The Unraveling of Boeing | Jedi Mind Tricks | 3
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2012 Seattle, Washington

In a Boeing research facility, two aerodynamicists are inside the company's transonic wind tunnel. Boeing uses this high-tech tunnel to test how its plane designs might perform under different conditions. And today they're working on Boeing's highest priority project, the 737 MAX. The 737 is Boeing's best seller. It's the workhorse of the world's airlines, but it's under pressure.

Airbus's equivalent, the A320, just got an upgrade. Its new addition, the A320neo, features modern fuel-efficient engines, and airlines are loving it. So Boeing's following Airbus's lead and creating the 737 MAX, a 737 with modern jet engines. The aerodynamicists in the tunnel carefully set up a scale replica of the 737 MAX design.

The model is about the size of an eagle and looks just like a regular 737. Model ready, the aerodynamicists exit the tunnel and head to the control panel.

On one monitor, they can see the Model 737 MAX waiting to be tested. Next to it, an LED display stands by to report on wind conditions in the tunnel. They've been testing the model for weeks, and today they want to see how it handles a steep banking turn. It's an extreme maneuver, one no commercial pilot is likely to ever do, but the MAX must be able to handle it in order to win permission to fly from the Federal Aviation Administration. The wind generator powers up.

The aerodynamicists watch the orange numbers on the monitor tick upwards as wind speed rises. They take notes and adjust dials. One stares at the image of the model on the monitor and frowns. Nose is pitching up. Yeah, not good. It's the bigger engines putting him further forward on the wings creating more surface for lift.

Aerodynamicists watch as the 737 MAX's nose is pushed up towards the sky by the wind. That's a certification fail right there. If the 737 MAX is to fly, Boeing's got to fix this. But the fix they come up with will prove deadly. You know, your team spends over half their time writing. And we all know how that happens. One confusing email turns into 12 confused replies and a meeting to get all lined up again.

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On the last episode, a new shareholders-first culture swept through Boeing after its merger with McDonnell Douglas. And Airbus displaced Boeing as the world's biggest civilian aircraft manufacturer. Now, Airbus is going after Boeing's best-selling aircraft, the 737. So Boeing's fighting back by creating the 737 MAX. But updating the aging 737 is about to backfire more than the company ever imagined. This is Episode 3...

Jedi mind tricks. It's spring 2011, one year before the 737 MAX wind tunnel tests, and the biggest commercial aircraft order of all time hangs in the balance.

American Airlines is shopping for 460 jets to replace its aging fleet of narrow-body planes. Airbus and Boeing are desperate to win this mega-order. They've spent months jostling for the airline's business. And now, American CEO Gerard Arpy is close to making a final decision. He sits in his glass-walled office in Fort Worth, Texas, nudges his rimless spectacles up his nose, then calls Boeing CEO James McNerney.

James, it's Gerard at American. I've got some news for you. In his executive suite at Boeing's head office in Chicago, a smile creeps across McNerney's face. He's a silver-haired executive in Harvard MBA. He's been running Boeing for nearly six years, and he's sure this deal is his. Airbus has been trying to tempt American with its latest creation, the A320neo. But Boeing's not fretting about it.

The way McNerney sees it, the NEO is just a regular A320 with a more fuel-efficient engine. Why would airlines want some retrofitted jet when Boeing's got a brand new single-aisle plane in development? If they buy A320 NEOs, they'll find themselves stuck with a dated aircraft.

Besides, Boeing and American are tight. American only owns Boeing jets. To buy Airbus would require American to walk away from the huge discounts it gets from its sole supplier deal with Boeing. McNerney eases back in his chair, certain that he's about to land a deal worth up to $40 billion. Good news, I hope. Not for you it isn't.

McNerney sits upright in his chair. What? You're buying Airbus? I've agreed to 260 A320s and A320 Neos. I don't want to wait a decade for a new Boeing. With Airbus, I get fuel-efficient airplanes in service in less than five years. I can't believe you're doing this. Listen, I haven't made a call on the other 200 planes we need. Boeing still has a chance to get those orders. But let me be frank with you. If you want to keep Americans' business...

You need to be way more aggressive in what you're offering. Okay, Gerard. Message received. Loud and clear. It's a huge setback for Boeing and a wake-up call. Airbus is now eating into the 737's sales, and that's an existential threat. So Boeing scrambles to respond. It abandons plans for its new single-aisle aircraft and Xerox's Airbus' A320neo strategy,

Its new plan is to sell airlines a new 737 model, one equipped with the latest engines. It calls it the 737 MAX. But the MAX's appeal doesn't stop at engines that burn less fuel. Boeing also promises airlines that any pilot who has flown a 737 will be able to fly its new 737 with just a few hours of computer-based training.

It's a compelling offer. Pilot training is a huge expense for airlines. And Boeing's new souped-up 737 saves the day. In July 2011, American Airlines awards Boeing the rest of its mega-order. It's a victory that comes not a moment too soon. Airbus' A320neo is selling fast. The company already has hundreds of orders for its revamped single-aisle jet.

Its popularity threatens to challenge the 737's position as the world's best-selling jet. Boeing is sure it can catch up with the MAX, but to succeed, it needs to keep its promises of bigger engines and minimal pilot training. And that's a challenge. The 737's airframe is 45 years old, and fitting it with newer, heavier engines will affect how it flies.

But that's a problem Airbus has already solved. Since the 1980s, it's used computers to erase the aerodynamic gulf between its jets. Because of this, for a pilot, flying a single-engine A320 doesn't feel much different to piloting a mammoth A380 Super Jumbo.

Aerodynamically, these planes have little in common, but the computers work behind the scenes to make them handle the same for their human pilots. So, Boeing decides it'll do the same with the MAX. It adds a software program called MCAS to the plane's computer systems.

MCAS's job is to automatically adjust the horizontal stabilizers on the MAX's tail so that it flies just like an old-school 737. So when its aerodynamicists discover the new engines caused the 737 MAX's nose to tip upwards, MCAS is tasked with compensating for the problem by pulling the nose downwards. It seems like the biggest challenges to bringing the MAX to market are solved.

Boeing can now keep its promise that the MAX won't saddle airlines with multi-million dollar training bills for their pilots. But while the momentum behind the MAX project gathers speed within Boeing, the company's newest plane in the air is about to encounter an electrical storm. It's January 2013 and Boeing CEO James McNerney returns to his home in Chicago after a long day. He's ready to put work out of his mind for a few hours.

He puts a fish dinner in the oven and then changes into his sweatpants ready to start his usual evening workout. But as he prepares to get on the treadmill, a message buzzes on his phone. He heads over to the table where he left it to check the message. Before he can get there, another message lands. Then another, and another, and another. By the time McNerney picks up his phone, it's vibrating wildly. He checks the first message.

And his eyes widen in panic. He races to the kitchen, snatches the TV remote off the countertop, and switches on the TV to CBS News. McNerney stares in horror at the footage of passengers fleeing the Boeing aircraft. It's the second battery malfunction on a 787 Dreamliner this month, and McNerney knows what happens now. The 787 is going to get grounded.

The next morning, McNerney calls an emergency meeting with Boeing's top engineers at the company's high-rise head office in Chicago. The news is grim and getting grimmer. The Federal Aviation Administration has ordered the Dreamliner out of American skies. And as usual, the rest of the world's regulators have done the same. The Dreamliner has just become the first aircraft grounded by the FAA since 1979.

Airlines that bought Dreamliners now face millions of dollars in losses, losses that Boeing may now find itself on the hook for. The groundings also mean Boeing can't deliver any more Dreamliners to airlines, which means they won't be able to collect tens of millions of dollars in final payments that are due on delivery. McNerney starts by checking if the cause of the latest Dreamliner battery glitch is the same as the earlier one.

Boeing's chief technology officer John Tracy confirms the lithium-ion batteries are the primary suspect, but the cause is yet to be determined.

He reassures McNerney that Boeing's Japanese team is confident that the fire didn't endanger the aircraft or anyone on board. McNerney slams his fist on the table and starts to berate his deputies for their relaxed attitude to the incident. To him, this isn't an engineering question. This is a safety issue, one that threatens airline and passenger confidence in Boeing. Planes that catch fire are bad for business. This needs fixing now.

In the weeks that follow, Boeing's engineers race to get the Dreamliner airborne again. They redesign the batteries to reduce the risk of short circuits that could start a fire. They also create a new casing for the batteries to better contain any fires. With a fix in place, Boeing sends an army of mechanics around the world to implement the changes on every Dreamliner in service, so they can fly again the moment the FAA gives the all-clear.

It's an operation that costs millions of dollars, but with Boeing's reputation on the line, there's no alternative. And in April 2013, after four months of furious activity and fixes by Boeing, the FAA approves the remedy. Soon, the Dreamliner is back in the air, allowing Boeing to refocus on its civil aviation priority, the 737 MAX.

By now, the MAX is nearing fruition, but its orders still lag behind those of the Airbus A320neo. The Neo is proving to be a sales sensation. By the time it enters service in late 2015, Airbus will have orders for almost 4,500 Neos, around 1,500 more than Boeing's one for the MAX. For years, the 737 and A320 have vied for dominance in the single-aisle corner of the aircraft market.

But now, Airbus has established a decisive lead, a lead that Boeing must overcome if it's to regain its position as the world's leader in civil aviation.

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Airlines don't want to pull their pilots off the job for lengthy training on how to fly Boeing's upgraded 737. So Boeing salespeople have been making big promises. They've told airlines that existing 737 pilots will be able to fly a MAX after only a couple of hours of computer training. But Boeing doesn't get to make that call. That's the FAA's job. And if the US aviation regulator thinks pilots need more training, Boeing's sales pitch will lay in ruins.

all of which puts Forkner under extreme pressure as the chief technical pilot for the 737. It falls to him to persuade the FAA to do what Boeing asks. And if he fails, he's sure he's going to get fired. So it's convenient that the FAA has grown cozy with Boeing in recent years. Airplane crashes are getting rarer and Boeing's used the industry's strong safety record to defang the federal regulator.

It's persuaded the FAA to let Boeing police itself more and spend less time scrutinizing what happens in the company's factories. And this lighter-touch regulation saves Boeing a lot of time and money. But while the FAA is now tamer, it still wields enormous power, as the grounding of the Dreamliner proved. And the world's other aviation regulators usually mimic every decision the FAA makes.

Forkner pushes for the FAA to agree to only require 737 pilots wanting to fly the MAX to undergo level B training, just a couple of hours of computer training. The FAA pushes back. It tells Forkner that Boeing must submit formal documentation about the MAX first, and only once the FAA's own pilots have reviewed that information will they make a decision.

The FAA also signals that pilots may need to undergo expensive flight simulator training on some aspects of the MAX. That news scares Forkner. That would be nothing short of a planet killer for the MAX. Annihilating the sales team's claims that the pilot training will be fast and cheap. Forkner knows he has to find a way to head off this threat, but he doesn't have to win this battle today.

Bringing a new aircraft to market is a long and complicated process. Boeing's been working on the 737 MAX for five years already, and its first test flight is still two months away. These training negotiations will continue for months, plenty of time to change the FAA's mind.

But Boeing needs to offer more than quick training to convince airlines to buy the MAX instead of Airbus' A320neo. It also needs to ensure Airbus doesn't undercut it on price.

It's February 2016, and at Boeing's facility in Everett, Washington, a group of engineers who build 787 Dreamliners are watching a company-wide webcast. On the screen, they see the face of Ray Connor. He's the gray-haired, dimple-chinned boss of Boeing's Commercial Aircraft Division, and he's in some distant executive office. And he's got a downbeat message to deliver.

He tells the engineers that Boeing is losing the air war. Airbus is beating it time after time. In most sales fights, Airbus beats Boeing on price. In 2015, Airbus' A320 line secured 60% of single aisle plane orders. This, Conner warns, is a serious threat to all of Boeing. The 737 is the product line that makes the biggest contribution to Boeing's earnings.

And while the 787 Dreamliner is proving popular, it's not going to make up for all those lost 737 sales. The engineers are not surprised. The fact that Airbus is out in front is old news. The days when Boeing dominated the market are a fading memory. They also know the Dreamliner doesn't make money. Boeing's been manufacturing Dreamliners for eight years, but it's yet to reach the point where the project recoups its costs and starts generating profits.

On the webcast, Conner declares that Boeing must compete with Airbus on price. And to do that, it must reduce its overhead and boost profit margins. There's a ripple of unease among the engineers. They know where this is going. Then, Conner confirms their suspicions. Boeing is starting a program of extreme cost-cutting. The engineers glance at one another and wonder how many of them will be left after this call.

As redundancies rock the company, the pressure on the 737 MAX team to save the day intensifies. It's March 30th, 2016, and Keith Leverkuhn, the general manager of the 737 MAX program, is sitting in a 4th floor conference room inside Boeing's campus in Everett, Washington.

He and his senior team are here to learn more about the latest challenges facing the MAX. As he listens, senior members of the MAX's engineering team walk the room through the latest regulatory hurdle. The problem is the aircraft's handling. It's an issue that's been lurking in the background ever since the model plane underwent wind tunnel tests four years earlier.

The 737 MAX's airframe dates back to the 1960s. It was never designed to carry the big modern engines that the MAX promises to bring to the 737 line. So to fit these engines, Boeing's had to move them forward on the wings. But this changed how the 737 handled and made it difficult to control when the nose is pointing sharply upwards. Boeing decided to resolve this by creating a computer system called MCAS.

The idea is that when faced with those conditions, MCAS will automatically adjust the horizontal stabilizer on the plane's tail to push the plane's nose down. But the engineers have discovered that MCAS doesn't fix the handling problems at lower flight speeds, and particularly when the plane's approaching a stall. If nothing changes, the MAX might not get certified by the FAA. Leverkuhn asks if the team has an answer. The engineers smile. They do.

They want to redesign MCAS. Their plan is to give it more control of the horizontal stabilizer so it has greater ability to force down the nose. They also plan to widen the range of speeds under which MCAS can activate. The engineers explain that this will resolve the issue and make the MAX handle in a more predictable way. Leverkuhn signs off on the plan, but the FAA isn't told about the change.

Instead, a few hours later, Boeing contacts the FAA and asks the regulator to remove all mentions of MCAS from the MAX's pilot manuals. Oblivious to the changes to MCAS, the FAA agrees to Boeing's request, ensuring that pilots won't even know the MCAS system exists.

Five months later, in Seattle, Washington, Mark Forkner, the 737's chief technical pilot, sits at his desk excitedly typing an email to around 40 bosses and colleagues. He's got big news for the MAX team. This morning, the FAA agreed with Boeing that Level B training is all pilots need to learn how the MAX differs from earlier models of the 737.

and the regulators of Canada, China and the European Union are now set to follow suit. Faulkner sends the email. Within an hour, someone from product marketing replies, gushing about how they love the news that pilots will need less than a day's training to fly the MAX. Faulkner replies that the next challenge will be to "Jedi mind trick" the rest of the world's aviation regulators into following the FAA's example. Step by step, the barriers to the MAX getting airborne

are being dismantled. It's November 2016, and Forkner's holed up in a hotel room sipping Grey Goose vodka. It's late, and he's on his laptop trying to keep on top of his ever-growing workload. He sips his ice-cold vodka and thinks about the latest problems with the MAX. He spent today with his 737 MAX flight simulator team, and there's a problem. The training simulator needs FAA approval, but the virtual version of MCAS is misbehaving.

Dude, log off. You too. I just logged on to check my schedule. I have so much to do that I want to work from home. I just can't get stuff done in the office.

Fortner taps out a jokey reply about how his colleagues should consider switching to a sales job. I'd ask for a job in sales where I can get paid to drink with customers and lie about how awesome our airplanes are. Colleagues ask about progress with the simulator. Fortner takes a sip of his vodka and replies, MCAS is now active down to Mach .2. It's running rampant in the sim on me, so I basically lied to the regulators, unknowingly. It wasn't a lie. No one told us that was the case.

Both men know this is a problem. In the simulation, MCAS is intervening when it shouldn't, trying to adjust the plane's course and altitude, all of which makes the 737 MAX harder to fly. I'm leveling off at like 4,000 feet, 230 knots, and the plane is trimming itself like crazy. I'm like, what? Granted, I suck at flying, but even this was egregious.

Fortner then asks his colleague why they're only just hearing about this problem. I don't know, the test pilots have kept us out of the loop. They're all so damn busy and getting pressure from the program. That is true. I wouldn't want to be them. Okay, time to log off. Talk later. Fortner watches his colleague log off and gets back to work. He can feel the pressure weighing down. But he's not alone. Everyone involved with the 737 MAX is feeling the heat.

Some employees fear corners are being cut and safety compromised. But those voices get ignored in the frantic race to get the MAX to the market. As the countdown to the MAX's first passenger flight nears, employees with concerns learn that it's better to say nothing if they want to keep their jobs.

The momentum behind the MAX is now unstoppable and few are paying attention to MCAS, the software program lurking deep within the aircraft that's about to turn deadly. Imagine getting a message from your favorite brand that feels like it was created just for you. Chances are they're using Attentive, the SMS and email marketing platform designed to help brands build and connect with their ideal audience.

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It's May 22nd, 2017, and in the Malaysian capital of Kuala Lumpur, passengers are boarding the first 737 MAX to enter service. The aircraft is owned by the Malaysian carrier Melindo Air, and it's due to fly to Singapore, and its maiden passenger flight is already late taking off. Boeing had to delay delivery due to a minor problem with the engines, which are built by General Electric and Safran. But now, that's fixed.

And the 737 MAX is ready to fly. On the plane, Melindo Air CEO Chandran Ramamuthi beams as he watches the 180 passengers taking their seats on this economy-only flight. He's expecting it to deliver big savings in fuel. And he's not the only one. The 737 MAX sales operation is gathering speed. The MAX is now the fastest-selling aircraft in Boeing's history.

Boeing's received nearly 3,700 orders from 87 airlines, and those add up to serious money. The list price for a 737 MAX is $112 million. Buyers usually pay half that amount, but that still leaves Boeing with an estimated profit of $12 to $15 million for each MAX sold. So, as the Milindo Air flight takes to the air,

Boeing's on track to earn more than $40 billion from its revamped 737. The MAX is already a success, but it's still got a long way to go to outmaneuver Airbus's equivalent, the A320neo. By the end of the year, there will be almost 1,500 more orders for its A320neo than Boeing's 737 MAX. And the order gap between the two aircraft families is getting bigger all the time. But Boeing's determined to catch up.

It tells its plant in Renton, Washington that it needs to produce 52 MAXs every month by 2018. It gets Boeing staff who carry out checks on behalf of the FAA to fast-track their work to keep production on schedule. And it also keeps up the pressure on regulators, who are wavering on Boeing's insistence that pilots don't need expensive training to fly a MAX. It's December 2017, and once again the 737 chief technical pilot Mark Forkner is working late.

It's past nine in the evening. He fires off an email to a colleague urging them to clock off for the night. Jesus, get off the computer and go drink with your wife. The colleague pings back immediately. Been there, done that. Taking some time off late next week. Good. This is garbage that the three of us are online right now. It's ridiculous we're working this hard. Well, that's the story of the 737 group. But today, there's at least a win to celebrate.

For the past few months, Boeing's been clashing with the DGCA, Indonesia's aviation regulator. The regulator floated the idea of requiring existing 737 pilots to be trained on how to fly the MAX using a flight simulator. That ruling would greatly increase the cost of buying the MAX for Indonesian airlines. So it's fallen to Forkner to convince the regulator that such training is totally unnecessary. Forkner shares with his colleague the news that the DCGA has backed down.

Fortner explains how he told them that aviation regulators in the United States, Canada, Europe, China, Malaysia and Argentina all think a short computer course is enough, and a list of all the airlines around the world that agree. Then he summarizes the strategy.

to make him feel stupid about trying to require any additional training requirements. The colleague replies, "Well done." In 2018, Boeing's aggressive push to get the 737 MAX into service starts to pay off. That year, Boeing attracts more orders for the MAX than Airbus gets for the NEO. And as Airbus' lead starts to shrink, Boeing's stock price and revenues start to soar. It seems that at long last, Boeing is ascending again.

It's October 29th, 2018, and in Jakarta, Indonesia, Lion Air Flight 610 is clear for takeoff. In the cockpit of this 737 MAX, the captain hits the takeoff button, and the engines roar into life. Seconds later, the jet pulls off the runway headed to Bangka Island with 189 people on board. But less than two minutes later, the first officer contacts air traffic control.

Terminal East, LNI 610, request approval to proceed to some holding point. LNI 610, Terminal East, what's your aircraft's problem? Terminal East, LNI 610, flight control problem. It's the first sign that Lion Air 610 is in trouble. As the plane heads over the Java Sea, the pilots are bombarded with stall warnings.

Suddenly, the plane's nose lurches down. The captain pulls back hard on the control column to lift the nose. But every time he does, the plane responds by pushing it down again harder. The 737 MAX roller coasters through the air like a bucking bull. No matter how hard the pilots try to raise the nose, the plane won't be tamed. And with every downward lurch, the plane's nose sinks further and further below the horizon.

Finally, 13 minutes after takeoff, the pilots lose the fight. The nose jerks down one last time, tipping the plane into a near vertical descent. The first officer sees the sea rushing towards him through the windshield and gasps his last words. Allahu Akbar. A split second later, Lion Air Flight 610 slams into the water, killing everyone on board. Something terrible has gone wrong with the MAX, and it's about to plunge Boeing...

into the mother of all crises. It's November 2018, and in Fort Worth, Texas, Boeing Vice President of Product Strategy Mike Sennett is facing a hostile audience before the gray-haired executive is a group of furious pilots from American Airlines. And they want answers. Answers about MCAS, the 737 MAX's automated flight control system.

Until last month's Lion Air crash in Indonesia, no 737 MAX pilot had heard of MCAS. It's not mentioned in the manuals or covered in pilot training. But now, MCAS is the prime suspect in the Lion Air disaster. Since the crash, the pilots have learned that MCAS automatically adjusts the plane's position. They also know it relies on data from the two angle-of-attack sensors on the plane's nose.

These sensors measure the position of the nose relative to the horizon. And if either angle of attack sensor says the nose is too high, MCAS automatically tilts the plane down. But on the Lion Air flight, one of these sensors was faulty. It kept telling MCAS that the nose was higher than it really was. In response, MCAS kept shoving the plane's nose down, with deadly results.

One infuriated pilot jabs his finger in the direction of the Boeing executive. The Lion Air guys didn't even know the damn system was on the airplane, nor did anybody else. Sennett tries to calm him. I don't know that understanding MCAS would have changed the outcome. There are other conditions that can cause similar flight control problems.

Why do you need to know which condition it is before acting? Another pilot steps in. Because this problem is masked by so many other distractions. As pilots, we're the last line of defense. We need this knowledge. Senate promises Boeing will deliver a fix. We will upgrade the software, but we don't want to rush and do a crappy job. We don't want to fix the wrong things. And until the fix is ready, the MAX stays airborne.

The world's regulators and airlines aren't panicking just yet. Besides, to bridge the gap, Boeing has offered pilots advice on how to switch MCAS off. But these actions are not going to be enough. Because in Ethiopia, MCAS is about to strike again. On the next episode, with the 737 MAX grounded worldwide...

Boeing's new CEO Dave Calhoun finds himself in a race against time to get the aircraft giant out of its tailspin.

From Wondery, this is Episode 3 of The Unraveling of Boeing for Business Wars. If you're interested in hearing more about Boeing, we recommend Boeing vs. Airbus by John Newhouse and Flying Blind by Peter Robison. A quick note about recreations you've been hearing. In most cases, we can't know exactly what was said. Those scenes are dramatizations, but they're based on historical research.

I'm your host, David Brown, written and produced by Tristan Donovan of Yellow Ant, researched by Marina Watson, sound design by Joe Richardson, fact-checking by Gabrielle Drolet. Our managing producer is Desi Blalock. Our senior managing producer is Callum Clues. Our producers are Tristan Donovan and Grant Rutter. Our senior producers are Emily Frost and Dave Schilling. Our executive producers are Jenny Lauer Beckman and Marshall Louis for Wondery.

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