• Pivotal Capital

Is Boeing's 737-MAX 8 Safe?

Updated: Mar 11, 2019

Boeing is one of my all-time favorite companies - I love their aircraft and I love the stock. However, following the second catastrophic and deadly crash of a 737-MAX 8 in less than six months I find myself wondering (for the first time ever with Boeing): Is this aircraft safe to fly?

"If it ain't Boeing, I ain't going"


As I said before, I am a long-time Boeing fan and shareholder. I think it is a great company that designs and creates the best aircraft in the world - and has done so for decades. From the Boeing 707's initial release in 1957 and the first 737 in 1967 to the first flight of the (industry-changing) 747 in February 1969 and their continuous innovation ever since - the 757, 767, 777 and most recently, the 787 Dreamliner are all incredible aircraft for both passengers and pilots. The company has done amazing things over the years - even before the 707's debut, Boeing played an instrumental role in establishing the U.S. Air Force's dominance during WWII - You may not know that it was 1,000 Boeing B-17 Flying Fortresses that delivered a death blow to Nazi Germany in the Battle of Berlin. Its successor, the B-29 Superfortress, was employed by the U.S. military to drop atomic bombs on Hiroshima and Nagasaki at the tail end of the war. Its successor, the B-52 Stratofortress, has been in continuous service with the U.S. Air Force since 1955 and (with upgrades) is expected to remain in use until 2050 - a tribute to the durability of the aircraft. Boeing also designed and built the Space Shuttle Discovery, the Apache Combat Helicopter and the C-17 Globemaster. Needless to say, you would be hard-pressed to find a company with a more impressive history and line of products than Boeing.

Boeing Shuttle Carrier N911NA Carrying Space Shuttle Endeavor - Source: NASA

Boeing 737 - The World's Most Popular Passenger Aircraft


Following initial introduction of the 737-100 in 1968, the Boeing 737 quickly became a favorite among airlines across the globe. The company delivered their 10,000th 737 in 2018 and according to flightglobal.com, there are an average of 1,250 737s airborne around the world at any given time. Historically, the 737 has an impressive safety record: the aircraft has suffered only 0.28 fatal accidents per million flights in over 40 years of service. If you exclude the 737-100 and 737-200, the oldest versions of the plane which are no longer in service, the accident rate falls to approximately 0.13 fatal accidents per million flights, according to data from airsafe.com.

Source: Airsafe.com

Lion Air Flight 610


At 6:20 AM local time on October 29, 2018, Lion Air flight 610 (a Boeing 737-MAX 8) departed from Soekarno–Hatta International Airport in Jakarta, bound for Depati Amir Airport in Pangkal Pinang with 189 passengers and crew on board. Just 13 minutes after takeoff, air traffic control lost contact with the Lion Air flight crew. Just an hour later, authorities received reports stating that the Lion Air 737 had crashed into the ocean a short distance from an offshore oil rig, whose workers witnessed the flight's final moments - which they described as "a nose-down dive." All 189 passengers and crew on board were killed, making it the deadliest crash in the 737's 40+ year history.


Although the final incident report has not been published by investigators, it is believed that a malfunction of the aircraft's Angle of Attack ("AoA") sensors led to the crash of Lion Air flight 610. The AoA sensors measure the plane's attitude in relation to the level plane that is displayed on the pilots' artificial horizon instrument and feed that information to the flight computer and the 737's Maneuvering Characteristics Augmentation System (MCAS), which is designed to prevent the plane from stalling. It does this by detecting when the aircraft's nose is pitched up to a degree that could cause loss of lift on the plane's wings. The traditional solution to a stall is to push the nose of the plane downward to pick up airspeed and restore airflow over the aircraft's flight surfaces. In the case of Lion Air flight 610, however, it appears the malfunctioning AoA sensors confused the 737's MCAS system, causing it to override the pilots' manual control and push the nose down in an attempt to mitigate the non-existent stall. As you can imagine, this kind of malfunction can be impossible for pilots to overcome at low altitude - there is simply no room for error and, consequently, no time for the pilots to assess and overcome the problem.


The realization that Boeing had not warned pilots about the potential for this type of malfunction with the MCAS system during training for the 737-MAX 8 is extremely concerning and further explains the Lion Air Pilots inability to assess and mitigate the issue with their aircraft. Unfortunately, this would not be the last accident involving the 737-MAX 8.

Indonesian recovery crews found only small pieces of debris following the crash of Lion Air flight 610

Ethiopian Airlines Flight 302


This morning, March 10, 2019 - less than 6 months after the Lion Air tragedy - another 737-MAX 8 went down in circumstances eerily similar to the Lion Air accident. Ethiopian Airlines Flight 302 departed from Addis Ababa's Bole International Airport bound for Jomo Kenyatta International Airport in Nairobi, Kenya at 8:38 AM local time, carrying 149 passengers and 8 crew members. Minutes after takeoff, the pilots reported a problem to ATC and requested to return to Addis Ababa. Moments later, the aircraft disappeared from radar and crashed at 8:44 AM local time - just six minutes after takeoff. All 157 souls on board perished in the crash.


While investigators have not yet weighed in on the cause of the crash, pictures from the crash site imply that the aircraft was traveling at an extremely high rate of speed at the time of impact - similar to the Lion Air accident. It is difficult to tell that the debris was once a large aircraft - the plane was destroyed beyond recognition - leaving only tiny pieces of debris and a crater behind.

First responders comb through the wreckage of Ethiopian Airlines Flight 302

While I am not an expert on aviation disasters, the similarities between these two accidents is extremely suspicious. Two of the same, nearly brand-new, aircraft crash at high speeds just minutes after takeoff - within 5 months of each other. Are the AoA sensors and MCAS system to blame once again?


These investigations take time - it usually takes months or even years for investigators to publish their final report - which is extremely concerning if there is an issue with the 737-MAX 8 that has caused these tragedies. For the first time in my life, I found myself wondering: is this Boeing aircraft safe enough for airline passengers?


Importance of the 737-MAX for Boeing


The airline industry absolutely relies on the trust of passengers - passengers must trust the airline to properly maintain the aircraft, the pilots to properly control the aircraft and the manufacturer to properly design the aircraft so that they can safely arrive at their destination. Without this trust, the airline industry would simply fall apart.


I have always trusted Boeing - in the past they have been proactive in fixing any issues with their aircraft and have displayed time and time again that they understand the importance of trust in the airline industry as well as their duty to ensure the safety of the passengers and crew members who fly on Boeing planes every day. However, the 737-MAX 8 is an incredibly important product for the company, undoubtedly placing significant pressure on the company to maintain the aircraft's reputation for safety. The company currently has 5,111 orders for the 737-MAX, and the wide majority of these orders have yet to be filled - only 350 had been delivered as of January 31, 2019. The undelivered orders represent approximately $262 billion of revenue for Boeing. Needless to say, cancellations could have a material impact on the company's financial performance.

Source: Bloomberg LP

That being said, safety needs to remain the #1 priority for Boeing. As a shareholder, I'm sure my position would take a hit if the company were to ground the 737-MAX fleet in order to fix this problem. However, the lives of passengers are much, much more important than the company's share price. I would much rather see the stock decline in value than see another deadly accident involving this aircraft.


My Plea to Boeing


My plea to Boeing is this: If you have any doubts about the safety of this aircraft, please do the right thing and ground the fleet until the issue is resolved. The lives of airline passengers and crew is far more important than the company's stock price or financial performance. I believe this company has high moral standards, which is why I trust Boeing to get me to my destination safely, every time I fly. If this accident turns out to be the result of another malfunctioning MCAS system, I implore the company to ground the fleet and resolve this issue before any more lives are lost.


My heart goes out to the family members who lost loved ones in the accident this morning, as well as the Lion Air accident last October. That is not something I would wish on my worst enemy. I truly hope that if Boeing is to blame for these accidents that they step-up, take responsibility and fix any problems their aircraft may have - regardless of the consequences for the company's profitability and share price. The company will survive regardless, as long as it has the trust of its customers. Human lives are irreplaceable.


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