The Boeing saga this past year is an example of how not to handle a crisis. - A relatively small design issue that exploded into massive catastrophe. - They did not build in margin for human error. - This brand new plane crashed twice in the span of about five months. How could this possibly happen? - How long has this plane going to be grounded? Boeing says there's a fix.
When is it coming? - Boeing was once held upto be the gold standard of engineering excellence. And today it has lost a lot of credibility. - The 737 MAX scandal will change aviation history like no other event in the past five or six decades. Until relatively recently, Boeing's reputation among pilots and passengers was second to none. Today, that faith has been significantly shaken as America's aviation giant continues to reel from the fall out of two devastating crashes that killed 346 people. The MAX crisis has severely crippled the nation's biggest exporter.
Exposed critical flaws in the relationship between the FAA and the businesses it regulates. And raised serious questions,how was this able to happen? Who is to blame, and what does this mean for the future of the aviation industry? (dramatic music) In late 2018, things were going pretty well for Boeing. - Before the first crash,Boeing thought of the MAX as a cash cow that would keep on producing. - They were just breaking all sorts of records for revenue and airplane deliveries. - [Narrator] A global boom in air travel had helped the company earn record profits, which drove it's stock price to new heights. - Problem prior to the crash for Boeing was that Boeing couldn't make the MAX fast enough. We wrote about how Boeing was running out of parking spots for the MAX.
The MAX is the latest iteration of Boeing's 737 aircraft, which first entered commercial service in 1968. - It's kind of the workhorse of Boeing's fleet if you've kind of done any kind of medium length travel, domestically, you've almost definitely flown on a 737. As times changed so did the 737. Over the years, Boeing has updated the jet dozens of times. All the while maintaining the original air frame. And this system worked well for Boeing. The 737 is the most successful commercial airplane ever made. In 2017, 50 years after the first 737 took off, Boeing was following along established play book when it delivered one of the first 737 MAX eight's to a budget Indonesian airline called Lion Air. - [Newsreader] An Indonesia passenger plane crashing into the sea minutes after take off.
189 people on board. On October 29th, 2018, a Boeing 737 MAX eight jet crashed into the Java sea, killing everyone on board. - There are a bunch of questions that immediately come up. A brand new plane went into commercial service about a year before it crashed. That's unusual. What could have happened? Could there have been pilot error? Was there a maintenance issue? Some of the most important reporting to come out after the crash was the story about anobs cure piece of software.
- We were obviously trying to understand things about this airplane and the systems on the airplane, and so I went to a aviation safety conference. One of the people we talked to was a pretty senior Boeing executive, and he acknowledged that they never told pilots about the system. And essentially what's the big deal. - [Narrator] Boeing at the time argued that pilots didn't need to know about the existence of the automated flight control system, who's name the public would eventually learn was MCAS.
- Well how can that be? How can there be something on a plane, not only that pilots didn't fully understand and weren't trained on, but also just didn't know that it existed. - After the first crash I think we still didn't yet realize how big the story would become. (mellow music) - [Narrator] The origin of the MAX scandal has it's roots in the rivalry between Airbus and Boeing. Ever since the 1990's the two companies have been locked in competition. By the 2010's thecommercial aviation market was essentially a stable duopoly, with each company controlling roughly half of the market.
At the heart of this rivalry has long been each company's flagship commercial passenger plane. For Boeing, that aircraft is the 737, for Airbus, it's the A320. In 2010, Airbus shook up the market when it announced the A320 Neo, an updated version of the A320 aircraft line. Neo planes wouldn't just be updated versions of a familiar aircraft, they would also be cheaper to run. - Fuel efficiency's the touchstone of anything that airlines do.
I mean, if you talk about bean counters and penny pinchers, airlines are the ultimate in those areas.It's time to think max. - Boeing did not design a completely new plane from the ground up because it would have taken too long. - [Narrator] To make the MAX, Boeing took the existing 737 air frame and paired it with a new,more powerful engine. But doing that changed the plane's aerodynamics. One effect was that inrare flying conditions the aircraft's nose would pitch up. This is where the MCAS software came in. It was designed to automaticallypush the plane's nose down. - One former Boeing engineerwho didn't work on the MAX, characterized the softwarefix as a band aid. We've been learning for the last year how the band aid wasn't asstrong as Boeing needed it to be. (slow piano music) - [Narrator] On March10th 2019, a second crash. This time in Ethiopia. All 157 people on board were killed. - [Male] I heard about the second crash. - When on Sunday morning. - I woke up and kind of rolledover and looked at my phone. - I got a text from an airline official, and it simply read, "MAX eight". I thought, how could this be, another one? - From the moment thatthe second crash happened, we've really thought or writtenabout almost nothing else. -
Plane crashes ingeneral are pretty rare. Plane crash within fivemonths of each other, is pretty stunning. (dramatic music) - This is unparalleled inmodern commercial aviation. It doesn't happen. - [Narrator] A day after the crash, in an unprecedented move,China grounded the MAX. Other nations quickly followed. - China grounding the planes before the FAA had donethat was a huge deal, and it came as a hugesurprise to all of us. - Historically speaking,the FAA has always been the, the leader that all theother countries followed. - [Narrator] This was thefirst time in aviation history that any nation's regulatorybody had overruled the FAA. - An emergency order of prohibition to ground all flightsof the 737 MAX eight. - [Narrator] Two dayslater, the FAA relented and decided to ground the MAX. This marked the beginningof the agency's troubles, as the MAX crisis brought the regulator under increased scrutiny. In April, Boeing began to facethe financial consequences of the scandal. News then emerged that Boeinghadn't informed the FAA the warning system thathelped pilots diagnose an MCAS malfunction wasn'tworking as intended. Boeing's lack of transparency about MCAS was highlighted yet again when a recording emerged of a meeting.
If you'regonna give us a system that we are gonna be affected by, it's hugely important thatwe get briefed on what it is. - [Narrator] The story wasbased partially on a recording made about a month after the first crash, when a group of Boeing executives met with the AmericanAirlines pilot union. In the tape, the pilotsconfront the executives, saying they were not toldenough about the plane. Most people say, "If it ain't Boeing, it ain't goin'." That's where most of us get that from because we think we'vebeen dealt with honestly by the company. We're getting told via the news media that you know what, the average pilot, that's a little bit too much information for him to understand andbe able to comprehend.
Then in July it was revealed that after the first crash, the FAA had done it's owninternal risk analysis of a potential second crash. - Their analysis showed that if the FAA and Boeing didn't do anything and just kept the planesoperating as they had been, there would be 15 crashesover some two decades. That would make the 737 MAXthe most dangerous jet airliner ever developed in the modern world. - What was going on inside Boeing? What was going on inside FAA? Did anyone discuss grounding the plane after the first crash? - A lot of questions have been raised about what the FAA's role was. Whether the agency was really doing it's job in overseeing the design and production of the MAX.
You know, the FAAdelegates Boeing employees to do some of that oversight itself, and I think some peoplehave questioned whether that has gone too far. You know, whether it's sort of the fox guarding the hen house. (mellow music) - We set out to pin point the root cause of how Boeing createda plane that crashes. We really tried to get to the heart of how they came to these decisions. - Why didn't they use two sensors? They only used one sensor and that is sort of aviolation of basic engineering. - At the root of it Boeing made an incrediblyflawed assumption. - But they failed to recognize badly, that all these other emergencysignals would be confusing. Would make it very verydifficult for a crew to do the right thingin a fast enough way. - [Narrator] Despite the intense scrutiny surrounding the MAX, at that time Boeing wasn'tespecially forthcoming with information about the plane.
- I spent much of the summerknocking a lot of doors in the Seattle area, tryingto find Boeing and FAA people who would help us understandhow all this happened. People would politelysay no, close the door, sometimes it was more of adoor being slammed in our face. - We went to, I think it wassomething like 200 houses, you know, drove 500 miles. It was really difficult to get people to agree to talk with us. - [Narrator] That fall,Boeing CEO, Dennis Muilenburg appeared before congress, where he was sharplycriticized by senators. - How did you not, in February, set out a nine alarm fire to say, we need to figure outexactly what happened. - We're not quite surewhat Mr Faulkner meant by that exchange.
- I think it was widely thought that he did not performwell in those hearings. - He survived two days ofreally tough questioning, but he was brutally wounded. - In conjunction with those hearings he sat down with family members in a closed door meeting, and they sat there with large posters with photos of their loved ones. In one case, a family member brought photos just of the coffins of his wife and his mother in law, and his three children, and he lost and he told the Boeing officials, including Dennis Muilen burg, that he didn't feel they deserved to see his family members' faces. In December, the company finally said, we can't keep making these planes, we're going to have toshut down our factory. And that has a huge ripple effect throughout the supply chain, and I think, all of the relatively rosy projections that Dennis Muilenburg had been making throughout the year, finally it came to a head, and the board said enough is enough.
- [Narrator] Less than a month later, Muilenburg was fired. - It wasn't surprising when Muilenburg was pushed out, it was more surprising that it took the board as long as it did to push Muilen burg out. - He wasn't visible. You know a question that came up a lot was "Where is Dennis?" - [Narrator] In the new year, Boeing has continued to grapple with the fall out from the MAX scandal. The end of which doesn't seem to be anywhere in sight. On January 10th, Boeing released a batch of internal communications. - They showed Boeing employees talking about tricking regulators and say some really unflattering things about the regulators that they were dealing with. - It gives you a real glimpse into culture inside Boeing. - [Narrator] It was these internal messages that likely led to Boeing's hand being forced to reverse their long held stance that pilots didn't need simulator training. - That is a stunning development. - We had been writing about how going back nearly a decade, Boeing had designed the MAX from the start to not require additional simulator training for pilots.
- [Narrator] Flight simulators are highly specialized machines, built to train pilots on the ground. One of the MAX's biggest selling points, touted by Boeing from the beginning, was that the pilots who knew earlier 737 models, like the 737 NG, wouldn't need much more training to pilot the MAX. For years, Boeing assured pilots, airlines and regulators that pilots who knew the NG could easily fly the MAX after just a few hours of training on an iPad. - Requiring pilots to go through simulator training before flying the MAX sort of raises questions about the fundamental, you know, value proposition of the MAX. You know, what is the value of the MAX? - [Narrator] Since March 8th of 2019, Boeing's market value has dropped close to $112 billion. - There is an ongoing criminal investigation by the justice department. There is a civil investigation by the Securities and Exchange Commission. It is also the subject of inquiries by the congressional law makers. It is also being looked at by the Department of Transportation and the FAA. The plane is still on the ground. Perhaps most important of all, 346 people died. -
The MAX saga shows that there's something that needs to be reassessed in that whole system. It's time to take a breath. And let's think about the down sides of automation. How it can confuse pilots, how it can introduceun expected consequences and new hazards. So we're looking at a new world where other regulators will be much more assertive and will take a much greater role in approving aircraft, even if they're US aircraft. - [Narrator] In an email to the Wall Street Journal, Boeing said, "The development to the MCAS portion "of the software is complete, "however the entire software package "is going through the system safety analysis, "and then will be presented to the FAA for approval." Boeing said it expects the MAX to be cleared to back in the air this summer.
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