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The Real Problem With the Boeing 737 Max

Published

10 months ago

January 11, 2024

To adapt an old Oscar Wilde quote: To lose one aircraft may be regarded as a misfortune. To lose two looks like carelessness.

So what to make of a third Boeing 737 Max suffering a major issue in recent years? Flying at 16,000 feet shortly after taking off in Oregon on January 5, Alaska Airlines Flight 1282 was still climbing when part of the plane’s body detached, leaving passengers looking out at clear air. The incident raises serious concerns about the viability of this type of plane and the industry’s method of assuring aircraft safety.

The plane involved was Boeing’s model 9 737 Max—an aircraft a generation on from the model 8s involved in the 2018 and 2019 Boeing crashes that killed 346 people, and which led to nearly 400 Boeing 737 Max 8s being grounded in early 2019 for over 18 months.

Initial findings suggest this year’s incident may have been caused by loose bolts and “quality control issues” with the part that came loose—a plug that had been attached to the plane to fill an unused door hole.

On January 6, the US Federal Aviation Administration (FAA) grounded approximately 171 of the Boeing 737 Max 9 aircraft operating worldwide, requiring immediate and enhanced safety inspections. These included checking door plugs of the type installed on the Alaska Airlines plane, alongside all components and fasteners for those plugs. On January 9 the FAA said all 737 Maxes with door plugs would remain grounded until the FAA decreed they were safe to return to flight. (Boeing has delivered 214 737 Max 9 jets in total worldwide, but 43 are not under the FAA’s jurisdiction.)

Subsequent reporting appears to indicate similar door plug problems on other model 9s. A photograph shared on social media purportedly showed one of United Airlines’ model 9 fleet with screws that weren’t fully screwed into place on door plugs.

When contacted by WIRED, Boeing spokesperson Jim Proulx declined to comment on this, citing an ongoing investigation by the National Transportation Safety Board (NTSB). “Safety is our top priority, and we deeply regret the impact this event has had on our customers and their passengers,” Boeing said in a January 6 statement.

Robert Mann Jr., an independent aviation analyst, wonders if the latest issues with the model 9 are instead related to the supplier or the plane’s manufacturing. He believes the bolt anomalies depicted in the photo, which was shared on X by an editor at Airline Weekly, are unacceptable. “If I found that on my car, I’d be livid, and it would make me wonder: What else might be there that’s problematic?”

Bjorn Fehrm, an analyst at the aviation industry publication Leeham News, agrees that the apparent overlooking of the tightening of these bolts is significant. “It’s a big issue,” he says. However, as far as the Alaska Airlines incident is concerned, he believes that if the screws had not been fully tightened, it would have been “inconsequential.” These bolts aren’t designed to hold in a door plug, he says.

Spirit AeroSystems, the Wichita-based aerospace manufacturer that manufactured the door plug that blew out on the Alaska Airlines flight, declined to comment on the incident. However, in a statement published on its website, Spirit says its “primary focus is the quality and product integrity of the aircraft structures we deliver.”

The company’s parts have caused issues for Boeing in the past. The Seattle Times reported back in October on defects in Spirit components that contributed to months-long delayed deliveries of Boeing 787 aircraft. Tom Gentile, the then CEO of Spirit, resigned following these and other production errors by the company.

But Fehrm hypothesizes the blowout may have been due to alleged oversights that happened after Spirit had added the door plug, once Boeing retook ownership of the plane. Fehrm claims Boeing uses the door in question to access parts of the plane during its checks ahead of the aircraft being cleared to fly. And so, in his opinion: “Someone has taken away the bolts, opened the door, done the work, closed the door, and forgot to put the pins in.”

In other words, he is leaning toward processes being at fault, not the plane’s design. This, though, raises concerns about the way plane safety checks are conducted.

In theory, in the US the FAA checks aircraft for their airworthiness, granting them certification to fly safely. Aircraft designs are studied and reviewed on paper, with ground and flight tests taking place on the finished aircraft alongside an evaluation of the required maintenance routine to keep a plane flightworthy.

In practice, these reviews are often delegated to third-party organizations that are designated to grant certification. Planes can fly without the FAA inspecting them first-hand. “You won’t find an FAA inspector in a set of coveralls walking down a production line at Renton,” says Tim Atkinson, a former pilot and aircraft accident investigator and current aviation consultant, referring to Boeing’s Washington state–based 737 factory.

The FAA relies on third parties because it’s already overstretched and needs to focus on safety-critical new technologies that push forward the latest innovations in flight. “It can’t [check all aircraft itself], because you’re producing 30 to 60 aircrafts a month, and there are 4 million parts in an aircraft,” says Fehrm.

“Designated examiners have always been part of the landscape,” says Mann, but he believes the latest series of events add to existing questions around whether this is the right approach. On the other hand, there are currently no practical alternatives, he says.

The plane in the Alaska Airlines incident was granted an airworthiness certificate on October 25, 2023, and issued with a seven-year certificate by the FAA on November 2. FAA records do not include who granted the certificate on behalf of the FAA, and the administration declined to identify the organization or individual who approved the plane’s airworthiness. The plane’s first flight took place in early November.

With this being a third major and potentially life-threatening incident for Boeing in little over five years—all involving a single type of aircraft—the company’s status has taken a hit.

There used to be an old saying among pilots, says Atkinson: “If it ain’t Boeing, I ain’t going.” He believes that reputation has diminished with the 737 Max issues, and with it, Boeing’s value. Its share price dropped 8 percent on January 8, the first day of trading after the incident. Citi analyst Jason Gursky estimates delays resulting from those 171 planes being grounded by the FAA will cost Boeing $2.3 million every day the issue lasts.

Airlines that have pulled 737 Max 9s from service have canceled some flights, and dragooned over planes into service to replace the missing 737 Maxes. The challenges in rousting enough planes to cover the absences highlight how beholden the airline industry is to the big two manufacturers: Airbus and Boeing. “The 737 Max is such an important product,” says Graham Braithwaite, professor of safety and accident investigation at Cranfield University in the UK. “Not just to Boeing, but globally, in terms of how many airlines depend on it.”

So what happens now? “Presuming this is limited, and presuming the issues are not judged to be design-oriented, I think this comes down to another major black eye for a number of people in the supply and production chain,” says Mann.

Whether it has a more meaningful impact on confidence in this type of plane, he’s less certain about. “We’ve had lots of airplanes that have had problems, and lots of maintenance practices that have led to problems in the past. But by and large, these things have all become footnotes in quarterly financial statements.”

That’s a forecast Atkinson agrees with. The airline industry regulates by counting tombstones, he says. “No one’s died. There’s massive reputational damage, but the right people are asking questions.”

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Telus prioritizing ‘most important customers,’ avoiding ‘unprofitable’ offers: CFO

Published

1 day ago

November 8, 2024

Anne Joseph

Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.

The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.

Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.

The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.

Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”

“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.

“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”

Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.

The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.

It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.

“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.

Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.

The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.

Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.

The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.

“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.

Asked how long that environment could last, he said that’s out of Telus’ hands.

“What I can control, though, is how we go to market and how we lead with our products,” he said.

“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”

Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.

On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.

That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.

Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”

“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.

“We will continue to monitor developments and will take further action if our codes are not being followed.”

French said any initiative to boost transparency is a step in the right direction.

“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.

“I think everyone looking in the mirror would say there’s room for improvement.”

This report by The Canadian Press was first published Nov. 8, 2024.

Companies in this story: (TSX:T)

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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

Published

2 days ago

November 7, 2024

Anne Joseph

CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:TRP)

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

Published

2 days ago

November 7, 2024

Anne Joseph

BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

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