MAX’s Return Delayed by FAA Reevaluation of 737 Safety Procedures
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I am pretty sure that Boeing knows how to write a contract, getting a manufacturer to give you a date certain on delivery is practically impossible -- at least I have never seen it in my (albeit limited) experience. There could be an earthquake, or a strike, or an unexpected manufacturing glitch in any product delivery. Probably most of what liability they have is covered by insurance, unless insurance can claim that Boeing was doing this all knowingly or deliberately.
The grounded planes may be another matter, although I suppose that could be covered by the contract as well. It is not unheard of for planes to be grounded to fix technical problems, and the timeline for restart is not entirely up to Boeing. Even if there is a good case, unless they are backed by a nation state trying to cause trouble I don't see any airlines trying to force one of their two possible suppliers into bankruptcy; they would be bankrupt themselves (and everybody involved retired) before any possible payout was even contemplated.
The grounded planes may be another matter, although I suppose that could be covered by the contract as well. It is not unheard of for planes to be grounded to fix technical problems, and the timeline for restart is not entirely up to Boeing. Even if there is a good case, unless they are backed by a nation state trying to cause trouble I don't see any airlines trying to force one of their two possible suppliers into bankruptcy; they would be bankrupt themselves (and everybody involved retired) before any possible payout was even contemplated.
Southwest will retain 'Max' moniker when grounding lifts
https://www.flightglobal.com/news/ar...ding-l-460469/
https://www.flightglobal.com/news/ar...ding-l-460469/
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Airline losses will be dealt with over a period of time as a mixture of cash payments, price cuts on future orders and more favourable payment terms.
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Airline losses will be dealt with over a period of time as a mixture of cash payments, price cuts on future orders and more favourable payment terms.
I suspect that our legal friends are looking forward to testing the meaning of such words as "reasonable" and "force majeur"
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Southwest will retain 'Max' moniker when grounding lifts
https://www.flightglobal.com/news/ar...ding-l-460469/
https://www.flightglobal.com/news/ar...ding-l-460469/
A company operating the largest fleet of 737MAX in the world would struggle to convince many customers that they didn’t!
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They don't spend that much on flowers.
They also had north of 70 bil in the bank a few years back. Used the majority of that for share buybacks. So while bankrupcy is not really on the cards they might have to do a share issue to make some cash, it would be selling shares they only recently bought back
Chapter 11 is bankruptcy protection and enables a company to reorganise whilst being protected from its creditors, the idea is to have the company emerge as a viable entity rather than be carved up and the creditors receiving X number of cents on the dollar of their claims. As stated earlier, time is the main factor, the longer it goes on the worse it gets. Boeing is too big to fail, especially with Donald Trump in office.
The company's lawyers will no doubt have come up with a number a possible scenarios and strategies to deal with them. Chapter 11 would be an absolute worst case assuming the MAX never flies again, Boeing is on the hook for lost income compensation to the airlines which bought the MAX, all the aircraft already produced have to be scrapped, and the costs involved in developing a new narrow body whilst their income is reduced to defence and widebody divisions only.
This would certainly incur another huge loss as the price they paid would be substantially more then they would receive at the moment and dumping a huge number of shares on the market would depress the price even further.
Even a best case scenario of the MAX returning to service late this year and the lawyers managing to minimise any claims will still leave them billions of dollars out of pocket but would avoid the stigma of bankruptcy protection.
The company's lawyers will no doubt have come up with a number a possible scenarios and strategies to deal with them. Chapter 11 would be an absolute worst case assuming the MAX never flies again, Boeing is on the hook for lost income compensation to the airlines which bought the MAX, all the aircraft already produced have to be scrapped, and the costs involved in developing a new narrow body whilst their income is reduced to defence and widebody divisions only.
So while bankruptcy is not really on the cards they might have to do a share issue to make some cash, it would be selling shares they only recently bought back
Even a best case scenario of the MAX returning to service late this year and the lawyers managing to minimise any claims will still leave them billions of dollars out of pocket but would avoid the stigma of bankruptcy protection.
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It isn't in the interest of Boeing's MAX customers to bankrupt the company, just as it hasn't been for Trent 1000 customers to bankrupt RR. Certainly, in the latter case, a desire for compensation was tempered with a pragmatism that they needed RR to survive to continue to fix the problem.
The posts about out-sourcing are interesting.
But to what extent is Boeing, or any aircraft design organisation, expected to understand how all these out-sourced components behave when bolted together?
It is now over 30 years since the UK Air Accidents Investigation Branch trashed Boeing for not understanding how simple actuators worked in Chinook, after a fatal accident. Five years later, the RAF Director of Flight Safety said the company (Boeing Helicopters/Vertol) was unsuited to being a Design Authority, partly due to the same lack of understanding. The following year the company admitted it hadn't a scoobie about how new fuel computers and software worked.
There is something in the ethos of the company that worries me. These problems are recurring. There's a lot of people in MoD UK thinking - released an aircraft with dodgy safety critical software? - been there before. It can't all be down to downsizing and savings.
But to what extent is Boeing, or any aircraft design organisation, expected to understand how all these out-sourced components behave when bolted together?
It is now over 30 years since the UK Air Accidents Investigation Branch trashed Boeing for not understanding how simple actuators worked in Chinook, after a fatal accident. Five years later, the RAF Director of Flight Safety said the company (Boeing Helicopters/Vertol) was unsuited to being a Design Authority, partly due to the same lack of understanding. The following year the company admitted it hadn't a scoobie about how new fuel computers and software worked.
There is something in the ethos of the company that worries me. These problems are recurring. There's a lot of people in MoD UK thinking - released an aircraft with dodgy safety critical software? - been there before. It can't all be down to downsizing and savings.
Just as much an issue is disposing of the old fleet, which will also have been prearranged. The lease may say it's extendible, but that's normally at standard rates rather than the great concessionary rate you have been paying over time. I believe rates for mid-life 737NGs have gone through the roof, because not only are none being released onto the market, but those with Max fleets which were in use are having to go out and try and get replacements.
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Well in the case of the MAX it certainly was down to savings.
Quite simply, Boeing tried to make the 737 more fuel efficient by fitting a 2.5 metre diameter engine to an airframe originally designed for, and fitted with a 1.25 metre diameter engine. MCAS came about to avoid redesign/recertification and huge savings in training costs to their clients allowing Boeing to knock $1 million off the list price of each aircraft. Once the MCAS route was decided upon, further savings were made by including virtually no redundancy, altering trim logic and setting up a massive ‘gotcha’ which claimed 346 lives.
This was very much about making savings, as the technology and skills existed for a better solution but were simply not chosen.
Quite simply, Boeing tried to make the 737 more fuel efficient by fitting a 2.5 metre diameter engine to an airframe originally designed for, and fitted with a 1.25 metre diameter engine. MCAS came about to avoid redesign/recertification and huge savings in training costs to their clients allowing Boeing to knock $1 million off the list price of each aircraft. Once the MCAS route was decided upon, further savings were made by including virtually no redundancy, altering trim logic and setting up a massive ‘gotcha’ which claimed 346 lives.
This was very much about making savings, as the technology and skills existed for a better solution but were simply not chosen.