737 MAX Crisis: Can Boeing Bounce Back?

737 MAX Crisis: Can Boeing Bounce Back?
Case Code: OPER152
Case Length: 10 Pages
Period: 2010-2020
Pub Date: 2021
Teaching Note: Available
Price: Rs.400
Organization : -
Industry : Aerospace & Defense
Countries : United States
Themes: Quality Management & Improvement, Operations Management , Quality Management & Improvement
737 MAX Crisis: Can Boeing Bounce Back?
Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

On September 26, 2019 the National Transportation Safety Board (NTSB)1 in its report on Boeing 737 MAX aircraft raised a big question about the design approval process of Boeing and the certification process of the Federal Aviation Administration (FAA)2. NTSB had conducted a month-long investigation on the possible lapses in the design and approval of Boeing 737 MAX aircraft, following two aircraft crashes – one of Lion Air and another of Ethiopian Airlines that killed 346 people on board, both involving Boeing 737 MAX aircrafts.

NTSB reported that Boeing had wrongly analyzed the failure risk associated with the newly implemented automated software Maneuvring Characteristics Augmentation System (MCAS) on the aircraft. The report stated that Boeing did not describe the functioning of this automated software either in airplane manuals or during the training programs given to the pilots. The first fatal accident of Lion Air prompted Boeing to report openly about the functioning of MCAS. The NTSB also recommended a revamp of FAA’s certification process to assess the risks associated with key systems of aircraft more stringently.

The Joint Authorities Technical Review (JATR) was constituted by the FAA during April 2019 to investigate its own approval process of MCAS system and a possible oversight during same. JATR also echoed the recommendation of NTSB i.e., the revamping of FAA’s certification process, as one of its major recommendations in the report submitted to FAA on October 11, 2019.

According the results declared on January 29, 2020, Boeing announced its first annual loss since 1997 attributed to the 737 Max crisis. Boeing had put the total cost of 737 MAX crisis at $18.6 billion as on the day it announced results. Boeing feared that the total cost would mount further as it did not include probable settlements against lawsuits from more than 100 victims’ families from both the crashes. The amount also excluded the fine that would follow the U.S. criminal investigation into lapses related to the 737 MAX plane. Along with these costs and financial losses which were tangible, the intangible damage due to the adverse impact on the brand value of Boeing in the world market may prove to be much more severe and irreversible. The case explores the various reasons behind the issues related to 737 MAX aircraft. Further the case elaborates the effect of poor quality on Boeing. The case is intended for use in courses on Quality Management, Operations Management, and Management of Aerospace Companies.

Issues

The case is structured to achieve the following teaching objectives:

  • Compute the cost of poor quality.
  • Carry out a root cause analysis.
  • Improve processes and systems to prevent a repetition of the issues faced by Boeing.
  • Create a roadmap for Boeing to improve the quality assurance and win back the trust of customers.

Contents

Keywords

Boeing; 737MAX; Cost of Quality; Quality Management; Root Cause Analysis; Quality Management; Maneuvering Characteristics Augmentation System (MCAS); FMEA; Aviation; Lion Air; Ethiopian Airlines; Air Crash

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