction corporate execs. That actually has happened not all that long ago; recall that the Fed forced out the CEO, vice chairman, general counsel, and head of government bond trading at Salomon Brothers in 1992 over Treasury bond market rigging.
But putting that aside, a general problem financial regulators face when sanctioning companies is civil versus criminal penalties. The problem, however, with even indicting a financial firm is that many counterparties would be required to stop doing business with them. That is why Eliot Spitzer threatening to prosecute AIG as a way to force CEO Hank Greenberg to resign was depicted as so heavy-handed. It was decried as a death sentence….of a company that effectively failed less than three and a half years later.
The FAA may have an analogous problem with the 737 Max. Telling Boeing to abandon MCAS entirely would be tantamount to requiring a hardware redesign of the plane….which means years, and would likely include the loss of all the backlogged orders, wreaking havoc not just on Boeing but also on airlines that depend on those new planes to replace aging ones and expand their fleets. In other words, this type of remedy would be draconian even if prudence indicated it were the right thing to do.
Perhaps I’m wrong that in believing that there’s not a middle ground, but I see a very big step function between the ready fixes and other solutions.
So the FAA is practically limited to rewrites of MCAS, whatever improvements in alerts that can be made without a cockpit redo, and training. Unless, of course, foreign regulators don’t deem those fixes to be adequate. But even if the FAA would like to be more bloody-minded, it would be better served, if it can, by casting foreign regulators as the heavies.
Now the perverse part of this development is that if Boeing had conceded to this change early on, the plane might well be flying now. Boeing’s protracted effort to blame pilots led to exposes of how much Boeing had in fact hidden from the airlines and the FAA about MCAS. When you are in trouble, rolling over, showing your belly, and asking for mercy is often the best approach, particularly after a global grounding of an expected cash cow means you aren’t in much of a position to negotiate. And even though the article positions the resistance to simulator training as coming from the FAA, this was likely the pre-new-FAA-Director-Steve-Dickson-regime defending its past actions.
One open question is how the needed training affects the business logic of the plane for Southwest, which is a 737-only airline. Recall that according to press reports, such a Moe Tkacik’s account in the New Republic, Southwest had required Boeing would pay a rebate of $1 million per plane if the 737 Max required additional level-D simulator training. That was way way way in excess of estimated costs of $2,000 per pilot. So was this provision merely a clever Southwest lawyer showing his macho….or was it that Southwest regarded it as a major pain to have to have effectively two types of pilots, ones trained to fly on the 737 Max and ones not, and didn’t want to have to keep tabs?
Get a load of this disconnect in the article:
The FAA’s formal decision [in context, on the simulator training] isn’t expected until February or later, and the situation remains fluid. An agency spokeswoman declined to comment on specifics, saying more analysis and testing is required.
“The FAA does not have a timeline for this process,” she said. “And at this point our primary concern is ensuring a complete and thorough review of the aircraft.”
Recall that new FAA Director Steve Dickson has now at least twice made a point of saying the agency does not have a timetable, and he wants his troops to take the time they need to make sure the plane is safe.
Yet we have later in the very same story:
Since at least early fall, regulators in Europe, Canada and some Asian markets have signaled they are leaning toward mandating extra simulator training as part of their independent reviews of the MAX’s safety.
The current tentative timeline projects FAA approval of an ungrounding order around March, after a group of international aviators—called the Joint Operational Evaluation Board—is slated to issue comprehensive training recommendations. After that, it would take weeks to inspect the idled planes, complete required maintenance tasks, brief foreign authorities and fly demonstration flights without passengers.
Note the lack of agency. Who is in charge of this “current tentative timeline”? The ordering of the story implies that it is the international regulators, but they won’t do bupkis until the US gives its approval. In other words, at best the Journal is flogging an outdated timetable.
The FAA may wind up coming in on that schedule, but Dickson is refusing being boxed in. If I were Dickson and this was some Boeing operative yet again trying to manage Mr. Market when there is no active plan of this sort, I’d be ripshit. But given that a new CEO is in place, if I were Dickson, I’d send a suitably unhappy message to him privately, giving him the benefit of the doubt in terms of not getting his subordinates yet marching all in the same direction.
In the meantime, Boeing has yet another 737 Max mess, potential shorts and newly-found fragility. SlashGear’s account:
According to The New York Times’ sources, Boeing discovered problems with the wiring that helps control the 737 Max tail. Two bundles have been determined to be too close to each other, risking a short circuit that could then send the plane crashing if pilots are unable to compensate quickly. And that’s just the tip of the iceberg.
The Max’s engines have also been reported to have a structural weakness that could cause it to shatter. While the possibility is remote enough that regulators aren’t requiring an immediate change, the mere knowledge that such a risk exists might be enough to deter airlines and passengers from having faith in the plane.
It may simply be a function of who was reading business, as opposed to Middle East news tonight, but the Wall Street Journal’s commentors seems a lot less leery of flying the 737 Max than they had of late. However, there was also a lot of “well trained American pilots” rah rahing, which did raise questions as to how organic some of the remarks were.
In any event, the great unwashed public will likely have a better sense in a month or two whether the FAA will deem more simulator training to be a sufficient fix to give the 737 Max a green light, and whether foreign regulators will buy off. Stay tuned.