By the Leeham News Team
March 13, 2024, © Leeham News: The Federal Aviation Administration (FAA) is considering whether to suspend the Production Certificate of Boeing Commercial Airplanes (BCA) if it’s not satisfied changes to its safety culture are sufficient, LNA has learned.
FAA Administrator Michael Whitaker. Credit: FAA
It’s the “nuclear option” LNA has written about on previous occasions following the Jan. 5 in-flight accident/explosive decompression of a
Boeing 737-9 MAX operated by Alaska Airlines. Already under heightened scrutiny by the FAA, Boeing took yet another in a series of safety blows when a special panel of experts appointed by the FAA to independently review Boeing’s safety culture issued a scathing report on Feb. 26.
The FAA levied fines—and suspended some of them—for previous safety violations 36 times, according to a tracking website. And despite pledges and actions taken to improve safety following the 2018-2019 MAX crisis, Boeing still has fallen short.
Now, with an intensive FAA audit of the 737 production line, the FAA yet again found lapses. The FAA on Feb. 29 gave Boeing 90 days to come up with an actionable plan and shape up. It did not say what would happen if Boeing either fails to produce an acceptable plan or fails to implement it satisfactorily.
And, the National Transportation Safety Board (NTSB) chair complained Boeing is withholding information in the investigation into the Alaska Airlines MAX 9 accident.
The ultimate option is to suspend the Production Certificate that authorizes Boeing to build commercially-based airliners. Such a move would have huge political and economic implications, however.
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Latest from the FAA
“The FAA’s six-week audit of Boeing and Spirit AeroSystems, prompted by the January 5 incident involving a new, Boeing 737-9 MAX aircraft, found multiple instances where the companies allegedly failed to comply with manufacturing quality control requirements. The FAA identified non-compliance issues in Boeing’s manufacturing process control, parts handling and storage, and product control,” the FAA stated on March 4.
“To hold Boeing accountable for its production quality issues, the FAA has halted production expansion of the Boeing 737 MAX, is exploring the use of a third party to conduct independent reviews of quality systems, and will continue its increased onsite presence at Boeing’s facility in Renton, Washington, and Spirit AeroSystems’ facility in Wichita, Kansas,” the FAA continued.
“By virtue of our quality stand-downs, the FAA audit findings and the recent expert review panel report, we have a clear picture of what needs to be done. Transparency prevailed in all of these discussions,” Boeing said in response to the FAA’s statement. “Boeing will develop the comprehensive action plan with measurable criteria that demonstrates the profound change that Administrator Whitaker and the FAA demand. Our Boeing leadership team is totally committed to meeting this challenge.”
Any plan to upgrade the Safety Management System (SMS) will take months to implement. It’s also likely that any program Boeing outlines to the FAA will include changes that will also take months or more to implement.
But changing a safety culture that’s been declining for years can’t be changed overnight. And Boeing’s track record of agreeing to improvements in the past and implementing them is filled with FAA findings of failure and fines.
So, what’s the ultimate hammer the FAA has? It’s suspending the PC 700 certificate, and this is under consideration, LNA is told.
Production Certificate
Boeing holds what’s known as a Production Certificate, named PC 700. This allows Boeing Commercial Airplanes to produce commercial airlines and military aircraft that are based on airliners. The latter include the P-8A Poseidon, which is based on the 737-800 Next Generation model that precedes the troubled MAX. It also includes the KC-46A refueling tanker, based on the twin-aisle 767-200ER passenger jet. The 767 passenger model is no longer in production. The 767-300ERF cargo airplane remains in production until 2027 when its engines no longer meet federal standards for noise and emissions.
PC 700 also covers the legacy 777, the new 777X, the 737 MAX, and the 787. The legacy 777 is now produced only as a freighter at a rate of about two per month. The 777-9, the first of three members of the 777X family, is being produced at about one-half airplane a month. The MAX is authorized for a production rate of 38/mo but in reality, is sometimes as low as about 20/mo. Boeing said the 787 rate hit 5/mo by year-end last year.
A PC 700 authorization was also required for the big storage sites from March 2019 through today after the global regulators grounded the MAX fleet for 21 months. Boeing built about 450 MAXes from March through December 2019 when production was suspended. Officials, and others, thought the grounding would be a matter of months in justifying continued production. Production resumed at a low rate the following year. Aircraft were stored in Moses Lake (WA), San Antonio (CA), and Victorville (CA). PC 700 authorization was needed for each facility.
After fixes to the MAXes were approved by the FAA—an arduous process—Boeing installed and integrated fixes at these “shadow factories,” another reason for the PC 700 authorization. For a variety of reasons, Boeing still has about 140 MAXes in inventory.
787 Suspension
In October 2020, Boeing suspended delivery of the 787 due to production issues at the Charleston (SC) factory. About 110 787s were produced during a 20-month suspension. After another arduous process to gain FAA approval for the fixes, Boeing is doing rework on these inventoried airplanes at Charleston and its former 787 production line in Everett (WA). There are still 787s in inventory, as rework takes longer than it did to build the aircraft.
Nuclear Option
If the FAA isn’t satisfied with Boeing’s corrective actions, what more can it do?
The FAA on Feb. 29 gave Boeing 90 days to develop an actionable plan in response to the Feb. 26 Expert Panel study. The FAA has capped production at the rate of 38/mo for now. The FAA still retains ticketing authority for the 737 and 787. The FAA has extra people on the floor at Renton and perhaps elsewhere. Since 2000, the FAA has levied about $163m in fines to Boeing for various safety and settlement violations, in some cases for failure to honor settlement agreements reached previously. This amounts to an average of $744,000 per year from 2000 through 2023. It’s peanuts for Boeing, the cost of doing business.
The FAA declined to comment beyond a previously issued statement by the FAA administrator, Mike Whitaker. “Making foundational change will require a sustained effort from Boeing’s leadership, and we are going to hold them accountable every step of the way, with mutually understood milestones and expectations.” The spokesman declined to answer a follow-up question. But there was no denial or confirmation.
However, in a press conference on March 11, the FAA Administrator was asked about the prospect of suspending Boeing’s production.
FAA will suspend production if necessary
“If we see something that requires us to cease production or pull something down, we will do that,” Whitaker said. “But we’re continuing that oversight and we’re working with Boeing and demanding that they come up with a very detailed plan within the next 90 days to fix the quality issues that are out there. And while that work is going on, we will continue to increase our oversight to ensure the planes that are getting their airworthiness certificates are safe airplanes. We are certifying the airplanes as they come off. And right now, with our oversight, we’re certifying them as safe.”
In a terse exchange last week between Boeing and the chairman of the National Transportation Safety Board, the NTSB chief accused Boeing of withholding information required for the investigation of the Jan. 5 Alaska Airlines accident. Boeing denied the Congressional testimony of the NTSB chair, whose spokesman doubled down on the accusation. The Seattle Times reported that Boeing implied that documentation of work involving the door plug on the Alaska airplane doesn’t exist.
Ramifications of suspending PC 700
If the FAA imposed a full suspension of PC 700, all 7-Series airliners would be affected. So would the commercially-based P-8 and KC-46A. Deliveries of the inventoried aircraft likely would be suspended.
The FAA could choose to segregate the PC 700 more narrowly. The 777 line, for example, doesn’t seem to have had the same level of quality control issues as the 737 or 787 lines. The 767/KC-46A line has had QC issues, but also not at the same level or severity as Boeing’s two bread-and-butter airplanes. The P-8 is based on the MAX predecessor, the 737NG. LNA hasn’t heard of any significant QC issues with this line. Keeping military deliveries intact and minor QC issues might exempt PC 700 suspension of these two lines.
Boeing-made spare parts would also be affected under a suspension of PC 700. According to a Boeing document reviewed by LNA and available on the Internet, “Parts ordered by Boeing are to be produced pursuant to our PC 700 production certificate.”
A suspension could be for a short time or as long as the FAA deems appropriate.
The 767 tanker and freighter and the P8, while not running like clockwork, do not appear to have issues of significance worthy of program shutdown which would occur if Boeing’s production certificate was suspended. The same can be said for the 777 program. Production of the 787 is more problematic, but based on what’s publicly known, suspending this PC 700 does not appear warranted.
However the FAA views the safety factors that would lead to a suspension, the political and economic implications are huge.
Campaign issue in election year
It’s an election year. There is bipartisan Congressional criticism of Boeing, including from Congressional members from Washington State where the 737, 767, KC-46A, P-8A, and 777 are built. Despite the bipartisan nature, if the FAA suspended the PC 700 authority, the damage to Boeing and the affected supply chains would undoubtedly be subject to criticisms of President Joe Biden by Republicans.
The economic impact in Washington State, which is reliably “blue,” Kansas, where Spirit AeroSystems is located, would be significant. Kansas is a “red” state. Key suppliers are scattered throughout the US in red, blue, and swing states. There is little doubt a suspension would become a campaign issue of Republicans vs Democrats.
Suspending the production certificate of any 7 Series line would have export economic impact, especially if the 737 PC 700 is suspended. The 737 is by far Boeing’s most prolific export. Boeing is a key player in the balance of trade with other nations.
Of course, economic vs safety issues would be a hard argument for Republicans to make. But in election campaigns, realities don’t often matter.
The 737 line is another matter
Segregating the 737 line in the event of a PC 700 suspension would seem to make the most sense and greatest impact.
Analysis of Boeing’s operations shows that Boeing has lost the handle on 737 production. There is a not unreasonable desire to stop that production while Boeing gets its act together. Boeing has many certification questions where quality has called into question their privilege of delivery of aircraft. The MAX is at the forefront of these issues.
There is a data tracking process for all Boeing commercial aircraft called the Type Certificate Data Sheet (TCDS). This is a line-by-line description of each and every version/model of an airplane ever certified by Boeing.
TCDS includes general information about the design such as dimensions, wing loading, limiting airspeeds and required placards and markings, control surface travel, engine installations, and, where applicable, approved engine/propeller combinations.
In practice, the ‘datasheet’ is more likely to be a lengthy document or an electric file. This means that the MAX 8 and MAX 9 live on discreet TCDS lines and that the FAA may limit the production of specific TCDS lines by reference. This would allow the FAA a surgical method of restricting the delivery of problematic aircraft while allowing product from lines running “acceptably” to continue to provide operational cash to Boeing which would be strangled by a restriction of revenue.
If you combine the production limitations available through the TCDS references along with the timelines called out for Boeing to get programs in place to fix quality problems, you create an environment where the focus of Boeing can be restricted to what is broken, the 737 program.
After the FAA agrees the new programs work, it can roll out the program cooperation by selectively using each TCDS line to schedule the changeover throughout the corporation by using the discreetly defined TCDS references to segment the corporation into a number of work groups that can be changed sequentially.
Cultural change and the TCDS
Boeing needs to make a cultural change. It’s hard and can’t be done all at once. The TCDS allows Boeing to identify a path forward where you can rack and stack the corporate elements worst-to-best and work them sequentially. The FAA would probably accept this. The FAA retains TCDS line control of the production, and Boeing would appreciate the time a sequential approach to meet the FAA’s timeline mandates.
Recent Boeing statements
Boeing issued two statements since Saturday in response to news about the FAA’s six-week audit (reported in the New York Times on Saturday) and the FAA’s press conference.
These statements are reprinted in their entirety.
Message from Stan Deal in response to the DOT/FAA press conference
Team,
Stan Deal, president and CEO of Boeing Commercial Airplanes. Credit: Boeing.
As we conduct quality stand downs across our company, your improvement ideas have been invaluable. We have used your feedback, and those from our regulator and customers, to take immediate actions to strengthen our safety and quality. These actions are central to a comprehensive plan we will soon deliver to the FAA.
In this update, I want to address two recent independent assessments of our operations, discuss our actions to date, and call out two things we must all do.
FAA production audit
FAA inspectors went deep into our Renton factories in January and February to audit our production and quality control. They examined 737 work instructions, monitored mechanics, inspected for defects, and more. The vast majority of our audit non-compliances involved not following our approved processes and procedures.
In addition to the steps we have taken to enhance quality, such as adding layers of inspections, our team has taken prompt action to ensure understanding and compliance with our requirements, including:
- Working with each employee noted with a non-compliance during the audit to ensure they fully understand the work instructions and procedures
- Implementing weekly compliance checks for every 737 work cell, as of March 1
- Dedicating time in each shift for mechanics to complete compliance and FOD sweeps
- Auditing all toolboxes and removing any box that isn’t fully compliant
- Planning additional audits this month of the 737 program to ensure full compliance
Expert panel review
A panel of industry experts spent much of 2023 reviewing Boeing’s Safety Management System (SMS) as part of a mandate from the U.S. Congress. The panel recently issued a 50-page report of their findings.
- The experts found our SMS reflects global standards, but our procedures are too complicated, we change them too much, and we can do more to connect metrics to the safety outcomes we want.
Our teams are working to simplify and streamline our processes and address the panel’s recommendations. Meanwhile, here are two things each of us must do to strengthen safety and quality at Boeing.
- Precisely follow every step of our manufacturing procedures and processes. These have been designed to ensure conformance to specifications and compliance to regulatory requirements. We can and should update procedures and processes, but until then, we must adhere to the existing ones.
- Always be on the lookout for a potential safety hazard or quality escape. If you spot an issue, you are fully empowered to report it through your manager or the Speak Up portal, so we address it right away rather than travel the risk to the next person or position.
Progress so far
Our teams are making progress in several critical areas, including:
- Reducing traveled work in our factories, including minimizing the need for rework of parts coming from our suppliers. Through our collaboration with Spirit AeroSystems, we have implemented additional inspection points at their facility in Wichita. As such, starting March 1, teams there have been ensuring first-pass quality before any fuselages are shipped to Renton.
- This week, we will deploy our Safety Management System to conduct new reviews of traveled work within our four walls. We will assess our status in the factory and, if needed, put mitigation plans in place. We will not hesitate in stopping a production line or keeping an airplane in position.
We have more to do and you play an important role. The quality stand downs have been a great platform to surface ideas and we have more of those planned this month. Meanwhile, please continue to raise concerns, anonymously or otherwise, via Speak Up. Thank you for strengthening our commitment to compliance and ensuring safety and quality in all that we do.
Stan
Statement in response to NY Times article
“Based on the FAA audit, our quality stand downs and the recent expert panel report, we continue to implement immediate changes and develop a comprehensive action plan to strengthen safety and quality, and build the confidence of our customers and their passengers. We are squarely focused on taking significant, demonstrated action with transparency at every turn.”
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