Aerospace & Defense

Lawmaker blames investors for Boeing's race to sell troubled 737 Max: 'This all starts on Wall Street'

Key Points
  • Rep. Peter DeFazio said investors pressured Boeing to quickly develop and sell its 737 Max.
  • Two of the planes crashed within five months of one another prompting a worldwide grounding.
  • Boeing's CEO Dennis Muilenburg testifies before two congressional committees this week on the crashes.
An aerial photo shows Boeing 737 MAX aircraft at Boeing facilities at the Grant County International Airport in Moses Lake, Washington, September 16, 2019.
Lindsey Wasson | Reuters

Investors pressured Boeing to quickly build its fuel-efficient 737 Max planes to top European rival Airbus, a key lawmaker said before the manufacturer's CEO appears before Congress on two fatal crashes of the beleaguered planes.

"This all starts on Wall Street," Rep. Peter DeFazio, an Oregon Democrat and chair of the House Committee on Transportation and Infrastructure.

Boeing CEO Dennis Muilenburg faces that committee on Wednesday and a Senate panel a day earlier as lawmakers seek answers about what brought down two of Boeing's best-selling airplanes.

Boeing raced to develop the 737 Max to keep up with Airbus, which debuted its fuel-efficient, single-aisle competitor, the A320neo, a year before Boeing's version. Airbus had won early orders from longtime Boeing customer American Airlines, which in July ordered a long-range version of Airbus jet, another blow to Boeing.

The Boeing 737 Max has been grounded since mid-March after two nearly-new 737 Max planes crashed within five months of each other.

While it's lagging the broader market, Boeing's stock is up nearly 6% this year despite the grounding and halt of sales of its best-seller, as investors expect the planes to eventually fly again.

At the center of the crisis is a flight-control system that has been implicated in both crashes. The system was added to avoid the plane from going into a stall, which could happen if the nose of the jets is jointed too high. In the crashes, sensors received erroneous data and the nose of the jets was aggressively pointed downward until their final dives.

The plane is a new model of Boeing's 737, an aircraft that has been flying since the 1960s and is the best-selling of all time. Boeing, facing competition from European archrival Airbus, whose A320neo, a more fuel-efficient version of its single-aisle plane that had just won orders from longtime Boeing customer American Airlines, ordered up a similar fuel-saving engine upgrade. Boeing also changed the wing and landing gear. Airbus's newly re-engined A320s started flying more than a year before Boeing's 737 Max.

Because of the changes it made to the planes, Boeing also added a system, known as the Maneuver Characteristics Augmentation System, or MCAS, to detect whether a plane is in a stall and automatically push the aircraft's nose down, the way planes recover from such a position. Investigators are looking at whether the sensors on the doomed Lion Air plane erroneously showed the aircraft was in a stall.

Lawmakers have criticized the Federal Aviation Administration for allowing Boeing to sign off on large parts of the aircraft's safety, a legal but now more scrutinized practice. A review by international air safety regulators, commissioned by the FAA found that more certification work for the 737 Max was outsourced to Boeing than originally planned.

"FAA involvement in the certification of MCAS would likely have resulted in design changes that would have improved safety," the report said.

DeFazio said changes to the existing laws to give the FAA greater oversight are possible.

"Boeing is in no position to defend or advocate against changes in this law," he said.

Why Airbus and Boeing are the only two companies to dominate 99% of the large plane market
Why Airbus and Boeing dominate 99% of the large plane market