AvTalk Episode 251: 737-9 MAX inspections and investigations

AVT 251 Transcript
EPISODE 251
[EPISODE]
[0:00:08] IP: Hello, and welcome to episode 251 of AvTalk. I am Ian Petchenik, here, as always
with –
[0:00:18] JR: Jason Rabinowitz. How's it going, Ian? How you feeling?
[0:00:23] IP: I'm okay. I'm struggling through it. I lost my voice, basically, just after we recorded
last week's episode. It's slowly coming back.
[0:00:31] JR: Wait. We said a lot of things, so.
[0:00:33] IP: We did. We did say a lot of things. Yeah, that's been a fun journey back. Other
than that, I'm doing all right. How are you, sir?
[0:00:42] JR: I'm good. I'm a little jetlagged at the moment, but I'm going to power through it
and talk to you about some things, and not just the thing we talked about last week, but other
things happened, too, so I’m actually –
[0:00:52] IP: Other things happened.
[0:00:53] JR: Pretty big news. We'll get there though.
[0:00:56] IP: Yeah. I mean, any other week, it would be the lead story, the main story, and
possibly, some other things sprinkled in. We will get to the fact that a federal judge has ruled
against the merger of JetBlue and Spirit Airlines later in the show, because there is still much to
cover. Jason, you alluded to the fact that you were jetlagged. You found out about the news that
the judge had blocked the merger between JetBlue and Spirit. Where did you find out about that
news?
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[0:01:29] JR: On board a JetBlue flight from Amsterdam to JFK. One of the five live TV
channels they get on JetBlue on transatlantic flights is CNBC. I turned that on and snapped a
few pictures of that screen in the aircraft for historical preservation.
[0:01:46] IP: Dare I say, it's the second largest JetBlue related news event to be shown live on
JetBlue in the airline's history?
[0:01:57] JR: Yeah. I mean, we have to go way back, like two decades at this point.
[0:02:01] IP: I'm willing to go way back.
[0:02:03] JR: You're going all the way back to 2005, I think. 2005 –
[0:02:06] IP: I’m dating myself, aren’t I?
[0:02:07] JR: - when the Canyon Blue related with the twisted landing here in LA. Yeah, that
was 2005, dude. That was almost 20 years ago. Certainly, some other breaking news has
happened regarding JetBlue since then on TV.
[0:02:21] IP: Hopefully, not.
[0:02:23] JR: I mean, presumably when they announced the merger. I don't know.
[0:02:26] IP: I mean, okay, fine. Maybe I'm just an old man at this point. Well, you were on the
flight from Amsterdam to JFK. It took quite a while to get from Amsterdam to JFK. We ran the
numbers and figured out that you, sir, have been on the third longest JetBlue flight ever.
[0:02:45] JR: Yeah. At least we think so. JetBlue started operating transatlantic flights in the
summer of 2021 and added, notoriously Amsterdam most recently. It adds a couple new ones
this summer, I think Edinburgh and Dublin. But Amsterdam is currently its longest flight by
duration of flight and mileage. When you add in some headwinds over the North Atlantic, that
flight gets long. It is safe to say, if this was the third longest flight that JetBlue's ever had on the
Amsterdam route, it is probably the third longest flight JetBlue has ever operated.
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Yeah, we left Amsterdam on time miraculously, because there was a lot of snow, ice, sleet, hail,
rain, all those things in Europe this past week, but we left right on time, but we blocked in to JFK
45 minutes late, just because of the headwinds that day.
[0:03:41] IP: Good times. By good times, I mean, fun. That gets to something that we've talked
about with single-aisle transatlantic operations. Setting aside the passenger cabin and comfort
issues, which I've come around to being not as big of a deal as most people make them out to
be when they say, “Oh, I'm never going to fly transatlantic single-aisle. A320, oh, I don't like it.”
The actual operational concern is that because of the A321LR and the XLR economics, they fly
lower and they fly slower, and so they're much more impacted by those headwinds than say, an
A330, or an A350. I mean, it adds not an inconsiderable amount of time.
[0:04:30] JR: Yeah. I think the Delta A330-300 that left shortly ahead of us got into JFK about
20 minutes faster. That could be for any number of reasons; just routing, approach. JFK could
literally just be the way things go. They got in an hour earlier. Maybe they had a less long
approach than we did. Yeah, I think it took a little bit longer, about 20 minutes longer for us to
get in. We were definitely stretching the legs of that A321neo LR, but it's not the longest flight
those operate. I think SAS gets the trophy for that Copenhagen to Dulles, all the way down
outside of DC, is an even longer flight by about 45 minutes to almost an hour. It's a long flight.
But yeah –
[0:05:15] IP: They’re only going to get longer.
[0:05:17] JR: Yeah. I didn't expect to have such immediate backlash and unjustified hate of the
idea from people who I think should know better of taking a narrowbody, long-haul flight. I mean,
it was wild to see the hatred of it like, “Oh, I would never do that. It's a narrowbody. That's
ridiculous.” I'm thinking like, well, I flew JetBlue, so the seats has more leg room than basically
any other airline you're going to get out there. The seat is as wide, or wider than any widebody
out there.
Most airlines flying over the Atlantic if they're flying the 777, it's going to be a 343 layout. It's
basically, there is somebody on the window side who is two seats away from the aisle. Really,
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the only downside was the economy cabin only had two lavs at the rear of the aircraft and
there's nowhere to wait for those. You end up doing that in the aisle. But it really wasn't that big
a deal. If it lowers costs and opens travel opportunities for passengers who may not be able to
afford a Delta KLM ticket, I’m all for it. It was fine. It was 10 hours onboard this aircraft, but it
was fine.
[0:06:25] IP: It was fine. Bottom line, it was fine.
[0:06:27] JR: It was fine. I’d do it again.
[0:06:29] IP: I think we're going to continue to find out. Okay, we rejoin the 737-9 MAX saga, or
the current saga. We'll go back to the 9th of January. We left off, we recorded last week's
episode on the 10th. Steve Giordano joined us. If you haven't listened to last week's episode,
last week's episode focused a lot on what happened on the accident flight. What happened on
Alaska Airlines flight 1282 on the 5th of January. What happened to that specific aircraft. This
week, what Jason and I are going to do is walk through the timeline, roughly since we recorded
last week what the actions by the FAA have been, what the actions and promised actions by
Boeing have been, and what the airlines have been saying about those things.
We're going to go back to the 9th of January to remind ourselves that on the 9th of January, the
FAA put out a statement, the way they've been phrasing these, they're very, very safety
oriented, very safety conscious. That seems the FAA has certainly learned its verbiage since the
MAX grounding in early 2019. It begins, “Every Boeing 737-9 MAX with a plug door will remain
grounded until the FAA finds each can safely return to operation.” Then it goes on to say that
Boeing must provide instructions for inspections and maintenance. Then this is where we left
things last week.
Boeing offered an initial version of the instructions yesterday, so the 8th of January, that the
revising based on feedback. The airlines and the FAA provided feedback to Boeing. They said,
“Okay, we need to revise the inspection instructions that we will then approve, so that airlines
can begin inspecting their aircraft.” That has led us all the way in, well, frankly, to this week. The
FAA, in the interim between requesting those revisions, and we'll get to when they finally
approve those, well, when they conditionally approved something. We'll get there.
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The 11th of January, the FAA announced that it was investigating Boeing and Spirit Aerosystems
to determine if Boeing failed to ensure that completed products conformed to its approved
design and were in a condition for safe operation in compliance with FAA regulations. The FAA
sent a letter to Boeing saying that it was opening an investigation to find out whether or not they
did what they were supposed to do to make sure that those aircraft were safe and were
assembled correctly when they left the factory.
I'm going to quote the FAA statement here. “The above-described circumstances,” so the fact
that the door plug came out, “indicate that Boeing may have failed to ensure its completed
products, conformed to its approved design and were in a condition for safe operation in
accordance with quality system inspection and test procedures.” I'm going to hit that last couple
of words there. Quality system inspection and test procedures.
That same day, Boeing says, “We will cooperate fully and transparently with the FAA and NTSB
on their investigations.” David Calhoun, we touched on this briefly last week where David
Calhoun, the CEO of Boeing, gave, or Boeing released a shortened version of his conversation,
or statements to Boeing employees. But Calhoun promised that they were going to approach
this with 100% complete transparency every step of the way.
[0:10:23] JR: Yeah. There were a few notes on the January 11th FAA update, basically, that I
wanted to call out. It starts off the update, and I quote, “This incident should have never
happened and it cannot happen again.” That is fairly firm wording from the FAA that I feel like,
we have not seen before. They are explicitly calling out Boeing for saying, “This should not have
happened.” When they say it cannot happen again, they are acknowledging that we have seen
past quality issues with the MAX and that this is a problematic aircraft from a problematic
vendor at this point. Frankly, they're sick of it, by the sound of it.
Then at the end of it, they quote, “The safety of the flying public, not speed, will determine the
timeline for returning the Boeing 737-9 MAX to surface.” Ian, where have we heard something
very similar to that before?
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[0:11:15] IP: I mean, this was the line that – I mean, well, every other statement that the FAA
has put –
[0:11:20] JR: Before this particular incident.
[0:11:21] IP: Yeah. This was the line. Long time listeners of the podcast will know where this
comes from. If you're just coming to the podcast because of this issue, or you need a slight
refresher. In the original MAX grounding after the two crashes and MCAS was the focus, Boeing
made a series of statements that the FAA, and I think anybody who's following the grounding,
took as a nudge, a shove, a thoughtful shoulder in passing to speed up the approval process.
Boeing thought that they were ready to move.
Boeing said, “Hey, we're waiting on everybody. It's the FAA is holding us up. We fixed the
problem. The FAA is holding us up.” the FAA told Boeing, I'm sure there were words exchanged
behind closed doors. But in public, the adopted phrase became, the safety of the flying public,
not speed, will determine the timeline. That has been reused here.
[0:12:28] JR: Yeah, exactly. Go on.
[0:12:29] IP: The other interesting thing about the statement last week was that this is the first
time where the FAA is floating the idea that it could remove entirely Boeing's delegated authority
to certify its own aircraft.
[0:12:51] JR: Yeah, that does feel the nuclear option. I would imagine they'd have to see
something so horrifying, so out of the norm at one of their facilities that they would have to act
on this. It seems like a bluff, but it's good that the FAA is even putting it on the table publicly to
put on the table something that they may not actually do, but say, “Here are our options. If we
find that Boeing is so unprepared to do its job, that we will pull that lever if we have to.” I can't
imagine that happening. But it's good just to see the FAA put its cards on the table and say,
“Here's what we can do. Don't make us do it.”
[0:13:31] IP: I got ahead of myself. We were still on the 11th of January.
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[0:13:35] JR: It's like a week ago.
[0:13:36] IP: I know. The 12th of January is when the FAA announced that. In addition to the
investigation into this specific incident and Boeing's quality systems writ large, the FAA
announced what it calls, “New and significant actions to immediately increase its oversight of
Boeing production and manufacturing.” This was just the day after they announced that they
were going to begin an investigation.
Then, the FAA and the 12th of January announces an audit involving the Boeing 737-9 MAX
production line and its suppliers to evaluate Boeing's compliance with its approved quality
procedures. Then the results of that initial audit will determine whether additional audits are
necessary. It could be audits all the way down. We just don't know yet. Here's one that I find
interesting. Increased monitoring of Boeing 737-9 MAX in service events. I assume that just
means that the FAA is going to take a closer look at any reported in-service events, rather than
just through normal oversight.
Then finally, an assessment of safety risks around delegated authority and quality oversight, an
examination of options to move these functions under independent third-party entities. That one
is fascinating to me.
[0:15:00] JR: Essentially, Boeing wouldn't be able to do what it is doing today, but the FAA
probably doesn't have the capacity to do it either, so someone else would come in and do that
work. That is not a great option. But if it's what has to happen, I mean, it's probably the best way
to do it.
[0:15:16] IP: Yeah. That one, I mean –
[0:15:18] JR: All sorts of questions.
[0:15:20] IP: Yeah. The thing that I'm trying to get at here is exactly what Jason just said. Every
new statement by the FAA and by airlines, and I hesitate to say by Boeing, because Boeing for
its part in its commitment to 100% transparency, hasn't really said anything.
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[0:15:39] JR: Well, it said one thing.
[0:15:40] IP: Other than agreeing.
[0:15:40] JR: Exactly. It said one thing, January 12th. It issued two sentences. “We welcome the
FAA's announcement and we'll cooperate fully and transparently with our regulator. We support
all actions that strengthen quality and safety and we are taking actions across our production
system.” Yeah. I guess, there's not much more they can, or should say in that situation. Good
thing they said something, because they have often gone seemingly too long between
statements. Yeah, this is what Boeing, they acknowledged it. There's nothing more for them to
say at that point. But the FAA had more to say the next day, didn't they?
[0:16:18] IP: They did. I want to stop for a second and remind everybody that we're talking
about, we've made it to the evening of January 12th. The accident meets the definition of an
accident. The accident occurred on the evening of the 5th of January. The FAA made an
immediate statement that it knew something had happened and that they were investigating.
They followed that up with the NTSB will investigate and they will support that investigation.
Then they said, “We're going to issue an emergency airworthiness directive that will prevent this
condition from happening again. It's going to take four to eight hours’ worth of work for the
airlines to do each inspection and get the aircraft back in the air.” That was the 6th of January.
Six days later, here's the FAA again on the 12th of January. The FAA is requiring Boeing to
provide additional data before the agency approves an extensive and rigorous inspection and
maintenance process for returning 737 MAX 9 aircraft to service. Six days after announcing that
they had an emergency airworthiness directive ready and that it would take airlines four to eight
hours of total work per aircraft to get things done, they're requiring Boeing to provide additional
data before they even approve an inspection.
[0:17:34] JR: Yeah. Go on.
[0:17:37] IP: Here's where it gets even more interesting to me. After reviewing Boeing's
proposed inspection and maintenance instructions, “The FAA determined it needed additional
data before approving them. Accordingly –” which is a weird adverb here, “Accordingly, the FAA
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is requiring plug door inspections of 40 aircraft.” What they did is they basically, and I don't know
if this was 20 Alaska, 20 United, but Alaska inspected 20 aircraft. I'm assuming that United
inspected 20 aircraft as well, because those are the two US airlines that operate the door plug
configuration.
The FAA is encouraged by the exhaustive nature of Boeing's instructions for inspections and
maintenance. However, in the interest of maintaining the highest standard of safety, the agency
will not approve the inspection and maintenance process until it reviews the data from the initial
round of 40 inspections. Now, we've been operating under the assumption, rightly or wrongly,
but we've been operating under the assumption, since the preliminary data shared by the NTSB
pointed to either very loose, or entirely missing bolts. We've been operating under the
assumption that this is a, are the bolts there? Are they tight?
Now, the FAA requiring an initial round of 40 inspections and then reviewing data from those
inspections before issuing how to safely mitigate whatever is happening, that, again, raises a lot
more questions than it answers.
[0:19:07] JR: Yeah. Spoiler, we're going to jump ahead a little bit here. It is now Wednesday,
January 17th, and the inspection of those 40 aircraft has only just wrapped up. That took five
days to do 40 aircraft. That is a much longer period of time than I think anyone would have
initially guessed. We don't know what happened in that inspection of those 40 aircraft. How
exhaustive it was? How careful they were? Those details have not been revealed, but that is far
longer a period of time than I think anyone thought it would last for.
[0:19:42] IP: Yeah. Especially since the airlines were very forward in saying, “We've taken these
planes apart.”
[0:19:49] JR: They are ready to go.
[0:19:50] IP: They’re ready to go.
[0:19:50] JR: We've seen pictures of aircraft from United and Alaska with the seats removed in
that section, the sidewall removed, everything's ready to go. What exactly did the 40 aircraft
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inspection entail? We just don't know. They're being, I'm not going to say cagey, but they're not
being revealing of exactly what they were looking for, or what those inspections were revealed,
what they've learned from it. I would have liked to see some of that, but I guess, we simply don't
need to know that.
[0:20:20] IP: I mean, we don't need –
[0:20:21] JR: I would like to k now it.
[0:20:23] IP: Yes, I would like to know as well. I mean, Boeing maintenance instructions, Boeing
inspection maintenance instructions, the MOMs have historically been considered proprietary
and not shared with the general public. I think at this point, it might be worth reconsidering that
view in this regard.
[0:20:42] JR: Yes. I don't think any other manufacturer is going to steal the notes from this
particular inspection. Airbus can probably handle this on its own. The more public Boeing is with
exactly what's going on here, I think the better, because they're on thin ice at the moment.
[0:20:58] IP: That takes us to the – we were on the 13th of January. Oh, on the 12th of January,
Alaska Airlines also announced that it would start moving 737-9s that are outstations without a
maintenance facility. Basically, aircraft that aren't in Seattle, or there's a few that are in
Oklahoma City right now, but start moving those towards maintenance bases. The first one
departed today on the 17th of January. N709AL went from Austin to Oklahoma City, where it will
presumably have its inspection and any fixes that need to be done.
As part of this transparency, shall we say, and certainly, as an effort to regain the trust of its
customers, Boeing has invited, shall we say, airlines to enhance their own oversight of Boeing's
work. Alaska Airlines is taking them up on it, Ryanair is taking them up on it. Ryanair, one of
Boeing's biggest customers, has announced that it will double the number of inspectors that it
assigns to Boeing production facilities to ensure that the aircraft are being assembled correctly
and being delivered as they should.
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One of the interesting quotations comes from Alaska Airlines on the 13th of January. “Boeing
leadership has publicly said that this incident is the result of a quality escape. This week, we
engaged in a candid conversation,” which means it was interesting and perhaps some yelling,
“Candid conversation with Boeing CEO and leadership to discuss their quality improvement
plans to ensure the delivery of the highest quality aircraft off the production line for Alaska.” I
would love to have been a fly on the wall for that particular candid conversation.
[0:22:45] JR: Yes. I'm sure that phone call was quite interesting. Alaska went on to say, “It will
initiate and enhance our own layers of quality control to the production of our airplanes,
including our quality and audit teams began a thorough review of Boeing's production quality
and control system, including Boeing's production vendor oversight.” I assume this means, we
don't just want to see what Boeing is doing. We want to see how Boeing is managing Spirit
Aerosystems. I don't think they name check Spirit, but that's really what you have to conclude.
[0:23:16] IP: That's who we're talking about there. Yeah.
[0:23:18] JR: Start. I quote, “Again, starting this week, we will also enhance our own quality
oversight of Alaska aircraft on the Boeing production line, expanding our team with additional
experienced professionals to validate work and quality on the Boeing 737 production line.” It's a
great step by these airlines putting their own people, or more people on Boeing's line. It's just
incredible that it's come to this that an aircraft that Boeing has been manufacturing for decades
and decades, more than a half a century, they have to have airline representatives looking over
their shoulder to make sure the bolts are tightened. Boeing is welcoming this, which is good.
[0:23:57] IP: To Boeing's credit in after fact, I suppose, they're also doing a number of other
things, more quality inspections, additional inspections throughout the build process at Boeing
and Spirit. They are adding people to work alongside the Spirit Aerosystems folks, that will
examine the installation of the mid-exit door plug, as well as “50 other points in Spirit’s build
process.”
I mean, Jason's point, the 737 was introduced to the world in 1967. It's undergone a variety of
iterations. It's been stretched. It's been [inaudible 0:24:40]. It's been updated. I mean, the
engines are new, the avionics are new, the wings are slightly different, systems have changed,
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but it remains fundamentally, the same plane that it was in the late 60s. To Jason's point, they've
been building this plane for decades. To me, that's the biggest thing.
We talked about this a little bit last week, where we want to be – Steve mentioned, Boeing's too
big to fail. I think, certainly, that's the political case and the economic case. But from a point of
pride and from someone who loves aviation and who got into aviation, because Boeing aircraft
would fly over my house and I would get to watch them and go. Those things are really cool. I
think that it's a supreme disappointment that we're having this conversation this year about
these things.
I think that fundamentally, it's disappointment in an organization that inspired a lot of us to take
an interest in this industry. I mean, the Joe Sutter's book about the development of the 747 and
I've probably read it a dozen times. It's not a long book. If you haven't read it, it's absolutely
fantastic. It's just called 747. It’s by Joe Sutter, who is the lead designer of the 747. He also
worked on the 707, the 727, and the 737. He's the gentleman that's responsible for where the
engines are on the 737, for good or for ill, I guess, depending on your perspective.
[0:26:21] JR: He's responsible for practically, Boeing still existing as a company.
[0:26:27] IP: His description of that era in Boeing, I'm sure it's a rosier picture. Any memoir is
going to be rosier than the truth. It's inspirational to see what they were doing at that time. It's a
supreme disappointment to see what has happened to Boeing and what frankly, continues to
happen to Boeing. For all of these quality systems, quality assurance, improvements,
inspections and things like that, we've already been here. We've already done this and not that
long ago. I mean, the entire MAX Fleet was grounded for almost two years. I feel like, we're
talking about the same things again.
[0:27:14] JR: I think it's different. With the original MAX grounding and MCAS, it wasn't a
workmanship quality issue. It wasn't a Steve didn't tighten the bolts properly on this plug door, or
Jake forgot the bolts entirely. The original MCAS issue was an issue of deception and deceit
and lying to customers. It was more of a mentality of Boeing of, “We're always right. We're going
to do the bare minimum to make sure that this airplane is safe. We're not going to tell everyone
everything. It's going to be fine, because we're going to make a lot of money and it's going to be
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great.” That's different. That is a corporate culture situation that can and should and needed to
change it, and I'm not convinced did change. This is a fundamentally different problem.
[0:28:01] IP: But that's my point.
[0:28:02] JR: This is a fundamentally different problem, though.
[0:28:05] IP: I don't think it is.
[0:28:06] JR: I think it is. I think this is fundamentally worse. I think there was an infection at
Boeing that has still not been truly rooted out, that there was a business infection there that they
were doing what they could do to maximize profits. Capitalism really took hold of Boeing and I
don't think anyone can argue against that. This is different. This is, we cannot do the most basic
task required of us, which is tightening bolts and making sure things don't fly off a two-month-old
aircraft. This is different. This is much more troubling to me. This can't be fixed by turning over
the board, even though that should happen.
It's a fundamental issue that their people on the line building their airplane can't do what they
are there to do, without a Boeing inspector looking over their shoulder, and then an airline
inspector looking over their shoulder, and then an independent assessor looking over their
shoulder. There are four layers of shoulder looking happening here and it's not sustainable. We
can laugh about it, but that can't continue. You can't have four people looking at everyone,
tightening every bolt. That's not going to work. This is to me, it's a much harder problem to solve
than lying to customers and designing a faulty piece of software. This is bad.
[0:29:23] IP: I think they're both bad, but I think they both stem from the root, the same root,
which is it's a cultural problem to me. They just didn't do what they were supposed to do. To me,
that comes from the top, that culture of this is fine, comes from the top. That, to me, it's the
same issue. The MCAS, it was good enough. It was a fine solution, but good enough. Put it on
the airplane. This is the doors on the airplane, good enough. They're separate immediate
issues, certainly. To your point, where there needs to be systemic change at the top, boy, I could
not agree more.
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[0:30:06] JR: Yeah. Change, hopefully, is coming. There is a change to top leadership coming
to Boeing commercial airplanes, but not soon enough, unfortunately.
[0:30:16] IP: That takes us to today. The first 40 inspections are complete. The FAA is reviewing
the data. The aircraft remain grounded, so one can safely assume that this will stretch at least
another week. I mean, if it took five days to examine 40 aircraft, there are over, well, nearly 200
aircraft that need to be inspected and return to service. We'll talk about it again next week, I'm
sure.
[0:30:42] JR: Yup. I hope we have some good news. I hope another week from now, there is
good news that inspections are happening and they can get these aircraft back into service,
because this is long-term. This is just not sustainable for the airlines impacted by this. It's 20%
of Alaska's fleet.
[0:30:59] IP: It's 20% of Alaska's fleet. It's 8% of United's, which doesn't sound a lot, but you
have to understand how many flights United operated today. For COPA, I mean, it's a huge
chunk of its fleet. Not insignificant.
[0:31:13] JR: Airlines are losing patience. Understandably, Alaska Airlines today, the CEO of
Alaska, put out a video message standing behind Boeing, as much as you reasonably can in
this situation, visibly frustrated and apologizing to passengers. I didn't quite like the part where
he explained what proudly all-Boeing means to them. Maybe downplay that a little bit more. It is
a tagline. It is not more than a tagline. Maybe reconsider that at this point. I don't know. It sucks
for everyone involved and nobody wants this to continue.
With those inspections of the first 40 aircraft, we don't know what they discovered. But hopefully,
it is nothing major. They can get the fix out and get these aircraft back into service and then start
the process of, how should I put this? Reassuring the flying public once again that the MAX is
not a death trap. I think that's going to be harder this time somehow than it was last time.
[0:32:15] IP: I think that goes to your point about with software. I think there's enough people
who don't necessarily understand that if you say, “We fixed the software, it's safe now.” They will
believe that.
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[0:32:26] JR: We fixed the software. If the software is not fixed, there's a chunky switch here
that we can flip and we just turn that thing off. That's essentially what they did. This is different.
[0:32:36] IP: Anyone can understand bolts not tight. Bolts there, bolts not there.
[0:32:43] JR: Yeah. That's not good, especially when the consequence of the bolts, either not
being tightened or not there, is so dramatic and is so sudden and was so visible in social media
this time. It's going to be an uphill battle. The flying public will forget and the next time they see
a $27 fare sale on Alaska, they will forget that it's operated by a 737 MAX 9. The reputation hit
Boeing and the MAX as an aircraft have taken this time around, in my mind, it's irredeemable. It
is so much damage so quickly, I don't know how they salvaged this brand name. By that, I mean
the MAX, not Boeing itself. Or both. I don’t –
[0:33:23] IP: We'll talk more about this next week. Until then, the planes are sitting on the
ground, waiting to be inspected. Meanwhile, JetBlue and Spirit Airlines have been permanently
enjoined from executing the proposed merger as agreed on July 28th, 2022, which shows you
how long ago this started.
The beginning of this story is that Spirit and Frontier, both ultra-low-cost carriers were going to
merge. They had an agreement. Everyone goes, “This makes sense. This actually works.”
[0:33:59] JR: Yeah. I like this.
[0:34:01] IP: This might go through.
[0:34:02] JR: I first read about it on one of those outdoor kiosks, the screens in Manhattan and
said, “Huh. Yeah. I like it.” Not the way I like news being broken to me in my industry, but yeah,
okay, I'm going to continue on my day.
[0:34:16] IP: But then, JetBlue came along with a better offer and said, “No, we're going to buy
Spirit.” The idea here would be that JetBlue would absorb Spirit's pilots and aircraft as a way to
grow their fleet, their pilot corps, and their route network. The United States government said,
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“Not so fast.” JetBlue's argument was that the acquisition of Spirit would lower fares, because of
the “JetBlue effect,” that JetBlue has sometimes had on markets that it entered.
[0:34:50] JR: Historically, I mean, we might have to date ourselves back 15, 20 years ago,
since this was really a thing, but it was most certainly a thing decades ago.
[0:34:59] IP: A thing at some point. Their argument was, fares will go down and it'll be great for
everybody. The government's argument was, “Well, that's not what we think is going to happen.
We think that Spirit is an ultra-localized carrier. You're not. Fares on balance will rise, because
you're going to JetBlueify the Spirit aircraft, so they will be less dense and less yellow.” The less
yellow part was not part of the government's argument. It's part of my argument why I didn't like
this merger.
[0:35:29] JR: All right. As valid as any other defense.
[0:35:32] IP: I know. This week, a federal judge blocked the merger. Not any merger. They're
free to try again with a different format, but the merger that they agreed to in July of 2022 is
blocked. I'm going to quote the end of the decision, because there are some interesting things
here.
[0:35:50] JR: There’s a lot of quotable lines in this decision.
[0:35:53] IP: There are.
[0:35:54] JR: We're not even going to quote the part where he just riffs on Les Misérables at all.
[0:35:58] IP: Les Mis. Yeah, yeah, which is just fantastic. There's a whole footnote with Les Mis
lyrics.
[0:36:04] JR: But I know the quote you're going to read at the end. Take it away.
[0:36:07] IP: The court rules that the proposed acquisition violates section seven of the Clayton
Act. Spirit is a small airline, but there are those who love it. To those dedicated customers of
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Spirit, this one's for you. Why? Because the Clayton Act, a 109-year-old statute requires this
result. A statute that continues to deliver for the American people. What?
[0:36:34] JR: Yeah. I know what he's saying here. He's saying that there are people who are
dedicated to Spirit –
[0:36:39] IP: That makes one of us.
[0:36:40] JR: Because Spirit is a low-cost airline and often, people can only fly, because Spirit
offers a low fare. The ruling overall, which is a 113 pages, took a long time to load on in-flight
Wi-Fi, by the way. It goes into saying, some believable, but outlandish things like, “If not for
Spirit, I'd never see my family in San Juan, because they're so cheap and things like that.” I get
it. Yeah, the ruling was pretty – it did acknowledge that JetBlue argued well against some points.
But overall, they determined that without Spirit, there would be less competition. The definition
they had of competition, this was a foregone conclusion. It was interesting.
I'm going to pull another quote here. “Although the defendant airline provided ample evidence at
the rebuttal stage that the anti-competitive harms of the proposed acquisition will be offset, both
by new entries into the harmed markets and potential pro-competitive benefits. This evidence
fails to establish that the proposed merger would not substantially lessen in at least some of the
relevant markets.” It was really a determination that if JetBlue nullified Spirit from the market, if it
ceased to exist, it would take so long, if ever, for other airlines to backfill the routes and the
place in the market that we know Frontier can't possibly grow that fast. We know other airlines
starting up like a velo and breeze. They can't possibly grow to the size of Spirit in the
foreseeable future that without Spirit, this segment of the market goes unserved.
[0:38:18] IP: That was the crux of the rejection. The follow-on is a bit interesting, too. This was
Jon Ostrower quoting TD Cowen analyst, Helane Becker.
[0:38:29] JR: This one gets spicy.
[0:38:31] IP: On Spirit, “We believe the best-case scenario for Spirit is a chapter 11 filing,
followed by a liquidation.” Wow.
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[0:38:42] JR: I hope that is not the case. I'm going to echo what Brett Snyder, CrankyFlier
regarded, that in the last year, Spirit hasn't done a damn thing. It's just been sitting there, waiting
out to see what happens, not really doing anything strategic. It's got to figure out its near future
in a hurry and it's a long-term future. They have plans for profitability in the long term, if they go
it on their own, but now they need to make those plans a reality and they need to do it quickly.
I hope a chapter 11 and then liquidation is not Spirit’s near-term future, because then more harm
will obviously come to everyone if Spirit simply stops existing, rather than being absorbed by
JetBlue. But I wouldn't be shocked if Frontier gives it another shot. I feel like, that would see
little to no resistance from the DOJ, but we'll have to wait and see what happens. As we know it
now, the Spirit-JetBlue merger is dead, but could be revived possibly if JetBlue determines it
wants to appeal this ruling and they very well may do that. They gave up a lot for this merger,
including the Northeast Alliance with American.
Now JetBlue, too, is in a bad position. It is not exactly a thriving airline. It's too small to compete.
It has lots of operational and financial issues. What does JetBlue do now? This ruling could be a
double-edged sword. Yeah, it saves Spirit for the low-cost fliers. But in doing so, it may
permanently harm JetBlue and Spirit as the independent airlines they are today. We'll have to
wait and see.
[0:40:19] IP: I'm not a betting man. But if I were, I would say that we can count on an appeal
from both of them against this move.
[0:40:28] JR: Yeah. I wouldn't be shocked. It could have been a strategic move all along. I think
we always knew this that JetBlue never appealed the Northeast Alliance ruling against it.
American said it was going to appeal, but JetBlue hadn't made that decision. Maybe it was all
along. They were so sure that they weren't going to get this merger through and that they were
going to appeal it, that they didn't even want to give the appearance that they wanted to salvage
the NEA. Pretty strategic, but it won't matter for the current CEO. Robin Hayes will be out in a
month.
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Someone else, Joanna Geraghty, I believe, who's the current COO, I think, I'm not 100% sure
on that, but she's been the shoe-in to take over as CEO for JetBlue for a long time and that will
be happening next month. This becomes her problem now.
[0:41:19] IP: Good luck. Jason, there are holes. Where are there holes and why is it a problem?
[0:41:25] JR: They're in runways, and you're not supposed to have holes in your runway. Wow,
it's been a while since we've talked about random news we find on the Internet.
[0:41:34] IP: Random, early news.
[0:41:35] JR: Yeah. Where did this happen?
[0:41:37] IP: Where did this happen? This is in Hawaii, my friend. Why are there holes in the
runway in Hawaii?
[0:41:42] JR: I don't know. I didn't know they get pot holes in Hawaii. They don't have ice, or
snow, because it happens some other way. But they had a hole in the runway. Which airport
was this at? Kona, was it?
[0:41:52] IP: Yes, I believe.
[0:41:53] JR: Yes. It's shut down operations for mainly Hawaiian, let's be honest, overnight.
Caused some chaos. But yeah, not too often you see a random NOTAM saying, airport closed,
there's a hole in the runway.
[0:42:05] IP: A few years ago, the FAA released a new NOTAM tool, where you could search
the free text of the NOTAMs. Every once in a while, I'll go through with a list of interesting
phrases and then see if anything pops up, like cows, sheep, goats, animals that tend to wander
across runways. Every once in a while, there's some good stuff. But now, I'm going to have to
add holes to that list.
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[0:42:30] JR: Yup. You don't want to drive your airplane over a hole in the runway. You know
what else you don't want on your airplane on the runway? Fuselage cracks are not particularly
good. Those are bad. Those are bad news. This comes to us from an Aviation Week article
saying, that Lufthansa discovered and grounded two of its recently converted A321 freighters
due to cracks in the fuselage. Single fine crack found on the rear fuselage structure of the two
freighters.
Apparently, they were already undergoing a routine check and that they don't believe the cracks
were caused by the conversion of those aircraft to freighters. That's not good. You never want to
hear that. It does have other freighters that are still in operation that I'm just laughing to myself,
because I'm seeing that this is Lufthansa, but it's Lufthansa Cargo and it's – the livery is
Lufthansa Cargo, but it's also operated somehow by Lufthansa CityLine. How many layers deep
of Lufthansa can you get?
[0:43:33] IP: I don't want to find the ultimate answer to that question.
[0:43:36] JR: You may never know. But you know what you might be able to answer is what
happens if a small airline with only a couple Dash 8s, or beavers, or sea planes and a very
specific geography, what if they get too ambitious? What usually happens?
[0:43:54] IP: Well, historically, that has not worked out well for such airlines. But why not give it
a shot?
[0:44:01] JR: Sure. Maldivian, I guess, and they're a little airline in the Maldives, they operate
mostly little sea planes and I think they have one A320. Flight Global reports, they want to go
crazy and they want to obtain a 787-8, maybe also an A330-200. They announced these things
two separate days, which is a little odd. But they want to go long haul, which Americraft, they
probably can't afford to a place that probably doesn't quite need it. Don't really know, but we've
seen this play out before, where a little airline gets a little too ambitious.
[0:44:38] IP: They're served by some of the largest aircraft in the world already. I mean, who
doesn't want to go to the Maldives? This is a very strange request to me, because why get one
A330 and one 787?
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[0:44:56] JR: For maximum complexity.
[0:44:58] IP: Yeah, it seems like a terrible way to make your maintenance people go crazy.
[0:45:02] JR: I mean, I do like that they were as specific enough to say as, “Yeah, we want a 78
with the GEnx engine. But we'd also consider one with the Trent 1000 from Rolls Royce.” Oh,
okay, so you want one or the other. You'll take anything out there, then fine. So be it. It's just
really strange. I hope they don't do this, because it will ultimately result in the demise of the
entire airline. This has happened before that it just happened again, but we are back at that
point of the airline industry that we were at before COVID, where little airlines were doing things
that they probably shouldn't have been doing and growing too fast, going too far with planes that
couldn't afford. Then they hit a brick wall and the whole thing came tumbling down and they
never operated again. I guess, we've gotten to that point in the recovery that we could start
having fun with this again. Why not?
[0:45:53] IP: I mean, maybe that's good.
[0:45:56] JR: It's good, but it's also just like, we've seen this happen before. Don't do it. Don't be
the airline that does it. But it's good to see that there is an airline doing something like this
again.
[0:46:06] IP: I guess, we've reached the amusing portion of the events. Here's just unbridled
good news and a cool one, because I'm a sucker for a special livery. LATAM is developing five
country specific special liveries for its fleet. These will go on to A320 family aircraft, so you'll
have a green and yellow Brazil flag livery. You'll have a blue and red Chile livery. You'll have a
yellow, blue, and red Columbia livery, a yellow, blue and red, but different Ecuador livery, and a
red Peru livery. Very cool stuff. I like the idea. A nice play on the existing tail. I would have liked
to see with a little more color on this fuselage. Make it a little more special. But cool,
nonetheless. I’m looking forward to seeing those actual aircraft.
[0:46:59] JR: Yeah. Nice to see LATAM embracing its culture and all of the various countries
that make up that airline. It really is Latin America's airline, more or less. It's pretty cool. I like it.
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[0:47:12] IP: Yeah. Yeah. I'm looking forward to seeing them fly.
[0:47:15] JR: You know what? You're not going to see flying again.
[0:47:18] IP: Oh, good one. Good one.
[0:47:20] JR: See, I had to get that in there before you continued. You almost missed a fantastic
transition. I'll just take it from here.
[0:47:25] IP: Shame on me.
[0:47:26] JR: Remember the Ural Airlines A320 that landed in a field, because pilots in charge
really didn't take everything into consideration that they needed to during a fuel issue and put
her down in the fields of Siberia? Well, unfortunately, it turns out that aircraft, against our
wishes, will not be flying out. They will scrap it in place.
[0:47:47] IP: That needs to be on the record, against our wishes.
[0:47:49] JR: Against our wishes, and every avgeek's wishes. We would all prefer to see it fly
out of there. Again, I was really looking forward to that absolutely abysmal quality video coming
out of Russia that all of their interesting videos seem to be. This aircraft will be parted out in
place to support the, I guess, other aircraft at Ural airlines. That's just disappointing, isn't it?
[0:48:11] IP: I hate when they take the prudent decision, don't you?
[0:48:14] JR: Yeah. I mean, if anywhere in the world was going to decide to not do the prudent
thing and fly this sucker out, it would have been Russia, especially right now. Saner minds
prevailed and it won't be happening.
[0:48:27] IP: Oh, well.
[0:48:28] JR: Sad.
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[0:48:30] IP: I mean, there's always next time.
[0:48:31] JR: I mean, I hope there isn't. But sure.
[0:48:34] IP: Tell me I'm wrong.
[0:48:36] JR: You are not wrong. It's happened several times before. It will happen again.
[0:48:40] IP: Oh. Well, we made it through episode 251 without, I think, any further statements
coming from either any of the airlines affected by the 737-9 MAX grounding, the FAA, or Boeing.
We'll leave it here right now. I'm sure, as soon as we hit stop, something else will come out, and
you'll read about that on the flightradar24 blog.
[0:49:03] JR: Wait. Actually, wait. I literally just refreshed Boeing's page and there is an update.
Boeing CEO Dave Calhoun visited Spirit Aerosystems in Wichita, Kansas and held an employee
town meeting with Spirit Aerosystems CEO Pat Shanahan, and Spirit Aerosystems Board Chair
Bob Johnson. They shared the following with Spirit Aerosystems employee. “We're going to get
better. Not because the two of us are talking, but because the engineers at Boeing, the
mechanics at Boeing, the inspectors at Boeing, the engineers at Spirit, the mechanics at Spirit,
the inspectors at Spirit, they're going to speak the same language on this in every way, shape or
form. We're going to learn from it, then we're going to apply it to literally, everything we do
together.” Good thing I hit F5. Not exactly newsworthy. Nothing major, but a statement
nonetheless that said really nothing.
[0:49:57] IP: We'll take what we can get. On that note, this has been episode 251 of AvTalk. I
am Ian Petchenik, here, as always with –
[0:50:09] JR: Jason Rabinowitz. Thanks for listening.
[END]
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