Please ensure Javascript is enabled for purposes of website accessibility

Boeing, FAA, Criticized in Congressional 737 Max Investigation

By Lou Whiteman – Sep 16, 2020 at 9:23AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The crashes were the result of faulty technical assumptions and cultural issues at both Boeing and its regulators, according to the report.

A pair of fatal crashes involving the Boeing (BA 2.39%) 737 Max were "a horrific culmination of a series of faulty technical assumptions by Boeing's engineers, a lack of transparency on the part of Boeing's management, and grossly insufficient oversight by the [Federal Aviation Administration]," according to a scathing Congressional report.

The 737 Max has been grounded since March 2019 after two crashes that led to a combined 346 deaths. The crashes have been attributed primarily to a single system, called MCAS, but the House Committee on Transportation and Infrastructure, following a lengthy investigation, has concluded there is plenty of blame to go around.

The 737 Max in flight.

Image source: Boeing.

The 239-page report cites "tremendous financial pressure on Boeing" to get the 737 Max flying to compete with Airbus's (EADSY 1.36%) A320neo aircraft, which "resulted in extensive efforts to cut costs, maintain the 737 Max program schedule," and avoid slowing the line. Boeing also made "fundamentally faulty assumptions about critical technologies," and had what the report calls a "culture of concealment."

"Boeing withheld crucial information from the FAA, its customers, and 737 Max pilots, including internal test data that revealed it took a Boeing test pilot more than 10 seconds to diagnose and respond to uncommanded MCAS activation in a flight simulator, a condition the pilot described as 'catastrophic'," the committee said in its report summary.

The FAA also comes under fire, with lawmakers arguing that the current oversight structure creates "inherent conflicts of interest" that jeopardize safety. Boeing also has too much influence over the FAA's oversight structure, the report concludes.

The crashes and subsequent groundings have taken a financial toll on Boeing, leading the company to bleed through nearly $10 billion in the first half of 2020. The 737 Max is expected to be airborne again before year's end, but with airlines reeling from the COVID-19 pandemic, Boeing will likely have a difficult time quickly delivering all of the 400 airframes it has manufactured but not yet placed with customers.

In a statement, Boeing said it "cooperated fully and extensively" with the inquiry and has incorporated many of the committee's recommendations.

"We have learned many hard lessons as a company from the accidents of Lion Air Flight 610 and Ethiopian Airlines Flight 302, and from the mistakes we have made," Boeing said. "As this report recognizes, we have made fundamental changes to our company as a result, and continue to look for ways to improve."

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.