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⇒ All Things Boeing ... Justice Department says Boeing Violated 737 Max Settlement
The Department of Justice said on Tuesday that Boeing was in violation of a 2021 settlement related to problems with the company’s 737 Max model that led to two deadly plane crashes in 2018 and 2019.
In a letter to a federal judge, the department said that Boeing had failed to “design, implement and enforce” an ethics program to prevent and detect violations of U.S. fraud laws in the company’s operations. Creating that program was a condition of Boeing’s settlement, which also carried a $2.5 billion penalty.
The determination by the Justice Department opens the door to a potential prosecution of a 2021 criminal charge accusing Boeing of conspiracy to defraud the Federal Aviation Administration, though Boeing can contest Tuesday’s decision.
In a statement, Boeing said that the company believed that it had honored the terms of the settlement, adding that it was looking forward to the opportunity to respond.
To recap, in the OT section the articles on the Boeing situation are as follows
Boeing is a component in the Dow Jones index and widely held in many funds. It seems to be the mechanics are not inspecting the planes thoroughly on a regular basis. There is no excuse to have loose bolts.
Truth! They are gambling with lives. No one can say it's a mix-up, like the Air Canada plane that ran out of gas and had to do an emergency landing at a retired military airstrip in Manitoba, which was by then being used for drag-racing at the time. Why? it was a mistake regarding the switch from Imperial gallons to liters as the new standard measurement. 40 years ago. https://www.cbc.ca/archives/when-a-metric-mix-up-led-to-the-gimli-glider-emergency-1.4754039
Boeing is a component in the Dow Jones index and widely held in many funds.
Yes - First thing I did this morning was to look at my holdings for Boeing exposure. Appears to be minimal. I recall that after the 2 fatal crashes (2018 / 2019) there were actually some on the board buying Boeing stock as it fell. (@JohnN was one.) Wonder how that worked out?
As @Old_Joe noted earlier, there’s an excellent discussion of the 737-Max design & safety issues ongoing in the “Off Topic” section.
- ”Doing some rough math … , it's likely that there are anywhere between 7,782 and 8,755 commercial planes in the air on average at any given time these days.”
It's not the number of planes directly affected. It's Boeing's reputation that is at risk, and with that, future orders.
Boeing's goodwill and intangible assets (don't have a breakdown) have been in a steady albeit slow decline since June 2019, down from $12B to $10B. (The 737 MAX line was first grounded in March 2019. Coincidence?) This latest brouhaha is not going to help its reputation. https://finbox.com/NYSE:BA/explorer/goodwill_intangibles/
There are three types of product defects - design, manufacture, and labeling. (If that third one sounds strange, take a look at the warnings up and down the side of an extension ladder - lawyers at work.)
When multiple airlines find the same problem with a plane, it's not a failure of airline maintenance, it's a failure of the product. Boeing just admitted this. It's saying that this was a quality control problem.
It's still too early to tell where the fault lies, but "if it was Boeing's error, then we're just putting another log on the fire that there needs to be increased focus on the engineering culture of the company," Ron Epstein, senior aerospace and defense analyst at BofA Securities, tells Axios in an interview.
Only - it’s a “seller’s market”. The similar sized Airbus product (A-319 / 320) is from what I hear completely sold out for several years. So Boeing’s products might stink, but airlines are desperate for new product.
Apparently China has a similar sized plane either in production or about to begin production. There’s speculation it might fill the gap - obviously with huge ramifications for the industry and global trade.
These mid-sized single-aisle planes seem to be the “sweet spot” for airlines. They allow for near 100% occupancy per flight while providing plenty of booking latitude (ie schedule choice) for passengers. Two or three decades ago they were envisioned by the airlines more as short / intermediate haul aircraft with larger twin-aisle jets doing most of the longer haul work. Didn’t work out that way in practice. Might help explain the backlog for this size plane.
A company with a good reputation can rally public support when dealing with regulators. That's a major reason why monopolies advertise.
Just last month, Boeing asked the FAA to waive a safety regulation through May 2026 so that it could deliver MAX 7s. This latest hit to Boeing's safety reputation is not going to help Boeing make its case with the FAA. And it's not going to help sustain airlines' demand.
“You get our attention when you say people might get killed,” Dennis Tajer, a spokesman for American Airlines pilots, told The Seattle Times, which reported on the waiver request Friday.
Boeing has declined since its 1997 merger with McDonnell Douglas and subsequent headquarters move from Seattle to Chicago. Boeing's renowned engineering excellence was neglected as the corporation emphasized near-term profits post-merger.
Boeing/BA moved its HQ from Seattle to Chicago in 2001, and from Chicago to Arlington, VA in 2022. For some reason, it has stuck to the damaged brand name "737 MAX". https://en.wikipedia.org/wiki/Boeing
MSNBC chart today shows that BA stock price has lost a cumulative 35% over the last five years. I recall visiting the factory prior to that decline. The tour guide touted the then-high share price as evidence of the company’s excellence. Sometimes it does not pay to hold a blue chipper for the long haul.
FYI: There is an updated report explaining the design and location of the so-called "bolts" that lock the door plug into position on the Boeing 737 Max-9.situation in the Off-Topic section.
Check my last post in that thread for the explanation.
@Old_Joe Thanks for the depth of research you’ve been doing. Hope others are availing themselves of your multiple threads on this topic over in the OT section. Some amazing graphs, diagrams, etc.
Myself? - You’ve certainly made the case not to invest in Boeing. I’d invest in dead fish first!
When I read through this thread (and many others) it takes me back to the old FundAlarm discussion board format where there seemed to be posts/threads inside the original post. I miss that because it was easier to follow in terms of who said what to who about what. But I do thank you for all of the info.
@Mark- Thanks. Some here are interested in aviation reports, especially when there's a financial aspect involved. Because this is an ongoing situation I thought that it would be cool to have an index to keep track of it.
I also liked the old FA format, for the same reasons. But you'll recall that Roy was real strict about subject matter, unlike MFO.
Proofread much? ENGLISH, much? "...It’s a surprising occurrence. The airline involved was Delta Air Lines, which Delta didn’t immediately respond to a request for comment..."
Yes, I knew of this incident, but it occurred on a 757, which has been in service for a very long time with no major issues that I'm aware of. That suggests that it's highly likely to be a Delta maintenance issue, and I don't want to be piling on Boeing ... they have more than enough of their own problems right now.
It is the perception that is important, don't you think? The official reason for the door plug won't be available for several months I would think. Now anytime a Boeing jet farts, it will be headlines
Comments
https://www.cbc.ca/archives/when-a-metric-mix-up-led-to-the-gimli-glider-emergency-1.4754039
As @Old_Joe noted earlier, there’s an excellent discussion of the 737-Max design & safety issues
ongoing in the “Off Topic” section.
"FAA says safety ‘not speed’ will decide how long Boeing jets are grounded"
- ”Analysts, Unfazed By 737 Max 9 Grounding, Say Spirit And Boeing Stock Are Buys”
https://www.investors.com/news/boeing-stock-spirit-still-a-buy-with-analysts-unfazed-by-737-max-9-grounding/
- “The order, which the FAA said affected 171 aircraft, requires inspections the FAA says will take four to eight hours per aircraft.”
https://www.investors.com/news/boeing-737-max-loses-emergency-door-in-flight-eyes-turn-to-spirit/
- ”Doing some rough math … , it's likely that there are anywhere between 7,782 and 8,755 commercial planes in the air on average at any given time these days.”
https://www.travelandleisure.com/airlines-airports/number-of-planes-in-air
Boeing's goodwill and intangible assets (don't have a breakdown) have been in a steady albeit slow decline since June 2019, down from $12B to $10B. (The 737 MAX line was first grounded in March 2019. Coincidence?) This latest brouhaha is not going to help its reputation.
https://finbox.com/NYSE:BA/explorer/goodwill_intangibles/
There are three types of product defects - design, manufacture, and labeling. (If that third one sounds strange, take a look at the warnings up and down the side of an extension ladder - lawyers at work.)
When multiple airlines find the same problem with a plane, it's not a failure of airline maintenance, it's a failure of the product. Boeing just admitted this. It's saying that this was a quality control problem.
https://www.fidelity.com/news/article/top-news/202401091904RTRSNEWSCOMBINED_KBN33T0AT-OUSBS_1 (Reuters)
Boeing's reputation takes another hit with 737 Max 9 accident
Only - it’s a “seller’s market”. The similar sized Airbus product (A-319 / 320) is from what I hear completely sold out for several years. So Boeing’s products might stink, but airlines are desperate for new product.
Apparently China has a similar sized plane either in production or about to begin production. There’s speculation it might fill the gap - obviously with huge ramifications for the industry and global trade.
These mid-sized single-aisle planes seem to be the “sweet spot” for airlines. They allow for near 100% occupancy per flight while providing plenty of booking latitude (ie schedule choice) for passengers. Two or three decades ago they were envisioned by the airlines more as short / intermediate haul aircraft with larger twin-aisle jets doing most of the longer haul work. Didn’t work out that way in practice. Might help explain the backlog for this size plane.
Just last month, Boeing asked the FAA to waive a safety regulation through May 2026 so that it could deliver MAX 7s. This latest hit to Boeing's safety reputation is not going to help Boeing make its case with the FAA. And it's not going to help sustain airlines' demand. https://apnews.com/article/boeing-exemption-safety-rules-max-10be423759080f64d4418019e4e4874d
For some reason, it has stuck to the damaged brand name "737 MAX".
https://en.wikipedia.org/wiki/Boeing
Check my last post in that thread for the explanation.
This latest update is 1/10/24, 3:24 PM (PST)
The latest update is 1/11/24, 1:09 PM (PST)
The latest update is 1/12/24, 10:16 AM (PST)
@Old_Joe Thanks for the depth of research you’ve been doing. Hope others are availing themselves of your multiple threads on this topic over in the OT section. Some amazing graphs, diagrams, etc.
Myself? - You’ve certainly made the case not to invest in Boeing. I’d invest in dead fish first!
I also liked the old FA format, for the same reasons. But you'll recall that Roy was real strict about subject matter, unlike MFO.
https://www.msn.com/en-us/travel/news/boeing-plane-loses-a-wheel-on-runway-it-s-another-setback-for-the-stock/ar-BB1hbsWx
"...It’s a surprising occurrence. The airline involved was Delta Air Lines, which Delta didn’t immediately respond to a request for comment..."
Airlines Hoping for More Boeing Jets Could Be Waiting Awhile
To recap, in the OT section the articles on the Boeing situation are as follows:
• 1/7/24: Yet More Trouble on the Boeing 737... so it's asking for an exemption to safety rules
• 1/8/24: United finds loose bolts on Boeing jets grounded after blowout incident
• 1/9/24: FAA says safety ‘not speed’ will decide how long Boeing jets are grounded
• 1/10/24: Boeing 737 Max 9: A closer look at the much-discussed "missing bolts" -
• 1/11/24: F.A.A. Investigating Whether Boeing 737 Max 9 Conformed to Approved Design
• 1/12/24: FAA to increase oversight of Boeing citing ‘other manufacturing problems'
• 1/22/24: FAA: Airlines should check the door plugs on another model of Boeing plane
• 1/23/24: United Airlines re Boeing: "The Straw That Broke the Camel's Back"
• 1/24/24: Boeing's quality control: "A rambling, shambling, disaster waiting to happen"
• 1/25/24: Alaska holds Boeing accountable, wants to be made whole for $150M in losses
• 1/25/24: Airlines Hoping for More Boeing Jets Could Be Waiting Awhile