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Crash Course
How Boeing's managerial revolution created the 737 MAX disaster

Maureen Tkacik / September 18, 2019

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Nearly two decades before Boeing’s MCAS system crashed two of the plane-
maker’s brand-new 737 MAX jets, Stan Sorscher knew his company’s increasingly
toxic mode of operating would create a disaster of some kind. A long and proud
“safety culture” was rapidly being replaced, he argued, with “a culture of financial
bullshit, a culture of groupthink.”

Sorscher, a physicist who’d worked at Boeing more than two decades and had led
negotiations there for the engineers’ union, had become obsessed with
management culture. He said he didn’t previously imagine Boeing’s brave new
managerial caste creating a problem as dumb and glaringly obvious as MCAS (or
the Maneuvering Characteristics Augmentation System, as a handful of software
wizards had dubbed it). Mostly he worried about shriveling market share driving
sales and head count into the ground, the things that keep post-industrial
American labor leaders up at night. On some level, though, he saw it all coming; he
even demonstrated how the costs of a grounded plane would dwarf the short-term
savings achieved from the latest outsourcing binge in one of his reports that no
one read back in 2002.*

Sorscher had spent the early aughts campaigning to preserve the company’s
estimable engineering legacy. He had mountains of evidence to support his
position, mostly acquired via Boeing’s 1997 acquisition of McDonnell Douglas, a
dysfunctional firm with a dilapidated aircraft plant in Long Beach and a CEO who
liked to use what he called the “Hollywood model” for dealing with engineers:
Hire them for a few months when project deadlines are nigh, fire them when you
need to make numbers. In 2000, Boeing’s engineers staged a 40-day strike over the
McDonnell deal’s fallout; while they won major material concessions from
management, they lost the culture war. They also inherited a notoriously
dysfunctional product line from the corner-cutting market gurus at McDonnell.

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And while Boeing’s engineers toiled to get McDonnell’s lemon planes into the sky,
their own hopes of designing a new plane to compete with Airbus, Boeing’s only
global market rival, were shriveling. Under the sway of all the naysayers who had
called out the folly of the McDonnell deal, the board had adopted a hard-line
“never again” posture toward ambitious new planes. Boeing’s leaders began crying
“crocodile tears,” Sorscher claimed, about the development costs of 1995’s 777,
even though some industry insiders estimate that it became the most profitable
plane of all time. The premise behind this complaining was silly, Sorscher
contended in PowerPoint presentations and a Harvard Business School-style case
study on the topic. A return to the “problem-solving” culture and managerial
structure of yore, he explained over and over again to anyone who would listen,
was the only sensible way to generate shareholder value. But when he brought that
message on the road, he rarely elicited much more than an eye roll. “I’m not
buying it,” was a common response. Occasionally, though, someone in the
audience was outright mean, like the Wall Street analyst who cut him off mid-
sentence:

“Look, I get it. What you’re telling me is that your business is different. That
you’re special. Well, listen: Everybody thinks his business is
different, because everybody is the same. Nobody. Is. Different.”

And indeed, that would appear to be the real moral of this story: Airplane
manufacturing is no different from mortgage lending or insulin distribution or
make-believe blood analyzing software—another cash cow for the one percent,
bound inexorably for the slaughterhouse. In the now infamous debacle of the
Boeing 737 MAX, the company produced a plane outfitted with a half-assed bit of
software programmed to override all pilot input and nosedive when a little vane
on the side of the fuselage told it the nose was pitching up. The vane was also not
terribly reliable, possibly due to assembly line lapses reported by a whistle-blower,
and when the plane processed the bad data it received, it promptly dove into the
sea.

It is understood, now more than ever, that capitalism does half-assed things like
that, especially in concert with computer software and oblivious regulators: AIG
famously told investors it was hard for management to contemplate “a scenario
within any kind of realm of reason that would see us losing one dollar in any of
those transactions” that would, a few months later, lose the firm well over $100
billion—but hey, the risk management algorithms had been wrong. A couple of
years later, a single JP Morgan trader lost $6 billion because someone had
programmed one of the cells in the bank’s risk management spreadsheet to divide
two numbers by their sum instead of their average. Boeing was not, of course, a
hedge fund: It was way better, a stock that had more than doubled since the
Trump inauguration, outperforming the Dow in the 22 months before Lion Air 610
plunged into the Java Sea.

And so there was something unsettlingly familiar when the world first learned of
MCAS in November, about two weeks after the system’s unthinkable stupidity
drove the two-month-old plane and all 189 people on it to a horrific death. It
smacked of the sort of screwup a 23-year-old intern might have made—and
indeed, much of the software on the MAX had been engineered by recent grads of
Indian software-coding academies making as little as $9 an hour, part of Boeing
management’s endless war on the unions that once represented more than half its
employees. Down in South Carolina, a nonunion Boeing assembly line that
opened in 2011 had for years churned out scores of whistle-blower complaints and
wrongful termination lawsuits packed with scenes wherein quality-control
documents were regularly forged, employees who enforced standards were
sabotaged, and planes were routinely delivered to airlines with loose screws,
scratched windows, and random debris everywhere. The MCAS crash was just the
latest installment in a broader pattern so thoroughly ingrained in the business
news cycle that the muckraking finance blog Naked Capitalism titled its first post
about MCAS “Boeing, Crapification and the Lion Air Crash.”
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But not everyone viewed the crash with such a jaundiced eye—it was, after all, the
world’s first self-hijacking plane. Pilots were particularly stunned, because MCAS
had been a big secret, largely kept from Boeing’s own test pilots, mentioned only
once in the glossary of the plane’s 1,600-page manual, left entirely out of the 56-
minute iPad refresher course that some 737-certified pilots took for MAX
certification, and—in a last-minute edit—removed from the November 7
emergency airworthiness directive the Federal Aviation Administration had
issued two weeks after the Lion Air crash, ostensibly to “remind” pilots of the
protocol for responding to a “runaway stabilizer.” Most pilots first heard about
MCAS from their unions, which had in turn gotten wind of the software from a
supplementary bulletin Boeing sent airlines to accompany the airworthiness
directive. Outraged, they took to message boards, and a few called veteran
aerospace reporters like The Seattle Times’ Dominic Gates, The Wall Street
Journal’s Andy Pasztor, and Sean Broderick at Aviation Week—who in turn
interviewed engineers who seemed equally shocked. Other pilots, like Ethiopian
Airlines instructor Bernd Kai von Hoesslin, vented to their own corporate
management, pleading for more resources to train people on the scary new planes
—just weeks before von Hoesslin’s carrier would suffer its own MAX-engineered
mass tragedy.

It went without saying that MCAS was an honest mistake, but the secrecy
shrouding the program’s very existence told you it wasn’t a 100
percent honest honest mistake. The story of the secrecy begins with the
universally beloved, unusually labor-friendly, strangely not-evil Southwest
Airlines. (When the carrier’s beloved co-founder Herb Kelleher died in January,
Ralph Nader wrote a fawning obituary about the old friend, a “many splendored
human being,” who had founded his favorite airline; Nader would soon lose a
grandniece to MCAS.) On something of a lark, Boeing had given Kelleher a sweet
no-money-down deal on his first four 737s in 1971, and Kelleher repaid the favor by
buying more than 1,000 737s over the next 50 years—and zero of any other plane.
According to a recent lawsuit against Southwest and Boeing, the airline had
rewarded this loyalty with an unwritten but zealously enforced “handshake”
agreement, dating back to the 1990s, that Boeing would not sell any planes for less
than Southwest was paying, or Boeing would send Southwest a rebate check. And
in exchange for that guarantee, Southwest reliably swooped in with big orders
and/or accelerated payments after accidents, stock price plunges, or both; the
same lawsuit claims that, after September 11, the airline formed an off–balance-
sheet slush fund to bail out Boeing during unanticipated shortfalls, and lent other
airlines its own planes when Boeing production fell behind, all while it waited
patiently for its order deliveries to be filled at a time when it was convenient for
Boeing. As the carriers became more profitable in the twenty-first century, more of
them followed Southwest’s lead and helped Boeing make its numbers, with United
Airlines and Alaska Airlines pitching in during fourth-quarter 2015, alongside
Southwest, to make payments not due until 2016. Those partnerships were but one
numbers-smoothing mechanism in a diversified tool kit Boeing had assembled
over the previous generation for making its complex and volatile business more
palatable to Wall Street, and while not entirely kosher and not at all sustainable,
they were by far the least destructive tool in the kit—until Southwest called in the
favor on its orders for the MAX.

Southwest always had a lot to say about projected modifications to the 737, and
Kelleher’s team mostly wanted as few technical modifications as possible. With
the MAX, they upped the ante: According to Rick Ludtke, a former Boeing
employee, Boeing agreed to rebate Southwest $1 million for every MAX it bought,
if the FAA required level-D simulator training for the carrier’s pilots.

To whoever agreed to this, the rebate probably seemed like a predictably quixotic
demand of the airline that had quixotically chosen to fly just one plane model,
exclusively and eternally, where every other airline flew ten. Simulator training for
Southwest’s 9,000 pilots would have been a pain, but hardly ruinous; aviation
industry analyst Kit Darby said it would cost about $2,000 a head. It was also
unlikely: The FAA had three levels of “differences” training that wouldn’t have
necessarily required simulators. But the No Sim Edict would haunt the program; it
basically required any change significant enough for designers to worry about to
be concealed, suppressed, or relegated to a footnote that would then be redacted
from the final version of the MAX. And that was a predicament, because for
every other airline buying the MAX, the selling point was a major difference from
the last generation of 737: unprecedented fuel efficiency in line with the new
Airbus A320neo.

The MAX and the Neo derived their fuel efficiency from the same source: massive
“LEAP” engines manufactured by CFM, a 50-50 joint venture of GE and the
French conglomerate Safran. The engines’ fans were 20 inches—or just over 40
percent larger in diameter than the original 737 Pratt & Whitneys, and the engines
themselves weighed in at approximately 6,120 pounds, about twice the weight of
the original engines. The planes were also considerably longer, heavier, and wider
of wingspan. What they couldn’t be, without redesigning the landing gear and
really jeopardizing the grandfathered FAA certification, was taller, and that was a
problem. The engines were too big to tuck into their original spot underneath the
wings, so engineers mounted them slightly forward, just in front of the wings.

This alteration created a shift in the plane’s center of gravity pronounced enough
that it raised a red flag when the MAX was still just a model plane about the size of
an eagle, running tests in a wind tunnel. The model kept botching certain extreme
maneuvers, because the plane’s new aerodynamic profile was dragging its tail
down and causing its nose to pitch up. So the engineers devised a software fix
called MCAS, which pushed the nose down in response to an obscure set of
circumstances in conjunction with the “speed trim system,” which Boeing had
devised in the 1980s to smooth takeoffs. Once the 737 MAX materialized as a real-
life plane about four years later, however, test pilots discovered new realms in
which the plane was more stall-prone than its predecessors. So Boeing modified
MCAS to turn down the nose of the plane whenever an angle-of-attack (AOA)
sensor detected a stall, regardless of the speed. That involved giving the system
more power and removing a safeguard, but not, in any formal or genuine way,
running its modifications by the FAA, which might have had reservations with two
critical traits of the revamped system: Firstly, that there are two AOA sensors on a
737, but only one, fatefully, was programmed to trigger MCAS. The former Boeing
engineer Ludtke and an anonymous whistle-blower interviewed by 60 Minutes
Australia both have a simple explanation for this: Any program coded to take data
from both sensors would have had to account for the possibility the sensors might
disagree with each other and devise a contingency for reconciling the mixed
signals. Whatever that contingency, it would have involved some kind of cockpit
alert, which would in turn have required additional training—probably not level-D
training, but no one wanted to risk that. So the system was programmed to turn
the nose down at the feedback of a single (and somewhat flimsy) sensor. And, for
still unknown and truly mysterious reasons, it was programmed to nosedive again
five seconds later, and again five seconds after that, over and over ad literal
nauseam.

And then, just for good measure, a Boeing technical pilot emailed the FAA and
casually asked that the reference to the software be deleted from the pilot manual.

No more than a handful of people in the world knew

MCAS even existed before it became infamous.
So no more than a handful of people in the world knew MCAS even existed before
it became infamous. Here, a generation after Boeing’s initial lurch into
financialization, was the entirely predictable outcome of the byzantine process by
which investment capital becomes completely abstracted from basic protocols of
production and oversight: a flight-correction system that was essentially jerry-
built to crash a plane. “If you’re looking for an example of late stage capitalism or
whatever you want to call it,” said longtime aerospace consultant Richard
Aboulafia, “it’s a pretty good one.”

The 737 MAX sailed through its FAA certification flight tests in just over a year. The
plane was actually early, which was a good thing from an investor’s standpoint,
since Boeing’s last new plane, the 787, had been three years late. Of course, the
MAX wasn’t really a new plane, just an “upgrade” of the old 737 that had the
benefit of carrying roughly two and a half times as many passengers about three
times as far as the original 737.

In its early aftermath, Lion Air 610’s fatal crash conformed too much to well-worn
stereotypes about Indonesian safety standards to seem, at least to layman
observers, like anything more significant than a cautionary tale about
honeymooning in Bali. As it happened, the MAX flight directly before the crash
had started nosediving right after takeoff, too. The pilots turned it up, but it dove
down again and again, so the crew flew manually the whole way to Jakarta, where
a passenger told the television reporters everyone on board had spent the whole
ride “reciting every prayer” they knew. But all the pilots reported in a routine
maintenance log that the plane’s speed trim system was “running to the wrong
direction,” and that the air speed and altitude sensors were off. “Nothing about
how, oh by the way, this plane is possessed by demons?” joked Aboulafia.

And so all the early hot takes about the crash concerned Indonesia’s spotty safety
record and Lion Air’s even-less-distinguished one. The plane dove into the Java
Sea early in the morning on a Monday, 14 hours before the market opened and sent
Boeing’s stock down almost $30. But the price shot right back up again on
Tuesday. “It looked like an anomaly,” said David Calhoun, the private-equity
executive who leads Boeing’s board of directors, and whose shares in the company
appreciated in value by $2 million between the two 737 MAX crashes.

There aren’t any pilots on the Boeing board, and the

only engineer in the C-suites is CEO Dennis Muilenburg
—and pilots and engineers were the ones who found the
crash unnerving.
Of course, there aren’t any pilots on the Boeing board, and the only engineer in the
C-suites is CEO Dennis Muilenburg—and pilots and engineers were the ones who
found the crash unnerving. “Boeing is the type of place where all you have to say is
‘427’ or ‘Turkish 981,’ and everyone knows immediately what you’re talking about,”
said Sorscher. Preliminary satellite data showed that the plane dove just after
takeoff, then recovered—and then dove again, and recovered again, and dove
again, over and over. It wasn’t the usual flight path of a pilot who’d lost control of a
plane. Twenty-two times the demons had violently jerked down the nose, and 22
times the pilot had corrected with equivalent force. “I get so mad at Boeing trying
to tar this captain when he was actually the most proficient pilot of all of them,”
said Bjorn Fehrm, a former Swedish air force pilot whose technical blog on the
aviation web site Leeham News is a 737 MAX must-read. “He was mastering this
wild animal—22 times and he kept it in check!”

What was this wild animal that kept dunking down the nose of the plane? There is
a scene in the first episode of a five-part 1996 PBS series on the making of the 777,
Boeing’s first plane to employ “fly-by-wire” technology, in which an engineer
discusses the company’s philosophy of computer-assisted aviation:

One of the things that we do in the basic design is the pilot always has
the ultimate authority of control. There’s no computer on the airplane
that he cannot override, or turn off if the ultimate comes, but, in terms of
any of our features, even those that are built to prevent the airplane from
stalling, which is the lowest speed you can fly and beyond which you
would lose the control. We don’t inhibit that totally; we make
it difficult, but if something in the box should inappropriately think that
it’s stalling when it isn’t, the pilot can say, this is wrong and he can
override it. That’s a fundamental difference in philosophy that we have
versus some of the competition.

Pilots are familiar with this philosophy. It’s one of the things that makes flying a
Boeing different from flying an Airbus. On the 1997 update of the 737, Southwest
had requested that Boeing make special changes in its cockpit design because the
carrier’s pilots were more comfortable with analog displays. The Lion Air pilot was
certain he could turn off whatever was trying to crash his plane, so he temporarily
handed over the controls to his co-pilot and scanned the manual. Ninety seconds
later, everyone was dead. The co-pilot, said Fehrm, “was not prepared for the
powerful beast of MCAS.”

As it happened, the beast would strike again, four months later, with the crash of
Ethiopian Airlines Flight 302 outside Addis Ababa, claiming 157 more lives in
conditions nearly identical to the Lion Air catastrophe. The Boeing MAX body
count now stood at 346, and once the scope of the horror became fully evident, the
FAA had Boeing’s MAX fleet grounded, initially intending to return the planes to
service within a few weeks. That’s since become months, and the fleet’s return
may not ultimately happen until sometime next year. What has pitched up nicely
since its initial nosedive is Boeing’s stock price, which as The New Republic went to
press was right about where it stood a year ago, despite company projections of
some $8 billion to settle wrongful death suits from the MAX debacle. The true
financial cost could be much bigger for Boeing, if more carriers follow in the
footsteps of Rostec, the Russian government conglomerate whose aircraft leasing
arm sued Boeing in August to cancel its orders of the plane and return its deposit
plus interest. That could prompt already pessimistic credit-rating agencies to
downgrade Boeing’s debt, which could put Boeing in a serious cash crunch. But
until anything really, really catastrophic happens, investors seem ready to buy all
of Boeing’s dips—rather like MCAS in reverse. That’s in no small part because they
know the company has developed fail-safe systems for smoothing earnings,
beating expectations and jacking up demand for its shares with a precision that
rivals any jet that rolled off the assembly line in Boeing’s heyday.
An investigator with the U.S. National Transportation and Safety Board (NTSB) looks over debris at the
crash site of Ethiopian Airlines Flight ET 302 on March 12, 2019 in Bisho!u, Ethiopia.
JEMAL COUNTESS/GETTY

You can say that a fatal design flaw killed all these people, but that’s actually just
another way of saying that money did. It’s hard to square the Boeing behind that
powerful beast with the subject of the awe-inspiring PBS series. With the crippling
recession of the early ’90s an ever-present source of stress for Boeing managers
back then, the company nevertheless marshaled $5 billion and 10,000 employees
—5,000 engineers and 5,000 machinists, split into a few dozen “design-build”
teams inspired by Japanese manufacturing practices—to develop the 777. Roughly
$2 billion to $3 billion, in an era of rock-bottom interest rates and record airline
profits, was detailed to the 737 MAX.

There was one unmistakable harbinger of what was to come at Boeing in the saga
of the GE90—an all-new, ultra-efficient engine inspired by a NASA project that
General Electric’s pioneering chief of aviation Brian Rowe developed exclusively
for the new plane. Market watchers referred to the development of jet engines,
which make up 20 percent of an airplane’s purchase price, as GE’s “crown jewel,”
because the margins were high once the company had eaten the ten-figure cost of
developing and testing one. But in 1993, GE’s notorious downsizing CEO Jack
Welch—by then well on his way to becoming the most grotesquely lionized
character in American business—abruptly fired Rowe, along with several
thousand other aviation engineers. The results were predictable: The engines
failed their tests, often in spectacular fashion, replete with smoke and flames, over
and over and over again. Things deteriorated to the point that the FAA sent Boeing
a “letter of discontinuance” directing the company to cease flight tests until GE got
its act together. A shrunken staff of engineers, working overtime to implement
decisions by colleagues who had long since been laid off, finally got the engines
approved more than a year past their scheduled delivery dates, and malfunctions
continued to plague the engines for years thereafter.

Less than two years later, a layoff-happy Welch protégé named Harry Stonecipher,
McDonnell Douglas’s former CEO, grabbed the reins at Boeing, and the same
dysfunction took hold in Seattle.

The line on Stonecipher was that he had “bought Boeing with Boeing’s money.”
Indeed, Boeing didn’t ultimately get much for the $13 billion it spent on
McDonnell Douglas, which had almost gone under a few years earlier. But the
McDonnell board loved Stonecipher for engineering the McDonnell buyout, and
Boeing’s came to love him as well. This was in no small part because Stonecipher
cast himself as the savior of Boeing and knew just how to exploit a bad situation to
get his way. When he arrived in Seattle, an unwieldy new computer system was
conspiring with a sudden spike in orders and a clueless new workforce hired to fill
them to wreak havoc on production. Factory managers pleaded with Stonecipher
to marshal resources to fix things, but he ignored them until things got so bad they
had to halt the assembly lines—at which point he began what The Seattle
Times called a “cultural revolution.”

The first suitably Maoist edict of the new era was a ban on the term “family,” which
had first been rolled out as managerial precept at a 1998 Boeing retreat. (This move
was cribbed from Jack Welch, who famously detested “loyalty” as a concept
among his subordinates.) The new idea for describing intracorporate
interdependence was “team.”

Stonecipher’s other big cultural transformation was focused on maligning and

marginalizing engineers as a class, and airplanes as a business. “You can make a
lot of money going out of business” was something he liked to say. Welch had been
famous for transferring upper managers from, say, GE’s locomotives division one
year over to plastics the next, and to jet engines after that. Stonecipher wanted
Boeing’s upper management to view planes with that same cold detachment, to
not, as then-chief financial officer Debbie Hopkins explained in a 2000 Bloomberg
interview, “get overly focused on the box”—i.e., the airplane.

No one at Boeing really knew what had hit them after the McDonnell merger. Stan
Sorscher was at a family reunion when he started putting the pieces together. He’d
been talking (OK, ranting) to his Uncle Sidney, a gentle and brilliant man widely
considered to possess the brightest mind to have ever emerged out of Flint,
Michigan, about the depraved new managerial culture that had taken hold of his
company, when Uncle Sidney cut him off, looked him straight in the eye, and, with
a kind of precision and clarity Sorscher had only ever seen in “like, Nobel Prize-
winning physicists,” told his nephew:

You are in a mature industry that is no longer innovative; it’s a

commodity business. The last great innovation capable of driving major
growth in aviation was the jet engine back in the 1950s, and every
technological advance since has been incremental. And so the emphasis
of the business is going to switch away from engineering and toward
supply-chain management. Because every mature company has to
isolate which parts of its business add value, and delegate the more
commoditylike things to the supply chain. The more you look to the
market for pricing signals, the more the role of the engineer will shrink.

Sidney Davidson was a pioneering University of Chicago accounting professor

who viewed his profession, in the words of one of his textbook titles, as “the
language of business.” And while he was wrong, Sorscher knew, about airplane
manufacturing, his glib analysis was compelling in large part because fin de siècle
Boeing was being devoured by the trendy accounting standards of the day. The
new model for measuring long-term profitability in corporate America had boldly
eclipsed the old Warren Buffett-style metrics like earnings and operating margins.
Companies with traditional earnings fell out of favor—now, businesses that
weren’t overcapitalized tech start-ups clamored to position themselves as
turnaround stories. Boeing was telling its own version of this story, with the aid of
another Stonecipher initiative that naysayers dubbed “the cult of RONA,” or return
on net assets.

Theoretically, return on net assets, which was called “residual income” at GE, is a
quantification of how efficiently a company is using its factories, warehouses,
office buildings, storefronts, and other elements of its physical plant.
Theoretically, the metric can be used to make the case that a factory would be
better served by shutting down and converting to condos and Amazon warehouses
—or that a fighter jet factory and a fuel tanker factory would be better off
consolidating production lines into one, or (depending on the year that a company
is in the airplane manufacturing business) it can be worth more dead than alive. In
reality, all you had to do to make RONA go up instantaneously, no matter what,
was to sell off your assets indiscriminately, and outsource whatever functions they
used to serve to other strategic points along the “supply chain.”

The McDonnell Douglas engineers had seen it all before: In the name of RONA,
Stonecipher’s team had driven the last nail in the coffin of McDonnell’s flailing
commercial jet business by trying to outsource everything but design, final
assembly, and flight testing and sales of the MD-11. In 2001, one McDonnell
engineer wrote a scathing critique of the metric and its inevitable result, “Out-
sourced Profits,” that went viral on Boeing’s intranet server. But Wall Street
analysts dismissed the paper as a “rant,” and so the whole process was fated to
begin anew under Stonecipher’s watch at Boeing.

Abuzz with new ideas about factories to sell and components to outsource, Boeing
was hemorrhaging market share to Airbus, and even the newest Jack Welch
protégé on the board, James McNerney, was pushing for a new plane. Stonecipher
and John McDonnell, who seemed almost irrationally intent on the Salieri-style
project of seeing Boeing fail at the enterprise that had done in his own family
business, issued what Sorscher called a “medieval” ultimatum: Develop the plane
for less than 40 percent of what the 777 had cost to develop 13 years earlier, and
build each plane out of the gate for less than 60 percent of the 777’s unit costs in
2003. The board ultimately approved a development budget, estimated by those in
the industry to be $7 billion, for a project labeled at the time as the 7E7—later to be
known as the 787—but that figure came with a huge asterisk, because managers
promised the board they would require subcontractors to foot the majority of
costs. As former Boeing Commercial Airplanes president Alan Mulally explained it
to a friend of Sorscher’s one day in the parking lot before he quit in 2006: “In the
old days, you would go to the board and ask for X amount of money, and they’d
counter with Y amount of money, and then you’d settle on a number, and that’s
what you’d use to develop the plane. These days, you go to the board, and they say,
‘Here’s the budget for this airplane, and we’ll be taking this piece of it off the top,
and you get what’s left; don’t fuck up.’”

It’s difficult to convey the extent to which the 787 was fucked up. Pitched as a high-
tech, vastly more efficient sequel to the 777, the plane was in every way the inverse
of its predecessor. It debuted three years behind schedule, tens of billions over
budget, and was grounded 14 months after its maiden voyage, following a rash of
mysterious lithium ion battery fires. This was a surprise only because the batteries
were the last thing anyone (with the exception of Boeing’s battery team) thought
would ground the 787 Dreamliner. (As for those battery specialists, there’s a
fantastic 2014 Al-Jazeera English documentary recounting how the
subcontractors tasked with manufacturing the 787’s battery chargers struggled to
meet Boeing’s specifications and ended up burning down an entire 10,000-square-
foot plant in the worst chemical fire in the history of Tucson, Arizona.)

The whole 787 project had been ludicrously understaffed from the outset,
remembered former flight controls engineer Peter Lemme: “Literally where there
had been 20 engineers, there was now one.” Boeing deliberately subcontracted the
components without designing them. The general manager of the program, Mike
Bair, promised that, once finished, the parts would quickly “snap together” like
Legos. This was an unintentionally funny spin on the design of the 777: For that
plane, the project managers wanted the aircraft to be as easy to assemble as Fisher-
Price toys. And unlike the 787, the 777 was completed with such precision that it
was the first Boeing jet that didn’t need its kinks worked out on an expensive
physical mock-up plane. The very first 777 off the assembly line was airworthy.

With the 787, very much by contrast, nothing seemed to fit. There was a gap
between the flight deck and the fuselage; the wing didn’t attach securely to the
body of the plane. Far more troubling, it turned out that most of the parts Boeing
workers were expected to “snap together,” from the wings to the smoke detectors,
lacked tubes and electrical wiring. Even the fuselage was an empty husk. In the
end, much of the plane’s real design happened on the assembly line, and Boeing
had to write off three separate mock-ups that were too much like science projects
to pass off as airworthy planes. In the end, the Dreamliner cost no less than $30
billion, and probably closer to $50 billion. From 2004 to 2008, the year the plane
was scheduled to hit the market, Boeing plowed $16 billion into dividends and
share repurchases—only ceasing when the plane officially blew its deadline, even
though, as Sorscher bitterly recalled, “anyone could have told you that plane was
going to blow its deadline.”

In an ordinary context, it’s hard to imagine how The Harry Stonecipher Way—by
that point being carried out by James McNerney, the Harvard MBA and GE
veteran who had pushed the board to approve the plane to begin with—could
survive such a traumatizing, spectacular hellward spiral as the one that the 787
had plunged Boeing into. But the project’s dysfunction came to light amid far
graver trouble signs in the American economy, circa 2008—during the same
volatile spring on Wall Street that saw the Bear Stearns bailout. By the time test
flights began to suggest fundamental problems with the plane’s architecture, it
was 2009, and America was in the depths of the worst recession since the 1930s.
Investors, voters, and regulators had all become inured to that sort of thing. So
McNerney held on to his job for the long haul, ultimately raking in about $250
million in compensation at Boeing. In one of his final acts, he restored the
company’s stock buyback program, six months after the FAA lifted the grounding
of the 787. Between 2013 and 2019, Boeing would spend more than $43 billion
buying its own stock, and an additional $17.4 billion on dividends.

Nor have the company’s recent MAX woes altered its basic financial outlook. Two
months after the Lion Air crash, the board authorized the company to plow yet
another $20 billion into buying its own stock. If you wondered where they got the
nerve, well, GE spent $24 billion on its own stock in 2016 and 2017 alone. The
Boeing board is now led by David Calhoun, still another Jack Welch protégé, with
nothing but an accounting B.S. from Virginia Tech, who had run four GE divisions
by the time he turned 49—something of a real-life version of Jack Donaghy, the
swashbuckling GE hired gun played by Alec Baldwin on 30 Rock. Calhoun was the
runner-up for the CEO job in 2005, when McNerney nabbed it, and he’s a shoo-in
for the post when and if the board finally decides to can Dennis Muilenburg, a
lifelong Boeing employee and engineer now shouldering the challenge of
managing through the aftermath of the MAX fiasco. Asked by The Washington
Post to comment on the company’s failure to ground the MAX when it first learned
of the sinister suicide software that had killed 189 people, a coolly indignant
Calhoun doubled down. “I don’t regret that judgment. And I don’t think we got it
wrong at that time and that place.” Translation: It’s easier to lie about something
when you can’t be bothered to understand it.

Indeed, most of Boeing’s response to the MAX disasters has involved

disseminating a kind of misinformation and doubt that makes the crashes look
more complex than they really are. First Boeing issued, then instructed the FAA to
circulate, a terse directive to the aviation community essentially copying-and-
pasting the 737 flight manual’s instructions for handling a runaway stabilizer—a
rare (but terrifying, and well-understood) situation in which the plane’s horizontal
stabilizer doesn’t respond to a pilot’s commands. Then, when the airlines
informed pilots about MCAS, they dispatched executives to talk pilots off the ledge
about the deadly software—explaining, in the words of a Boeing vice president
Mike Sinnett to the American Airlines pilots’ union, that Boeing simply didn’t
want to “overload the crews with information that’s unnecessary.” Sinnett also
suggested that an MCAS malfunction would never happen to American pilots,
because the AOA “Disagree” light, an optional feature for which American had
paid extra to outfit its fleet, would alert the crew before takeoff that the plane’s
angle-of-attack sensors were contradicting each other and that the plane was not
airworthy.

That part turned out to be a lie. (The plane needed to be at least 400 feet in the air
to activate the Disagree light—at which point the pilots, already preoccupied with
getting the plane in the air, would only have a few seconds to turn it around.) But
the idea that some safety feature existed that would have saved American planes
perpetuated the fiction that an MCAS crash couldn’t have happened in a civilized
country, even if its pilots were ill-informed enough to fail to remember the
runaway stabilizer checklist.

And that’s why, come March 2019, Peter Lemme, a former Boeing flight controls
engineer who publishes a very technical aviation blog called Satcom Guru, could
not bring himself to believe that when Ethiopian Flight 302 drilled into the ground
near the resort town of Bishoftu, this incident could possibly be related to the Lion
crash. “It can’t be MCAS, it just can’t be,” he thought. Lemme had met his wife
working on pitch augmentation controls for the 757 and 767 aircraft; he’s also been
one of the company’s now much-maligned “designated engineering
representatives,” to whom the FAA delegates so much of its oversight. It went
against everything he’d seen in 40 years in the business to think that two crashes
four months apart had been caused by something so specific and inane. When the
FAA grounded the MAX before even analyzing the preliminary black box data on
the crashes, he assailed the move on Twitter. Clearly Boeing had made some
serious mistakes, but it seemed implausible that the media wasn’t oversimplifying
them—and moreover, every pilot in the world knew how to respond to an MCAS
error. They had the checklist!

But by the end of March, Lemme and his fellow aviation blogger Bjorn Fehrm,
working occasionally in concert with the anonymous but very pilot-famous
Mentour Pilot, a 737 captain and “type rating examiner” with half a million
YouTube subscribers, had solved at least one mystery: The Ethiopian
pilots had followed the Boeing checklist. They had switched the stabilizer trim
cutout switches to the “cutout” position and attempted to turn the nose of the
plane back up using the manual crank—they just couldn’t. In accordance with the
prescribed fix for an alert they were getting on the flight control computer, the
pilots had been flying extremely fast, and above the speeds of about 265 miles per
hour at which the manual trim wheel became unbearably heavy. This issue wasn’t
specific to the MAX; it was a well-known bug in the 737 generally. The Mentour
Pilot had noticed the problem in his day job evaluating the final flight simulator
exams of hundreds of would-be 737 pilots. He had even filmed a terrifying video in
which he attempted to implement the MCAS override checklist in a simulator to
demonstrate the system failure. And as Lemme had detailed on his blog, the
predicament was compounded by the ways in which Boeing had and hadn’t
tweaked the plane through its various iterations—shrinking the size of the cranks,
adding augmentations but never moving to a full fly-by-wire electronic flight
control system, introducing a somewhat questionable function called “speed trim”
in the ’80s that paved the way for MCAS, consolidating certain controls on the
MAX, and all the while purging a lot of pertinent information from the official 737
literature over the years.
Representative Angie Craig, D-Minnesota, talks with Paul Njoroge (right) and Michael Stumo, who
both lost family members in the crash of Ethiopian Airlines Flight 302, at a hearing of the House
Transportation and Infrastructure Subcommittee on Aviation.
TOM WILLIAMS/CQ ROLL CALL/GETTY

The upshot was that Boeing had not only outfitted the MAX with a deadly piece of
software; it had also taken the additional step of instructing pilots to respond to an
erroneous activation of the software by literally attempting the impossible. MCAS
alone had taken twelve minutes to down Lion Air 610; in the Ethiopian crash, the
MCAS software, overridden by pilots hitting the cutout switches as per Boeing’s
instructions, had cut that time line in half. Lemme had seen a lot of stupidity from
his old employer over the years, but he found this whole mess “frankly stunning.”

Lemme was on the brink of going public with his analysis of the manual crank fail
when a federal agent showed up at his door with a subpoena demanding all his
electronic correspondence. He was dumbfounded that the feds wanted talk to
someone who hadn’t worked at Boeing in 22 years, and a little concerned that the
criminal probe would “chill the open dialogue” he considered foundational to a
functional safety culture, but he chose to take it all as a positive sign authorities
were casting an “unusually wide net” in their hunt for the perpetrators of MCAS
and the deadly obfuscation surrounding it. Lemme called Dominic Gates at The
Seattle Times and posted his analysis the next day, tweeting for context a link to
the Mentour Pilot video, in which he and a co-pilot use the full force of their bodies
to move the crank about a degree or two before turning off the camera. It was a
sanitized but still deeply unnerving reenactment of what the Ethiopian pilots
experienced.

“There was this micro tidal wave of people coming forward because they felt it was
safe to come out of the woods,” remembered Dennis Tajer, spokesman for the
American Airlines pilots’ union, of the weeks following the Ethiopian crash, when
pilots and engineers alike shed their qualms and unloaded on the company whose
“toxic culture of fear and intimidation” they blamed for the crash. But the fear and
intimidation would start to surface again: Mentour Pilot took down his video,
explaining in a livestream that he shouldn’t have taken such liberties amid an
“ongoing investigation.”

But the bigger picture was becoming clearer: Boeing had manufactured a self-
hijacking plane, and in a display of grotesque cowardice, it had chosen to
disseminate to pilots a checklist for counteracting the self-destruct mechanism
that had killed them even faster. The Seattle Times deemed it “a nightmarish
outcome for Boeing and the FAA.”

But as the nightmare drags on, the clarity of things has dimmed a bit. We have
learned that there were other problems with the MAX—esoteric and exponentially
less comprehensible than the MCAS nosedives—as well as problems that dated
back to earlier generations of corner-cutting, but troubles that the company and
the agency are genuinely trying to fix. We have learned that the FAA certified the
plane despite its professed belief that the plane “does not meet” its own safety
standards due to the elevated possibility of one of its massive new engines
destroying the single set of cables controlling the rudder, if it were to break apart
in midair. (The FAA is not mandating repairs to the cables.)

We have also learned that no one at FAA wanted to work on the MAX certification
—to the point that one of the engineers who did take a job on the effort told The
New York Times he joked that he was high on drugs when he agreed to the
assignment. We have learned that Indian coders engineered much of the software
powering the MAX in offshore coding sweatshops as part of a campaign to make
inroads in Airbus-dominated India, where one airline proceeded to order $22
billion worth of Boeing jets in 2017. We have learned as well that Patrick Shanahan,
the former Boeing executive and acting defense secretary whom President Trump
nominated and then withdrew from consideration for the job, was accused of
hitting his then-wife in 2010.* (Shanahan denied the allegation.)

But, as it generally goes when a corporate malefactor is caught doing something

wrong, we have also unlearned some things about Boeing and the MAX. Starting
almost immediately after the Ethiopian crash, Daniel Elwell and Sam Graves,
respectively the then-acting FAA chief and the ranking Republican on the House
Transportation and Infrastructure Committee, led a coordinated campaign to
blame the dead pilots for crashing the planes. The crux of their argument was that
there was nothing to see here—that correct execution of the runaway stabilizer
checklist would have saved all 346 lives, and that the real scandal behind the two
crashes was a regime of lax foreign pilot training standards. Graves proceeded, in
the storied tradition of congressional grandstanding, to call for the Department of
Transportation to launch an investigation into this manifest nonissue.

The pilot errorists took their primary talking points from a blog post titled “The
Boeing 737 Max 8 Crashes: The Case for Pilot Error,” written by two pilots and
published on a site called Seeking Alpha. According to The Seattle Times, the post
in question had been commissioned by one of Boeing’s institutional shareholders;
and the error-narrative picked up additional bursts of momentum by aggregating
random little scooplets turned up in the media’s voracious focus on the MAX soap
opera. The Wall Street Journal, in particular, homed in laserlike on matters of pilot
behavior—even managing to transform the impossibility of manual flight under
the conditions of the Ethiopian crash into a story about the FAA’s new concern
that “female” pilots might lack the physical strength to fly the old-fashioned way.

What had been a tidy fable about good and greed, up there with OxyContin and
the Ford Pinto, one of the simplest ever told about the perils of following orders
from investor-managers, was gradually dissolving into incoherence and
uncertainty. Planes piled up in Victorville, California, where an out-of-the-way
airport charges $2,000 a month to park a plane in the bone-dry Inland Empire’s
corrosion-proof desert. Graves went on Fox News or Fox Business every few days,
and he insisted in one representative appearance, “It’s not the plane I’m
concerned about; I think the plane is very safe. We need to concentrate on the pilot
... being trained [for] the aircraft, and being able to fly a plane and not just fly the
computer.”

The House Aviation Subcommittee held regular hearings. The lawmakers on

Graves’s side of the aisle showed up ready for information war, and the panel’s
majority members were best embodied by subcommittee Chairman Rick Larsen,
an ex-lobbyist New Democrat who delivered an opening statement of head-
scratching insipidness: “As I have said before, if the public does not feel safe about
flying then they won’t fly; if they don’t fly, airlines don’t need to buy airplanes; if
they don’t need to buy airplanes, then airplanes don’t need to be built; and if there
is no need to build airplanes, then there will be no jobs in aviation.”

The Republican minority was spearheaded by Graves’s colleague Paul Mitchell, a

two-term congressman from Michigan who sharpened his knives and summoned
all his righteous indignation for a showdown with Dan Carey, the outgoing
president of the Allied Pilots Association, the American Airlines pilots’ union:

Captain Carey, you made more than a few headlines by releasing

portions of an apparently secret recording made in November.... Who
made that recording, sir?

Did the APA board of directors authorize that or know in advance you
were making the recording? Did you tell Boeing officials that you were
making that recording prior to the meeting or subsequent to that?... Are
you aware that—I’m sure you are—in April you issued a press release
 fully confident in the 737 MAX’s capabilities?

What’s the value [of releasing a secret recording] to the system or the
families?... Explain to me what warranted that, sir!

Carey had, in fact, recorded a meeting seven months earlier with Boeing executive
Mike Sinnett—the now-infamous gathering at which Sinnett had falsely assured
pilots that a failure of the MCAS was a near zero probability event, and that in any
case an MCAS breakdown would never happen in the United States, because most
airlines had paid extra to activate their “AOA Disagree” lights on the cockpits.
Boeing had a history of deflecting blame on to dead pilots, even back in the pre-
Stonecipher era, when a malfunctioning rudder on an earlier generation of 737s
caused a string of crashes and near-misses in the 1990s, while Boeing and its
surrogates promulgated a range of alternative theories about pilots inexplicably
(or intentionally) jamming the controls.

Carey could feel the MCAS story veering into similar territory, so he recorded the
meeting in case another once-in-a-lifetime MCAS fail occurred—as it indeed did.
Had you wandered into the congressional hearing without knowing an extra 157
people were now dead as a result, you’d have assumed Dan Carey, a pilot and labor
leader whose small effort to check the power of a corporate behemoth had been
rewarded with a lost reelection campaign two weeks earlier, was in fact the most
unscrupulous character in the whole sordid affair. (His interrogator, Mitchell, for
the record, is a probable centimillionaire who made his fortune selling a chain of
predatory for-profit junior colleges to a private-equity firm and his political
reputation challenging Rick Snyder, Michigan’s water-poisoning, austerity-
besotted governor from the right.)

I was sitting in the room as this happened, my first time in the Rayburn building
since the immediate aftermath of the 2008 financial crisis, and I am almost
embarrassed to report how painful it was to listen to Mitchell and company
shamelessly gaslight everyone, just as Congress’s hard-right true believers had
done when they fingered ACORN as the perpetrator of the 2008 meltdown, or Iraq
as a key culprit in 9/11 before that. Men like these had told far bigger lies for far
bigger and scarier clients to far more destructive ends. And far more successfully:
Regardless of what happens in the criminal case, there have been more than 60
lawsuits filed against Boeing over the MAX. No one who knows anything about
anything believes Boeing is anywhere close to being out of the woods, and some
who know a lot think the road ahead could lead to bankruptcy court.

But it’s also true that no one who knew anything about anything thought it was a
good idea to slash research and development spending, lay off half the engineers,
or subcontract whole chunks of a plane without designing it first. It hardly
mattered. “It was two camps of managers, the Boeing Boy Scouts and the ‘hunter
killer assassins,’” remembered Cynthia Cole, a former Boeing engineer who led the
Society of Professional Engineering Employees in Aerospace (SPEEA) during the
787 saga. “How do you merge those two management philosophies? The hunter
killer assassins will destroy the Boy Scouts. That’s what happens.”

That’s what happened on an exponentially more ruinous scale in mortgage

lending and pharmaceutical sales and at General Electric, which over the past
decade has spent more than $50 billion buying back its own stock even as its
staggering insurance business losses threaten to bankrupt the company. (And
none of this has diminished GE’s zeal for deindustrialization, which has
disemboweled places like Fort Wayne and Erie and Schenectady and put tens of
thousands of people out of work, both permanently and on furlough.) It’s what
happens to every well-intentioned half-measure to mitigate the catastrophic
effects of climate change.

None of these things had to be ideological wars, said Cole, a lifelong conservative
who now chairs the King County Republican Party in Washington state and first
joined the union—membership in SPEEA had been voluntary when she joined—
because not a few months into her first engineering job she had watched a space
shuttle land in a control room full of engineers who had built the shuttle. The
shuttle bounced, there was a massive collective intake of air, and one of her
colleagues let it slip that the landing gear wasn’t strong enough to withstand
certain weather conditions, and that if she wanted to keep her job she’d keep her
mouth shut about it; she was laid off a few months later. “I thought to myself, oh
my gosh! This happens in the movies.”
She had no idea then how sick she would get of watching the same movie.

But a month later, back in the same room on a biblically hot day, a son of Kenyan
farmers restored a bit of moral clarity to proceedings: “As an investment
professional, allow me to inform Congress as to how Boeing has viewed this whole
crisis.” Noting that the stock had surged from $140 four years earlier to $446 right
before the crash that had killed his wife, and his son, four-year-old daughter, nine-
month-old daughter, and mother-in-law, Paul Njoroge laid out the sequence of 737
MAX orders, ten-figure stock buybacks, and dividend hikes that had dealt out this
horrible fate to his family.

“One hundred and eighty-nine lives were lost, and

executives at Boeing cared more about its stock price
than preventing such a tragedy from occurring again.”
“Could that be the reason Boeing did not feel obliged to ground the MAX even
after the second crash of the Boeing 737 MAX?” he asked. “Back to my very
essential question, why wasn’t the MAX 8 grounded in November after the first
crash in the Java Sea? One hundred and eighty-nine lives were lost, and executives
at Boeing cared more about its stock price than preventing such a tragedy from
occurring again,” and so had begun “a pattern of behavior blaming innocent
pilots.”

“I am empty,” he told the committee. “My life has no meaning.” He had met his
wife studying finance at the University of Nairobi. The family had been spread
across Bermuda, where Paul worked as an investment manager at Butterfield
Bank, and Ontario, where his wife and children were settling down. Paul was
expected to join them later. The distance had been hell, and he had never even had
a girlfriend before her; his family was literally everything, he explained, and every
single one of them was gone. “I have nightmares about how they must have clung
to their mother, crying, seeing the fright in their eyes as they sat there helplessly. It
is difficult for me to think of anything but the horror they must have felt.”

After his testimony, a dead-eyed Njoroge stood in the hallway for nearly three
hours, granting interviews to the dozens of journalists who needed exclusive
footage to anchor their packages. He told me he wasn’t surprised that Boeing’s
stock hadn’t suffered more since the company had killed his family. He would
never buy it himself, of course, but even now it would be hard to justify leaving it
out of a client’s portfolio.

* This article has been updated to clarify Sorscher’s worries about Boeing’s future
and the domestic-violence accusation against Patrick Shanahan.

Maureen Tkacik @moetkacik

Maureen Tkacik is a writer in Washington, D.C., and a former Wall Street Journal reporter.

Read More: Magazine, October 2019, Politics, Cover Story, Feature, Boeing, Wall Street,
Finance, Financial Regulation, Financial Crisis, Dennis Muilenburg, Harry Stonecipher, Jack
Welch, General Electric, McDonnell Douglas Corp., Federal Aviation Administration, Aviation,
Aerospace, Airplanes, Neoliberalism, Business

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