Shareholders

Slapping the FAA in the face

Since when did the POTUS become an expert on air safety? What is the point of the FAA if the occupant at 1600 Pennsylvania Avenue issues executive orders to ground planes the regulator has deemed airworthy?

The problem for the airlines is not so much the inconvenience of fleet reduction but the astronomical cost of storage. Planes are very brittle. It’s not like a car one puts on bricks in the garage when it won’t be used during the winter.

Planes require the fuel tanks to be full to prevent the risk of damage under the beating sun. The engines must be run everyday to prevent build up of foreign objects. The wheels must be rotated to prevent flat spotting the tyres. One plane sitting on a tarmac that an airline wants to return to service runs at $100,000/mth. Southwest has 31 and American 22. So between them $5m/mth will be wasted.

For Boeing, depending on how quickly this gets sorted, the supply chain which has lead times up to 9 months could create havoc with suppliers. With the 787 delays, things got so bad that some suppliers needed to be bailed out. It is unlikely to see a delay anywhere near the magnitude of the 787 but the disruption can have substantial side effects including lay offs.

Once again the planes are safe to fly without the AOA. It’s a 50 year old airframe with 1 billion hours under its belt. It’s a software issue. Adequate pilot training is all that is required to make it safe to fly.

Worst of all it’s a complete slap in the face for an organization with an exemplary record on air safety to be given a lesson by Trump. The FAA and NTSB take their roles incredibly seriously and the recommendations they have made after accidents has made flying today safer than ever. Bad call Mr President.

Fake News about Boeing’s CEO & Trump call

Business Insider has reported that the Boeing CEO Dennis Mullenberg pleaded with President Trump to prevent the MAX8 from being grounded. Here’s why the story is totally implausible:

1) the Boeing board would have Mullenberg’s head if he entertained the prospect of getting Trump to influence the regulator.

2) that would imply the FAA was susceptible to influence from outside forces. It is clearly not. No president would have the slightest say in the matter. As said in previous posts, the FAA has openly stated it is safe to fly without AOA activated.

3) Boeing has 4,800 outstanding orders for MAX8. Why would it run the risk of knowing it had a Ford Pinto to thrust some short term deliveries to pad its P&L while it knew more crashes were inevitable? Hardly a sensible marketing strategy. Boeing would panic more about losing 4,800 orders than delaying the delivery of 100 planes in coming months. Why run a greedy corporate narrative?

4) airlines can’t immediately switch to Airbus A320s as they’d join the end of the queue of the 4,000 outstanding orders. Moreover airlines can’t switch pilots from B737 to A320 on a whim. Airlines can’t wait 6 years for deliveries.

Boeing spokespeople said clearly it was a call to reassure safety. That’s a basic given. Why try to even make up a story about suggesting Trump and Mullenberg were involved in a conspiracy? More TDS. Shameless.

Boeing 737 MAX-8 – question the pilots not the plane

There is something to be said about the group think behind countries stepping up to ground the 737 MAX-8. Of course safety is of maximum importance. It always is. However had the FAA held the slightest inkling that switching off the Boeing 737 AOA would still cause crashes it would be grounded immediately. The FAA is comfortable that airlines that follow the updated airworthiness directive (AD) will not experience danger. So confident in that decision the AD called for a continuation.

If anything blanket groundings are more a slap in the face of pilots in questioning their skill to fly these planes without all of the gizmos. As a passenger you should question the airlines that ground as a reflection on the level of pilot training and confidence in them during a crisis situation.

It’s a bit like having your parking camera and sensors go on the blink. Is reversing into the car space with your left arm on the passenger seat looking over your shoulder impossible without these aids? No. Do you stop driving your car because you’re afraid you can’t park it? The problem is all of these aids are to a point dumbing down the ability to drive using feel. Perhaps we should demand The NHTSA grounds Tesla for the spate of autopilot accidents ending in death of drivers.

Would Boeing risk such massive corporate negligence by letting the planes still fly if they had the slightest doubt switching off the AOA would cause more crashes? This is not a Ford Pinto moment. It’s a serious flaw to be sure but the plane has got a clean bill of health without autopilot AOA. That’s why the FAA hasn’t grounded it.

Boeing assures customers it has a software upgrade to be released in coming weeks. There are 4,800 orders outstanding. The new Leap X engines are so much more efficient than the CFM-56 variant they replace. The secret sauce in the engines is made by NGS Advanced Fibers (50% owned by Nippon Carbon) in Japan. Airlines want them. Period. Efficiency helps them stay in business.

The Boeing 737 fleet has done around 1 billion flight hours combined. This is a 50 year old plane which has been modernized. Think of it like a Porsche 911. The basic shape is the same. The plane is airworthy. The software is faulty. As passengers we should pray that the pilots have the skills when the systems fail, not fail when the systems let them down.

ZeroHedge ban – nothing helps publicity like scarcity

ZeroHedge

ZeroHedge (ZH) has been banned from Facebook. ZH has the occasional spicy article but it is hardly a purveyor of information that could be remotely deemed hate speech or attacking ‘community standards’. It is punchy journalism. The good thing is that ZH already has quite a good following from readers who access the website directly. The irony of these arbitrary bans is that it only makes sites like ZH even more attractive. Nothing helps publicity like scarcity.

In the last few years, privacy and other issues have plagued the social media giant. By all accounts, users are moving away from the platform. ZH reported

More than 17 million young Americans have abandoned Facebook over the last two years after a series of data privacy scandals damaged public trust in the social media platform… to the longest-running survey of digital media consumer behavior in America conducted by Edison Research, Facebook users between 12-34 years-old are now flocking to Facebook sister site Instagram, reports the Daily Mail

…Older people over the age of 55, meanwhile, increased their Facebook usage – marginally offsetting the drop in younger users for a net loss of 15 million users over the last two years

The longer term problem for social media is that kowtowing to a wafer thin number of activists who complain (no matter how much Facebook might align ideologically), means that those who are sick of being told what is deemed acceptable for them will just grow tired and leave. The irony in all of this is listening to a minority will ultimately drive the majority to a place which provides a marketplace that offers personal choice on what is deemed acceptable.

Boeing 737 MAX-8 – FAA continues airworthiness directive

The Federal Aviation Administration (FAA) has issued a continued airworthiness directive (AD) notification for the Boeing 737 MAX-8 after the crash of flight ET302. Note there have been 15,342 ADs issued by the FAA. 46 have been issued in the last 60 days. While we probably don’t give it much thought when we board a flight, that’s how much scrutiny goes on behind the scenes.

As tragic as the preventable loss of life was, the FAA had issued training procedures on 7 November 2018 to overcome the angle of attack (AOA) problem post the Lion Air flight JT610 MAX-8 accident on 29 October 2018. Many airlines assured the FAA that their crews have been trained to handle the issue in case of malfunction.

Former NTSB member John Goglia noted that while many pilots have learned to fly aircraft with complex electronic aids, those in countries with less developed aviation industries have less experience flying without them.

The FAA views the MAX-8 as a safe aircraft provided the erroneous AOA data is dealt with correctly. Boeing will fix the problem to ensure the product’s reputation. To the FAA, if the AOA couldn’t be disabled then the aircraft would be grounded.

Note Boeing has 4,800 orders outstanding for the MAX type. Around 230 are in service. The aircraft is the most popular selling commercial jet plane worldwide.

It’s not the first time Boeing has had issues with the 737.

In 1991, the first of a series of rudder hard overs caused several crashes until one pilot managed to save his plane which suffered the same fault for investigators to understand the problem and rectify it.

As for air safety, US Census data points to an1 in 205,552 chance of dying in an aircraft vs. 1 in 4,050 dying as a cyclist, 1 in 1,086 risk of drowning and 1 in 102 in a car crash.

Tesla – Musk baits the regulator again?

Anton Wahlman on Seeking Alpha has reported that Tesla held a secret telephone conference call to a limited audience which apparently contradicted statements made earlier in the public domain. If true, from a pure compliance and governance perspective that would violate fair disclosure rules. It is surprising that given Elon Musk’s run ins with the SEC that shareholders would hope he’d look to avoid further investigation rather than taunt the regulator.

According to the call transcript, Tesla provided new profit/loss guidance to the select few on the call. Even more bizarre is that Deutsche Bank compliance apparently let its Tesla analyst publish a report on March 1 based on the contents of the call, including margin guidance on the $35,000 Model 3 which was not divulged to others.

CM has always held that Tesla is an amateur car maker. Luring owners to deposit a non refundable $2,500 for a $35,000 Model 3 smacks of a silent fund raising to keep the ship afloat.

The company recently admitted it would close much of its dealer network and move to mobile servicing. Cute in principal but unlikely to be sustainable. Mainstream makers know that dealer/service networks are vital to keeping customers connected. If large recalls need to be conducted, mobile units aren’t going to cut it.

None of the above really surprises. Owning Tesla is sort of like joining a cult. The preachings from the fearless leader are designed to keep the disciples fiercely loyal. However if the government gets enough evidence to gather the SWAT team it will swarm the compound. This company is not worth anything like $50bn. Grab your popcorn.

Facebook face plant?

FB.jpg

Facebook is the dark blue line. Its popularity has been waning. Some people are complaining (and others cheering) that Tommy Robinson has been banned from Facebook & Instagram (he had already been banned from Twitter in March 2018) after he exposed the BBC in his ‘Panodrama‘ documentary with his own undercover video  claiming allegations of threats, blackmail and intimidation to smear him. BBC News was clearly happy to report on the outcome today. Regardless of one’s view on the legitimacy of the life ban on Robinson, FB is a corporation that has the power to exercise its own guidelines, no matter how farcical some might judge them. There are countless examples of censor bias across multiple social media platforms. The managements admit as much.

The flip side for Facebook to ban him only makes him more desirable to his followers and increase their willingness to leave the platform.

If conservatives are becoming frustrated at the bias shown by Facebook, Twitter or any other social media forum why not set up a rival? If conservatives feel their voices are being suffocated by political correctness and the actions of arbitrary thought police why haven’t they set up a platform that will not silence what they covet?

Even if they have a very good case to argue against being silenced they have two options; stop using these social media players who they feel obstruct or build a fresh site which would surely see conservatives flock to it.

Fighting Facebook or Twitter to play fair has been proved worthless countless times (e.g. black conservative Candace Owens being suspended for replacing the word “whites” from Sarah Jeong’s tweets with other races). So it is a war that won’t be won.

The publishing of Google’s internal post-election debrief video shouldn’t have surprised anyone in the slightest either. All the outward appeals to the group’s impartiality were smashed by this leak. In a sense Google was the victim of the half-life nature of the very digital media feeds it seeks to control. Even worse it was all the senior management talking about what really goes on. Sunlight is truly the best disinfectant.

There is an opportunity to plug the gaping hole in social media – one that is willing to support all free speech and not shut out those that ideologically disagree with the apparatchiks in the censorship department. The question is why conservatives haven’t stopped complaining and moved to finance a rival? Or is there an inner fear that the authorities will become the judge and jury on what is considered free speech and shut the platform, not the individual…