Monday, October 21, 2019

WALL STREET PLUNDERS - WHY HAVEN'T BOEING'S GREEDY EXECUTIVES BEEN PUT IN PRISON? - "Within two years of executives making the decision to put it into service, the deadly aircraft crashed twice—first in October 2018 and then in March of this year—killing 346 men, women and children."

New reports by Bloomberg reveal that, as part of a cost-cutting measure, the aerospace giant Boeing outsourced the software development for the 737 Max 8 aircraft to recent college graduates for as little as $9 an hour. It was the plane’s “fatally flawed” software that caused the deadly airplane crashes of two Max 8s, Lion Air Flight 610 and Ethiopian Airlines Flight 302, which together claimed 346 lives.

Why haven’t Boeing’s executives been arrested?

A leaked conversation between two Boeing employees provides further evidence that even though the aerospace giant was well aware of potentially catastrophic problems of the Boeing 737 Max 8 jet, it still decided to introduce the aircraft for commercial flights. Within two years of executives making the decision to put it into service, the deadly aircraft crashed twice—first in October 2018 and then in March of this year—killing 346 men, women and children.
So why aren’t any of Boeing’s executives facing criminal charges?
The exchange between Boeing pilot Mark Forkner and his colleague Patrick Gustavsson, first published by Reuters, again reveals that the company subordinates passenger safety to the drive for profit. With only six months to go before the release of the aircraft, Forkner noted “fundamental issues” with the Max 8 that other Boeing officials “claim they’re aware of.” He specifically mentioned that “MCAS” was “running rampant in the [simulator]” and that “the plane [was] trimming like crazy.”
These comments by two Boeing employees dovetail with black box recordings and other data collected on the two crashes, Lion Air Flight 610 and Ethiopian Airlines Flight 302, which show that a previously unknown system, the Maneuvering Characteristics Augmentation System (MCAS), forced the planes into an unrecoverable nosedive. The system was ostensibly installed so that pilots of previous Boeing 737s would require next to no training on the new aircraft, a major selling point the company used to push its plane onto customers over European rival Airbus’s A320neo aircraft.
Boeing Chief Executive Officer Dennis Muilenburg speaks during a news conference after the company's annual shareholders meeting at the Field Museum in Chicago, Monday, April 29, 2019. (John Gress/Reuters via AP, Pool)
The real reason MCAS was developed, however, was to correct for a tendency of the Max 8 to stall. In order to shorten development time for the aircraft, Boeing essentially welded on new engines to a half-century old airframe, which meant the jet constantly had a slight pitch up. Instead of designing a new body for the engines, company executives determined it would be much quicker and cheaper to apply a software fix to faulty hardware.
Moreover, Boeing did everything it could to hide this development from regulators. Forkner, who at the time was a technical pilot for the company, told Gustavsson “I basically lied to the regulators (unknowingly)” because neither he nor his coworker had been informed of how much control MCAS could assume over an aircraft. Despite this incident, which was likely one among many, Boeing not only hid the dangers of the system from aviation safety officials, it kept the software out of Max 8 flight manuals. Even after the Lion Air crash, many pilots in the US and internationally were unaware of MCAS and the potential dangers it posed.
There is no innocent explanation for these omissions. They indicate reckless and criminally negligent behavior on the part of Boeing executives to rush into service a flying deathtrap in order to gain market share over its corporate rivals.
That none of them have been prosecuted, much less arrested, speaks to the incestuous relationship between airline companies and the US government. Ali Bahrami, one of the heads of the aerospace industry’s lobbying group, was one of the leading members of the Federal Aviation Administration (FAA) during the initial development of the Max 8. FAA Acting Administrator during both crashes was Dan Elwell, a former American Airlines executive. Stephen Dickson, the new head of the agency, was a Senior Vice President at Delta.
It also indicts Boeing’s Wall Street investors, which see lives lost only as the cost of doing business. This includes The Vanguard Group, T. Rowe Price Associates, the Newport Trust Co., SSGA Funds Management and Blackrock Fund Advisors, among others. They collectively control 27.9 percent of Boeing’s stock, valued at $59.4 billion, which is more than twice what it was when Boeing first introduced the Max 8.
Boeing’s executives themselves also made a tidy sum. During the meteoric rise of the company’s stock in January and February, Chief Financial Officer Gregory Smith, Executive Vice President John Keating, General Counsel Michael Luttig and Chief Executive Officer Dennis Muilenberg all sold shares worth $9.5 million, $10.1 million, $9.5 million and $6.5 million, respectively. That the second Max 8 crash occurred within a month of these and other similar windfalls raises questions about what else corporate executives knew.
The relationship between Boeing, its executives and its Wall Street investors, however, is only a symptom of the logic produced by the deregulation of the airline industry as a whole, an effort spearheaded by the Democratic administration of Jimmy Carter in 1978. Aided and abetted by Professor Alfred Kahn and liberal icon Senator Edward Kennedy, Carter pushed through the Airline Deregulation Act, which smashed the existing setup that treated interstate airlines as a regulated public utility, setting routes, schedules and fares.
At the same time, Carter drew up plans to smash the air traffic controllers’ union, PATCO, which were carried out in 1981 by his Republican successor Ronald Reagan—with the support of a Democrat-controlled House of Representatives. This began an assault on airline workers and all sections of the working class, made possible by the treachery and complicity of the trade unions, which accelerated the growth of financial speculation and parasitism which has dismantled much of the country’s industry.
The basis for this is the ongoing counterrevolution being carried out by the ruling elite against the social position and living standards of the working class as wealth is concentrated ever more tightly in the top 1 percent and .1 percent of society. These same processes led the utility company PG&E to plunge millions into darkness two weeks ago without warning. The company, which has been implicated in the deaths of 85 people in last year’s Camp Fire, has stated that random blackouts will likely be the new normal for working-class Californians for at least a decade.
The Boeing 737 Max 8 disasters are the outcome of the capitalist ownership of the airline industry and the financial system. They point to the inherent incompatibility between the basic interests of the working class and the private ownership of essential industries, as well as the division of the world’s economy into rival nations. These catastrophes were driven by both the greed of Boeing executives and big investors and the intensifying trade conflict between the United States and Europe.
The only way forward is the opposite, the transformation of the airlines and other major corporations and banks into publicly owned utilities under the democratic control of the working class. This will be a key part of a political fight against the corporate-financial oligarchy and both of its parties, as part of the establishment of a planned economy based on social need, not private profit.


Boeing outsourced software development for faulty 737 Max 8 to cut costs


New reports by Bloomberg reveal that, as part of a cost-cutting measure, the aerospace giant Boeing outsourced the software development for the 737 Max 8 aircraft to recent college graduates for as little as $9 an hour. It was the plane’s “fatally flawed” software that caused the deadly airplane crashes of two Max 8s, Lion Air Flight 610 and Ethiopian Airlines Flight 302, which together claimed 346 lives.
Boeing’s decision to look outside the company for software development is part of a broader cost-cutting campaign which has resulted in 35,000 lost jobs since 2001. This accelerated under current CEO Dennis Muilenberg, who cut more than 20,000 employees in his first two years as senior executive of the aerospace giant.
The 737 Max 8 itself is another of Boeing’s decisions to increase the profits of the company and its executives. The plane was developed and advertised as a cheaper option than the Airbus 320neo, both for its higher fuel efficiency and reduced pilot training time. To meet this claim, the company took the 50-year-old 737 frame and attached new, larger engines that caused the plane to pitch up and stall.
Rather than redesigning the airframe to properly incorporate the new engines, Boeing commissioned the Maneuvering Characteristic Augmentation System (MCAS), the software likely responsible for the two crashes. It used a single angle-of-attack sensor (not multiple, against airplane software standards) to automatically pitch the plane downward, a feature that was not mentioned in pilot manuals, and which ultimately led to the two fatal crashes.
In response to the report, Boeing immediately claimed that the contractors, employed by the Indian company HLC Technologies Ltd., were not involved in the development of the MCAS system. It also denied their involvement in a more recent software glitch uncovered by the Federal Aviation Administration that has set back the recertification of the Max 8 by at least three months.
These statements cannot be taken in good faith. Boeing itself didn’t consider MCAS a critical system for the Max 8, suggesting that the system’s development might have been relegated to contractors. Moreover, as former Boeing employees note, the company was doing everything it could do rush the Max 8 into production, including “moving work from Puget Sound, because we’d become very expensive here,” according to Rick Ludtke, an engineer laid off in 2017, referring to the cost of Boeing’s own software engineers.
Another comment, from former Boeing engineer Mark Rubin, noted that in 2015, “a room full of a couple hundred mostly senior engineers…were being told that we weren’t needed” because the software didn’t need further development.
The contract with HLC was also a financial boon for Boeing. In 2005, it secured an $11 billion order from Air India in exchange for a $1.7 billion investment by Boeing into Indian companies, including HLC. This was a critical step in Boeing’s ongoing battle for market share with European-based rival Airbus in the rapidly expanding Asian aerospace market.
The revelations about Boeing’s software development practices come alongside new reports of an expanded Justice Department investigation into the company’s previous flagship aircraft, the 787 Dreamliner, which was grounded in 2013 after its lithium-ion batteries caused fires while the jets were in flight. In addition to reviewing the two crashes, federal officials are also looking into accounts of cost cutting at its manufacturing plant outside Charleston, South Carolina as well as “hallmarks of classic fraud.”
These stem from the frenzied pace of production Boeing has imposed on the plant’s workforce, causing safety lapses including debris left uncleaned and tools left in engines. On several planes, slivers of metal have been discovered near cockpit and flight control wiring, risking a loss of control during flights. While the Dreamliner has never crashed, these sorts of errors have the potential, in the words of one Boeing whistleblower, to be “catastrophic.”
Another revelation is the discovery that a critical fire-fighting function on the Dreamliner does not always work, forcing Boeing to issue a warning that a switch designed to automatically fight fires sometimes failed. Despite the agency’s warning that “the potential exists for an airline fire to be uncontrollable,” it only mandated that airlines check that the switch works once a month and did not issue an order to ground the plane. It is another in a long list of choices the FAA has made in favor of Boeing’s profits over human lives.
While the 787 investigation will not likely produce any major consequences, any threat to Boeing’s previous crown jewel aircraft hangs like the sword of Damocles over the aerospace giant. Since its launch in 2011 and the development of the 787-8, -9 and -10 variants, it has built 840 planes and has another 1,441 on order. If all the orders for the 787 were canceled, the company would lose approximately $400 billion in sales, in addition to the potential losses of $92 billion if all Max 8 orders are reversed. There is a very real risk of Boeing’s bankruptcy if either scenario is realized.
Such fears are no doubt circulating among Boeing’s leadership and its stockholders. The company’s stock has fallen 20 percent since the Ethiopian Airlines crash, reducing the company’s value by more than $47 billion while the groundings have so far cost a further $1 billion. Three class-action lawsuits have also been initiated against Boeing, including from stockholders, pilots and the crash victims’ families, all claiming restitution for the company’s lies and negligence.



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