Is Boeing a Buy Here?

[Freedom56]

Canadian Transport Minister Marc Garneau explains what they saw in this new satellite tracking data that prompted Canada to ground the aircraft followed by the FAA.

https://www.cbc.ca/player/play/1457597507920

Lion Air stated that they are proceeding with the cancellation of their order with Boeing and switching to Airbus primarily due to the CEO being angered by Boeing blaming the crash on Lion Air. However, if there is a design defect in the aircraft, the liability will increase significantly for Boeing. Don't be surprise if Lion Air forces Boeing to take back the grounded aircraft. At a time when airlines are cancelling orders for planes that they don't need, any design defect, will give them airlines an excuse to get our of their contracts with minimum financial impact. I would avoid Boeing stock at these levels. It has already made a parabolic ascent over the past two months. If more airlines start canceling orders, look out below.

 

[Go-NoGo]

Canadian Transport Minister Marc Garneau explains what they saw in this new satellite tracking data that prompted Canada to ground the aircraft followed by the FAA.

https://www.cbc.ca/player/play/1457597507920

Lion Air stated that they are proceeding with the cancellation of their order with Boeing and switching to Airbus primarily due to the CEO being angered by Boeing blaming the crash on Lion Air. However, if there is a design defect in the aircraft, the liability will increase significantly for Boeing. Don't be surprise if Lion Air forces Boeing to take back the grounded aircraft. At a time when airlines are cancelling orders for planes that they don't need, any design defect, will give them airlines an excuse to get our of their contracts with minimum financial impact. I would avoid Boeing stock at these levels. It has already made a parabolic ascent over the past two months. If more airlines start canceling orders, look out below.

And Lion air will crash those Airbus in the future. This is an airline that was blacklisted from flying in European airspace (lifted in 2016).

Here's a list of all incidents Lion Air has been involved in (source https://en.wikipedia.org/wiki/Lion_Air):

• On 14 January 2002, Lion Air Flight 386, a Boeing 737-200 crashed after trying to take-off with an incorrect flap configuration at Sultan Syarif Kasim II International Airport. Everyone on board survived but the aircraft was written off.[31]
  
• On 30 November 2004, Lion Air Flight 583, a McDonnell Douglas MD-82, crashed in Surakarta with registration PK-LMN (c/n 49189); 25 people died.[32]
• On 4 March 2006, Lion Air Flight 8987, a McDonnell Douglas MD-82, crashed after landing at Juanda International Airport.[33] Reverse thrust was used during landing, although the left thrust reverser was stated to be out of service.[33] This caused the aircraft to veer to the right and skid off the runway, coming to rest about 7,000 feet (2,100 m) from the approach end of the runway.[33] There were no fatalities, but the aircraft was badly damaged[33] and later written off.[34]
• On 24 December 2006, Lion Air Flight 792, a Boeing 737-400, landed with an incorrect flap configuration and was not aligned with the runway.[35] The plane landed hard and skidded along the runway causing the right main landing gear to detach, the left gear to protrude through the wing and some of the aircraft fuselage to be wrinkled.[35] There were no fatalities, but the aircraft was written off.[35]
• On 23 February 2009, Lion Air Flight 972, a McDonnell Douglas MD-82 landed without the nose gear at Hang Nadim International Airport, Batam.
• On 9 March 2009, Lion Air Flight 793, a McDonnell Douglas MD-90-30 (registration PK-LIL) ran off the runway at Soekarno–Hatta International Airport. No-one was injured.[36]
• On 2 November 2010, Lion Air Flight 712, a Boeing 737-400 (registration PK-LIQ) overran the runway on landing at Supadio Airport, Pontianak, coming to rest on its belly and sustaining damage to its nose gear. All 174 passengers and crew evacuated by the emergency slides, with few injuries.[37]
• On 13 April 2013, Lion Air Flight 904, a Boeing 737-800 (registration PK-LKS; c/n 38728) from Bandung to Denpasar with 108 people on board, crashed into the water near Denpasar/Bali while attempting to land. The aircraft's fuselage broke into two parts.[38] While Indonesian officials reported the aircraft crashed short of the runway,[38] reporters and photographers from Reuters and the Associated Press indicated that the plane overshot the runway.[39][40] All passengers and crew were evacuated from the aircraft and there were no fatalities.[38]
• On 6 August 2013, Lion Air Flight 892, a Boeing 737-800 (registration PK-LKH; c/n 37297) from Makassar to Gorontalo with 117 passengers and crew on board, hit a cow while landing at Jalaluddin Airport and veered off the runway. There were no injuries.[41]
• On 1 February 2014, Lion Air Flight 361, a Boeing 737-900ER (registration PK-LFH; c/n 35710), from Balikpapan Sultan Aji Muhammad Sulaiman Airport to Ngurah Rai International Airport in Denpasar/Bali via Juanda International Airport in Surabaya, with 222 passengers and crew on board, landed hard and bounced four times on the runway, causing a tail strike and substantial damage to the plane. There were no fatalities, but two passengers were seriously injured and three others had minor injuries.[42]
• On 20 February 2016, Lion Air Flight 263 from Balikpapan Sultan Aji Muhammad Sulaiman Airport to Juanda International Airport in Surabaya overran the runway on landing, with no injuries.[43] The National Transportation Safety Committee investigation into the incident found that failures in crew resource management led to improper landing procedures, and recommended that Indonesian airlines improve pilot training.[44]
• On 2 April 2017, about 300 litres[45] of fuel spilled on the apron at Juanda International Airport in Surabaya. Pictures taken by passengers on board showed fuel pouring out of one of the aircraft's wings.[46] Shortly after, all passengers were evacuated and the plane was grounded for further investigation. No casualties were reported. That same day a representative from Lion Air was summoned by the Indonesian Transport Ministry to clarify the incident. An early statement by a Lion Air representative said that the leak was caused by a non-functioning safety valve and overflow detector.[47]
• On 29 April 2018, Lion Air Flight 892, a 737-800 (registration PK-LOO), made a runway excursion at Jalaluddin Airport after landing under heavy rain conditions, resulting in the main nose gear to collapse. There were no fatalities.
• On 29 October 2018, Lion Air Flight 610, a Boeing 737 MAX 8, crashed in the Java Sea 13 minutes after takeoff from Jakarta, killing all 189 people on board.[48]
• On 8 November 2018, Lion Air Flight 633, a Boeing 737-900ER was taxiing for departure at Fatmawati Soekarno Airport when its left wing struck a light pole, severely damaging the leading edge.[49]
• On 16 February 2019, Lion Air Flight 714, a Boeing 737-800 (PK-LPS) suffered a runway excursion while landing at Supadio International Airport in wet and windy weather. No injuries were reported. [50]

Note the incidents that occurred after the Oct 2018 crash, you would think the pilots would be a little more careful. At Lion Air, flying is a contact sport.

 

[mamadogmamacat]

I have been guesstimating an up to 20% total hit on BA price from this, followed by a recovery of uncertain duration Company is just too well run and products are generally too good, while what competition there is just are not,for it to be any more than that, IMHO.

So far, down 5% first day, another 6% the next, actually up 0.5% percent today, and up another 0.5% in after hours trading..

So, looks like market is even more optimistic than I am.

Of course, as I said, I'm playing BA with house money now.

 

[Freedom56]

And Lion air will crash those Airbus in the future. This is an airline that was blacklisted from flying in European airspace (lifted in 2016).

Here's a list of all incidents Lion Air has been involved in (source https://en.wikipedia.org/wiki/Lion_Air):


Note the incidents that occurred after the Oct 2018 crash, you would think the pilots would be a little more careful. At Lion Air, flying is a contact sport.

I don't think you fully understand the business ramifications of a grounding of 370 Max 8 aircraft. The airlines are going seek compensation for lost revenue. This is from the WSJ today:

"Deposits from 737 MAX orders helped lift Boeing’s revenue above $100 billion for the first time last year. That drove the Chicago-based company’s market cap over $250 billion this month."

What happens if airlines start canceling orders and requesting refunds of their deposits? The 3 month 787 grounding left Boeing with accumulated losses of $30B per the WSJ. This can be much worse.

Revenues and cash from the 737 MAX, which are significant, will come to a complete halt. They can't deliver aircraft's collect payments from their customers. Many may use this as an excuse to cancel their contracts.

Buying Boeing stock at these levels is like walking through a minefield blindfolded.

 

[Go-NoGo]

I don't think you fully understand the business ramifications of a grounding of 370 Max 8 aircraft. The airlines are going seek compensation for lost revenue. This is from the WSJ today:

"Deposits from 737 MAX orders helped lift Boeing’s revenue above $100 billion for the first time last year. That drove the Chicago-based company’s market cap over $250 billion this month."

What happens if airlines start canceling orders and requesting refunds of their deposits? The 3 month 787 grounding left Boeing with accumulated losses of $30B per the WSJ. This can be much worse.

Revenues and cash from the 737 MAX, which are significant, will come to a complete halt. They can't deliver aircraft's collect payments from their customers. Many may use this as an excuse to cancel their contracts.

Buying Boeing stock at these levels is like walking through a minefield blindfolded.

Actually I said nothing about Boeing and it's potential liabilities in my post, please go back and read it again.

Since you are making your case with Lion Air and that is your casus belli against Boeing - I pointed out that Lion air is basket case of an airline. Some customers you want to keep and others you should fire - Lion Air falls in the latter category and Boeing should be happy to lose this customer.

 

[travelover]

I don't know, either.

 

[Freedom56]

Actually I said nothing about Boeing and it's potential liabilities in my post, please go back and read it again.

Since you are making your case with Lion Air and that is your casus belli against Boeing - I pointed out that Lion air is basket case of an airline. Some customers you want to keep and others you should fire - Lion Air falls in the latter category and Boeing should be happy to lose this customer.

Lion Air placed the 3rd largest order for 737 MAX jets. A cancellation of their order will inflict some financial damage and even more, if others follow suit. If they are able to prove that the FAA and Boeing were aware of issues with the MCAS prior to the Lion Air crash, then damages from civil litigation can be significant.

I worked 20 years in the aerospace industry with the last 5 years at the VP level and having gone through flight safety crisis with multiple customers when your systems are grounded is not a financially pleasant experience.

 

[NW-Bound]

I would not be buying BA until the dust settles.

Two days ago, I overheard my BIL telling my wife he sold all of his BA stocks, and it was more than 8,000 shares. Perhaps he got in early enough to have a decent gain to give back with the recent drop.

I am more interested in hearing how the accidents happened. People seem to suspect the MCAS which uses the angle-of-attack sensors, and is susceptible to the sensor failures. However, a jet liner typically uses 2 alpha vanes, and there are some aircraft having 3.

In the past, a fatal accident involving an A320 was found to be caused by 2 out of 3 alpha vanes failing, but the failed sensors were in agreement. The 3rd operational sensor was voted out by the flight computer. Aye aye aye!

 

[samclem]

I am more interested in hearing how the accidents happened. People seem to suspect the MCAS which uses the angle-of-attack sensors, and is susceptible to the sensor failures. However, a jet liner typically uses 2 alpha vanes, and there are some aircraft having 3.

In the past, a fatal accident involving an A320 was found to be caused by 2 out of 3 alpha vanes failing, but being in agreement. The 3rd operational sensor was voted out by the flight computer. Aye aye aye!

Sorry, more than you wanted to know follows.

The 737 MAX 800 and 900 series has (at least) 2 AoA sensors (one on the left, one on the right). As it is presently designed, the MCAS system uses only one of these (and I've read it actually alternates between the left and right one each flight, but that seems hokey). IMO, the rationale for using a single AoA sensor is that the MCAS is not critical to flight, and as we've seen many times (you correctly point out the Airbus example), introducing a "voting" system and/or the complex programming needed to discern which sensor is correct introduces complexities that detract from safety rather than enhance it (esp when a crew is trying to troubleshoot a problem in flight).

The MCAS only adds nose-down trim in certain situations. If it gets bad AoA information, it can move the horizontal stabilizer to a "nose down" trim position because it "believes" the plane's nose is dangerously high (relative to the airstream, not the horizon). The crew can use the normal trim switch to bring the nose back up, no problem. After 10 seconds (if the faulty AoA sensor still reads "nose too high!"), the MCAS will again trim the nose down, and the crew can (again) bring it up. The Lion Air crew (and the crew which flew the plane before) did this many, many times. At any time, the crew can turn off the automatic/electric trim and the cycle will stop. The crew would then use the manual trim wheel to adjust the pitch, the plane can be flown this way without a problem.
We don't know exactly what happened in the case of Lion Air, but it appears that the captain was handling the situation using the trim switch, and did so for many cycles (for minutes of flying time). It appears that he handed control over to the copilot/first officer, and for whatever reason he apparently handled the situation differently and stopped cycling the nose up. It don't think it is known whether he/they ever disconnected the electric trim and used the manual wheel. Little has been publicized about the state of the investigation in Ethiopia, but it is reported that the stabilizer jack screw found at the crash site was set for nose-down trim, which is consistent with (but does not prove) a situation similar to the one in the the case of Lion Air. The airspeed and altitude data that has been made public from Ethiopia is quite unusual (very high airspeed, very little climb), but more detailed data is in the hands of investigators.
The MCAS system simply augments the normal pitch trim system. A failure or "uncommanded pitch down" from the MCAS is handled like "runaway trim" on the 737, an emergency that (in the US at least) >every< crew member must see and master in the sim before being certified to fly the aircraft. In retrospect, most people now believe that crews should have been explicitly told about the MCAS system and trained in its functions. But, fundamentally, uncommanded nose-down trim caused by the MCAS "looks" the same as the same situation that can be caused for several other reasons, and corrective actions are the same.
Boeing is modifying the system, maybe it will compare the AoA data or use some other tricks. IMO, it would be much better to leave it slaved to a single AoA sensor and then alert the crew if there is a difference between the AoA sensors and let them solve it (select the other AoA sensor, disconnect the MCAS, etc). Automation is great, but Boeing's philosophy has always been to provide the crew the information and means to fly the plane if automation fails. I hope they'll continue doing that.

 

[Boho]

Boeing is modifying the system, maybe it will compare the AoA data or use some other tricks.

https://www.bloomberg.com/news/arti...-to-max-will-be-costly-following-twin-crashes

...The revised MCAS will use inputs from a second sensor to ensure such failures are more rare.

The system also won’t act repeatedly if pilots overcome it, according to the company. The Indonesian pilots counteracted MCAS at least two dozen times before the crash. And the revised MCAS won’t make such aggressive nose-down movements, according to the company.

In addition, Boeing and the FAA plan to mandate changes in airline flight manuals and to give pilots additional training in how to overcome a malfunction.

 

[NW-Bound]

... Boeing is modifying the system, maybe it will compare the AoA data or use some other tricks. IMO, it would be much better to leave it slaved to a single AoA sensor and then alert the crew if there is a difference between the AoA sensors and let them solve it (select the other AoA sensor, disconnect the MCAS, etc). Automation is great, but Boeing's philosophy has always been to provide the crew the information and means to fly the plane if automation fails. I hope they'll continue doing that.

It is a common design philosophy in avionics that failures that cause a gradual effect, such as ones that drive the stabilizer trim, and which can be easily overriden by the pilots can rely on single sensors.

However, if two sensors are available, it is better to make use of them both, and to alert the crew if they disagree. What is the point of having two sensors on board?

In a system that I worked on, if the two sensors disagreed and the computer could not isolate the failure (there are some limited ways of telling if a sensor is bad), the crew was alerted. They then could manually select which one to use by watching their operation.

Of course, the pilots may not be up to snuff, as we often find out.

 

[samclem]

However, if two sensors are available, it is better to make use of them both, and to alert the crew if they disagree. What is the point of having two sensors on board?

The AoA sensors do a lot of other things, they aren't dedicated for the MCAS. It's good to have two of them.

In a system that I worked on, if the two sensors disagreed and the computer could not isolate the failure (there are some limited ways of telling if a sensor is bad), the crew was alerted. They then could manually select which one to use by watching their operation.

I favor that approach. For mission-critical systems it is much better than having software decide what is best and then using that data without notifying the crew. Or worse, taking an average.

"The man with two watches never knows the time."

 

[NW-Bound]

When dual or triple sensors agree within a defined tolerance, it is good to use the average of their outputs. This improves accuracy. The problem is always when their differences fall outside this tolerance.

In the case of the alpha vanes, a validity of the measurements can be made by computing the angle of attack from the flight path angle, the airspeed, and the pitch attitude of the aircraft. These variables are measured by other independent instruments on the aircraft.

One may ask, then why have the alpha vanes at all? The above calculation is not accurate if one has a strong side wind or downdraft. But for a validity check, it would detect gross errors, such as the unfortunate A320 that had 2 of its 3 vanes frozen by water ingress.

 

[Freedom56]

For those wondering how the 737-MAX MCAS software was even flight certified, this article from the Seattle Times provides some insight. I assume the lawyers will be all over this. Use incognito mode for viewing the article. One has to ask, how does a company that produced so many great aircraft like the 747, 777, and 787 end up in this mess.

https://www.seattletimes.com/busine...-max-system-implicated-in-the-lion-air-crash/

I hope we don't find out that the head of software engineering at Boeing was a music or arts major with no technical background.

 

[NW-Bound]

I just read the article. It's not software, but the system design and operation aspects are not kosher. I am sure the software does exactly what the avionics engineers in charge want it to do.

Aye, aye, aye... Perhaps Boeing just hired some engineers from the Tesla autopilot group.

Tesla's motto is "Whatever goes wrong shall be detected and corrected by the user, who is wholly responsible".


PS. Come to think of it, airframers do not do all of their avionics, but rely heavily on subcontractors and just oversee them. So, who's really behind this MCAS design?

 

[frayne]

I think it is too early to tell. If I walked into a plane and it was a MAX 8, I would turn around and walk off.

Good article in Bloomberg concerning the crash and Boeing. Interesting the black box is going to France for analysis as opposed to the U.S.

 

[samclem]

I found this article to be a good non-technical look at the MCAS and the (apparent) changing acceptance of flight control designs that are explicitly designed to require crew intervention. "Should Boeing Trust Pilots". (I'd say the title could well be turned around as the basis of a new article--"Will Pilots Trust Boeing?")

In the "old days" airliners had >many< systems that required constant crew attention and vigilance (which is one reason there were three crewmembers on the flight deck). Fuel management alone was a very big and critical job--inattention or miscalculation could lead to a plane that was rapidly and disastrously unflyable. Also, nearly all these crewmembers had hundreds or thousands of hours of stick-and-rudder flying experience before they came to the airlines. Today, some airlines (no US carriers, but both Lion Air and Ethiopian Airlines) employ crewmembers who have only a Multicrew Pilot License (MPL), aka "200 hour First Officers." These crewmembers are not required to have an instrument rating, or a private pilot license. (I do not know the experience level or qualifications of the crewmembers on either of the 737 Max crashes).

 

[Boho]

"(Reuters) - Boeing Co said on Sunday it was finalizing the development of a software upgrade and a revision of pilot training for its 737 MAX..."

Makes me wonder what the previous story of the FAA "signing off" on the upgrade means. It sounds like they're still writing code yet they committed to be finished within two weeks. I think they should finish before they announce a date.

Then there's the wait for the accident report which will take a while, and some airlines want flight simulators that won't be ready until next year.

Meanwhile we're going to hear reports of lawsuits and probably some order cancelations and reimbursements to airlines. I wouldn't buy.

 

[sheehs1]

For those wondering how the 737-MAX MCAS software was even flight certified, this article from the Seattle Times provides some insight. I assume the lawyers will be all over this. Use incognito mode for viewing the article. One has to ask, how does a company that produced so many great aircraft like the 747, 777, and 787 end up in this mess.

https://www.seattletimes.com/busine...-max-system-implicated-in-the-lion-air-crash/

I hope we don't find out that the head of software engineering at Boeing was a music or arts major with no technical background.

Thanks for posting this link Freedom 56. As I read it, I was both increasingly
incredulous and sad. Sad for those that lost their lives and incredulous at the way this rolled out and obtained approval as well as the supposed lack of training. It may not be a surprise for some but it was for me.
I understand the competition with Airbus...but...still.

 

[Freedom56]

Thanks for posting this link Freedom 56. As I read it, I was both increasingly
incredulous and sad. Sad for those that lost their lives and incredulous at the way this rolled out and obtained approval as well as the supposed lack of training. It may not be a surprise for some but it was for me.
I understand the competition with Airbus...but...still.

Having worked for many years in Aerospace (rotary wing avionics) and subjected to DO-178B and other standards by our customers at United Technology, Bell, Eurocopter, and others, I was shocked by what I read in the article. Our systems had redundancy from the sensor through the processors and firmware and we spent years going through our initial flight clearance.

Software fix or not, I'm staying away from the 737 Max. Why take whatever small risk there is, flying on this aircraft?

 

[Hamlet]

"The man with two watches never knows the time."

My father had a pretty bad sense of direction ( a trait I share with him ). He had a boat on Lake Michigan and would often fish out of site of land. He had three compasses on his dash, which his friends made fun of. However his logic was solid. If he had two compasses, and they pointed in different directions, what would he do?


Of course, you actually have to look at the compasses for them to do you any good. He once pulled up his lines and started running into shore, and didn't realize he'd gone in the wrong direction until he was closer to the Wisconsin side of the lake than the Michigan side that he had started on. The worst part was that he had to keep going and spend the night on the Wisconsin side because he had gone so far that he didn't have enough gas to get back without fueling up.

 

[triangle]

Based on what I was reading today about the subject...but especially the Lion Air crash (voice cockpit transcripts) and how the day before that first crash an off-duty pilot saved the same plane from crashing, I believe that Boeing might have to retrofit the existing aircraft with multiple sensors and develop better training to recover trust from the public. I wonder how many potential purchases are being reconsidered right now?? Thankfully they are grounded in the meantime to avoid another incident.


Turbulence ahead for BA.

 

[BigNick]

The NYT is reporting that the planes that crashed didn't have the latest safety updates because Boeing charges $$$ for them as an option. Many US airlines also don't pay for these because the FAA doesn't require them. I guess that's part of "light touch" regulation, but I can imagine lawyers making out that this isn't a good enough excuse.

 

[Sunset]

The NYT is reporting that the planes that crashed didn't have the latest safety updates because Boeing charges $$$ for them as an option. Many US airlines also don't pay for these because the FAA doesn't require them. I guess that's part of "light touch" regulation, but I can imagine lawyers making out that this isn't a good enough excuse.

I get the optional seat and bathroom choices, but safety features

Maybe the next plane I fly on, will have an optional low fuel warning light or not

 

[Boho]

I thought all the pilot needed to know was how to stop the dive and maintain manual control. He already knew the plane shouldn't be diving.