(dramatic music) - The Boeing saga this past year is an example of how
not to handle a crisis. - A relatively small design issue that exploded into massive catastrophe. - They did not build in
margin for human error. - This brand new plane crashed twice in the span of about five months. How could this possibly happen? - How long has this plane
going to be grounded? Boeing says there's a fix. When is it coming? - Boeing was once held up
to be the gold standard of engineering excellence. And today it has lost
a lot of credibility. - The 737 MAX scandal will
change aviation history like no other event in the
past five or six decades. - [Narrator] Until relatively recently, Boeing's reputation among
pilots and passengers was second to none. Today, that faith has
been significantly shaken as America's aviation
giant continues to reel from the fall out of
two devastating crashes that killed 346 people. The MAX crisis has severely crippled the nation's biggest exporter. Exposed critical flaws in the relationship between the FAA and the
businesses it regulates. And raised serious questions,
how was this able to happen? Who is to blame, and what does this mean for the future of the aviation industry? (dramatic music) In late 2018, things were
going pretty well for Boeing. - Before the first crash,
Boeing thought of the MAX as a cash cow that
would keep on producing. - They were just breaking
all sorts of records for revenue and airplane deliveries. - [Narrator] A global boom in air travel had helped the company
earn record profits, which drove it's stock
price to new heights. - Problem prior to the crash for Boeing was that Boeing couldn't
make the MAX fast enough. We wrote about how Boeing was running out of
parking spots for the MAX. - [Narrator] The MAX
is the latest iteration of Boeing's 737 aircraft, which first entered
commercial service in 1968. - It's kind of the work
horse of Boeing's fleet if you've kind of done any
kind of medium length travel, domestically, you've almost
definitely flown on a 737. - [Narrator] As times
changed so did the 737. Over the years, Boeing has
updated the jet dozens of times. All the while maintaining
the original air frame. And this system worked well for Boeing. The 737 is the most successful commercial airplane ever made. In 2017, 50 years after
the first 737 took off, Boeing was following a
long established play book when it delivered one of
the first 737 MAX eight's to a budget Indonesian
airline called Lion Air. - [Newsreader] An
Indonesia passenger plane crashing into the sea
minutes after take off. - [Newsreader] 189 people on board. - [Narrator] On October 29th, 2018, a Boeing 737 MAX eight jet
crashed into the Java sea, killing everyone on board. - There are a bunch of questions
that immediately come up. A brand new plane went
into commercial service about a year before it crashed. That's unusual. What could have happened? Could there have been pilot error? Was there a maintenance issue? - [Narrator] Some of the
most important reporting to come out after the crash was the story about an
obscure piece of software. - We were obviously trying
to understand things about this airplane and the
systems on the airplane, and so I went to a
aviation safety conference. One of the people we talked to was a pretty senior Boeing executive, and he acknowledged that
they never told pilots about the system. And essentially what's the big deal. - [Narrator] Boeing at the time argued that pilots didn't need to know about the existence of the
automated flight control system, who's name the public would
eventually learn was MCAS. - Well how can that be? How can there be something on a plane, not only that pilots
didn't fully understand and weren't trained on, but also just didn't know that it existed. - After the first crash I think
we still didn't yet realize how big the story would become. (mellow music) - [Narrator] The origin of the MAX scandal has it's roots in the rivalry
between Airbus and Boeing. Ever since the 1990's the two companies have
been locked in competition. By the 2010's the
commercial aviation market was essentially a stable duopoly, with each company controlling
roughly half of the market. At the heart of this rivalry has long been each company's flagship commercial passenger plane. For Boeing, that aircraft is the 737, for Airbus, it's the A320. (dramatic music) In 2010, Airbus shook up the market when it announced the A320 Neo, an updated version of
the A320 aircraft line. Neo planes wouldn't
just be updated versions of a familiar aircraft, they
would also be cheaper to run. - Fuel efficiency's the
touchstone of anything that airlines do. I mean, if you talk about bean
counters and penny pinchers, airlines are the ultimate in those areas. - [Narrator] It's time to think max. - Boeing did not design
a completely new plane from the ground up because
it would have taken too long. - [Narrator] To make the MAX, Boeing took the existing 737 air frame and paired it with a new,
more powerful engine. But doing that changed
the plane's aerodynamics. One effect was that in
rare flying conditions the aircraft's nose would pitch up. This is where the MCAS software came in. It was designed to automatically
push the plane's nose down. - One former Boeing engineer
who didn't work on the MAX, characterized the software
fix as a band aid. We've been learning for the last year how the band aid wasn't as
strong as Boeing needed it to be. (slow piano music) - [Narrator] On March
10th 2019, a second crash. This time in Ethiopia. All 157 people on board were killed. - [Male] I heard about the second crash. - When on Sunday morning. - I woke up and kind of rolled
over and looked at my phone. - I got a text from an airline official, and it simply read, "MAX eight". I thought, how could this be, another one? - From the moment that
the second crash happened, we've really thought or written
about almost nothing else. - Plane crashes in
general are pretty rare. Plane crash within five
months of each other, is pretty stunning. (dramatic music) - This is unparalleled in
modern commercial aviation. It doesn't happen. - [Narrator] A day after the crash, in an unprecedented move,
China grounded the MAX. Other nations quickly followed. - China grounding the planes before the FAA had done
that was a huge deal, and it came as a huge
surprise to all of us. - Historically speaking,
the FAA has always been the, the leader that all the
other countries followed. - [Narrator] This was the
first time in aviation history that any nation's regulatory
body had overruled the FAA. - An emergency order of prohibition to ground all flights
of the 737 MAX eight. - [Narrator] Two days
later, the FAA relented and decided to ground the MAX. This marked the beginning
of the agency's troubles, as the MAX crisis brought the regulator under increased scrutiny. In April, Boeing began to face
the financial consequences of the scandal. News then emerged that Boeing
hadn't informed the FAA the warning system that
helped pilots diagnose an MCAS malfunction wasn't
working as intended. Boeing's lack of transparency about MCAS was highlighted yet again when a recording emerged of a meeting. - [Michael] If you're
gonna give us a system that we are gonna be affected by, it's hugely important that
we get briefed on what it is. - [Narrator] The story was
based partially on a recording made about a month after the first crash, when a group of Boeing executives met with the American
Airlines pilot union. In the tape, the pilots
confront the executives, saying they were not told
enough about the plane. - [Michael] Most people say, "If it ain't Boeing, it ain't goin'." That's where most of us get that from because we think we've
been dealt with honestly by the company. We're getting told via the news media that you know what, the average pilot, that's a little bit too much information for him to understand and
be able to comprehend. - [Narrator] Then in July it was revealed that after the first crash, the FAA had done it's own
internal risk analysis of a potential second crash. - Their analysis showed that if the FAA and Boeing didn't do anything and just kept the planes
operating as they had been, there would be 15 crashes
over some two decades. That would make the 737 MAX
the most dangerous jet airliner ever developed in the modern world. - What was going on inside Boeing? What was going on inside FAA? Did anyone discuss grounding the plane after the first crash? - A lot of questions have been raised about what the FAA's role was. Whether the agency was
really doing it's job in overseeing the design
and production of the MAX. You know, the FAA
delegates Boeing employees to do some of that oversight itself, and I think some people
have questioned whether that has gone too far. You know, whether it's sort of the fox guarding the hen house. (mellow music) - We set out to pin point the root cause of how Boeing created
a plane that crashes. We really tried to get to the heart of how they came to these decisions. - Why didn't they use two sensors? They only used one sensor and that is sort of a
violation of basic engineering. - At the root of it Boeing made an incredibly
flawed assumption. - But they failed to recognize badly, that all these other emergency
signals would be confusing. Would make it very very
difficult for a crew to do the right thing
in a fast enough way. - [Narrator] Despite the intense scrutiny surrounding the MAX, at that time Boeing wasn't
especially forthcoming with information about the plane. - I spent much of the summer
knocking a lot of doors in the Seattle area, trying
to find Boeing and FAA people who would help us understand
how all this happened. People would politely
say no, close the door, sometimes it was more of a
door being slammed in our face. - We went to, I think it was
something like 200 houses, you know, drove 500 miles. It was really difficult to get people to agree to talk with us. - [Narrator] That fall,
Boeing CEO, Dennis Muilenburg appeared before congress, where he was sharply
criticized by senators. - How did you not, in February, set out a nine alarm fire to say, we need to figure out
exactly what happened. - We're not quite sure
what Mr Faulkner meant by that exchange. - I think it was widely thought that he did not perform
well in those hearings. - He survived two days of
really tough questioning, but he was brutally wounded. - In conjunction with those hearings he sat down with family members
in a closed door meeting, and they sat there with large posters with photos of their loved ones. In one case, a family
member brought photos just of the coffins of his
wife and his mother in law, and his three children, and he lost and he told the Boeing officials, including Dennis Muilenburg, that he didn't feel they deserved to see his family members' faces. In December, the company finally said, we can't keep making these planes, we're going to have to
shut down our factory. And that has a huge ripple effect throughout the supply chain, and I think, all of the relatively rosy projections that Dennis Muilenburg had been
making throughout the year, finally it came to a head, and the board said enough is enough. - [Narrator] Less than a month
later, Muilenburg was fired. - It wasn't surprising when
Muilenburg was pushed out, it was more surprising
that it took the board as long as it did to push Muilenburg out. - He wasn't visible. You know a question that came up a lot was "Where is Dennis?" - [Narrator] In the new year, Boeing has continued to
grapple with the fall out from the MAX scandal. The end of which doesn't
seem to be anywhere in sight. On January 10th, Boeing released a batch of
internal communications. - They showed Boeing employees talking about tricking regulators and say some really unflattering things about the regulators that
they were dealing with. - It gives you a real glimpse
into culture inside Boeing. - [Narrator] It was
these internal messages that likely led to
Boeing's hand being forced to reverse their long held stance that pilots didn't need
simulator training. - That is a stunning development. - We had been writing about
how going back nearly a decade, Boeing had designed the MAX from the start to not require additional
simulator training for pilots. - [Narrator] Flight simulators are highly specialized machines, built to train pilots on the ground. One of the MAX's biggest selling points, touted by Boeing from the beginning, was that the pilots who
knew earlier 737 models, like the 737 NG, wouldn't need much more
training to pilot the MAX. For years, Boeing assured
pilots, airlines and regulators that pilots who knew the
NG could easily fly the MAX after just a few hours
of training on an iPad. - Requiring pilots to go
through simulator training before flying the MAX
sort of raises questions about the fundamental, you know, value proposition of the MAX. You know, what is the value of the MAX? - [Narrator] Since March 8th of 2019, Boeing's market value has
dropped close to $112 billion. - There is an ongoing
criminal investigation by the justice department. There is a civil investigation by the Securities and Exchange Commission. It is also the subject of inquiries by the congressional law makers. It is also being looked at by the Department of
Transportation and the FAA. The plane is still on the ground. Perhaps most important
of all, 346 people died. - The MAX saga shows
that there's something that needs to be reassessed
in that whole system. It's time to take a breath. And let's think about the
down sides of automation. How it can confuse pilots, how it can introduce
unexpected consequences and new hazards. So we're looking at a new world where other regulators
will be much more assertive and will take a much greater
role in approving aircraft, even if they're US aircraft. - [Narrator] In an email
to the Wall Street Journal, Boeing said, "The development
to the MCAS portion "of the software is complete, "however the entire software package "is going through the
system safety analysis, "and then will be presented
to the FAA for approval." Boeing said it expects
the MAX to be cleared to back in the air this summer.
