Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Did a 1997 merger ruin Boeing?

finshots.in

Post reply on HN
Print view View original

131–140 of 354 posts

Re: Did a 1997 merger ruin Boeing?

#131

Post by interroboink »

atleastoptimal wrote: post #75

I feel like this pattern occurs in too many companies across all sectors: 1. Company is product-quality focused 2. Beats competition and creates mini-monopoly 3. Sales becomes somewhat inelastic to changes in quality 4. This leads "cost-cutting" and marketing focused execs/decision making to beat out product quality execs/decision making 5. Company's product quality takes predictable linear path to the bottom

Perhaps another take on this:

  Hard times create strong people
  strong people create good times
  good times create weak people
  weak people create hard times
Obviously that's not some magic rule or anything, but people shape their surroundings, then the surroundings shape their people. When played out across generations (or multiple phases of ownership at a company, as in your comment), cycles often form.

Re: Did a 1997 merger ruin Boeing?

#132

Post by ulfw »

mcv wrote: post #34

Here's what I don't understand: the 737 MAX was introduced in 2017. In 2018, two of them dropped out of the sky, the grounded for a while, it turned out Boeing had lost its engineering culture and its priority for safety, and it became clear that the 737 MAX had some serious design problems that they had tried to fix in software. And according to this article, the 737 MAX is Boeing's best selling plane ever. Why? Why…

Because there are only two manufacturers. It's impossible to get significant A321 delivered within the next decade as Airbus is (rightfully) sold out for most of their production.

Also it's extremely simpler for a 737 airline (the biggest being Southwest in the US and Ryan Air in the EU) to put another 737 in their arsenal rather than switch to a different manufacturer's plane. Anything from in-house maintenance to training to rostering to having the right type-rated pilots etc is easier for those cheaply run airlines to do when they're running just one type of aircraft.

Why airlines still order 737s at this point is beyond me. I guess some value having every type of aircraft in their arsenal for just-in-case one gets grounded while other airline groups are just caring about getting the cheapest thing (Lufthansa)

Re: Did a 1997 merger ruin Boeing?

#134

Post by SkyMarshal »

Beldin wrote: post #87
throwup238 wrote: post #83

Earlier quoted context omitted.

The list of orders and deliveries is public: https://en.wikipedia.org/wiki/List_of_Boeing_737_MAX_orders_... Most orders were before the accidents but the vast majority haven't been canceled. Boeing has only delivered a fraction of them; they have another 3,000 to deliver before they get to the orders placed after the accidents (~1400).

If you cancel, you'll have to place an order elsewhere and end up at the back of their log. Since there isn't that much competition, this means Airbus. Moreover: this also means introducing another brand of aircraft into your fleet. That is a far greater maintenance headache than "merely" various types by the same company. Basically: Switching cost are stratospheric.

> That is a far greater maintenance headache than "merely" various types by the same company.

You would think so, but it’s actually not. I used to work at an airline in IT, and asked that question of the Ops folks when the airline was evaluating switching fleets to Airbus. They said switching fleets or operating a mixed fleet is not cost prohibitive. This was midsize regional airline fwiw.

Re: Did a 1997 merger ruin Boeing?

#135

Post by ulfw »

NoMoreNicksLeft wrote: post #51
mcv wrote: post #34

Here's what I don't understand: the 737 MAX was introduced in 2017. In 2018, two of them dropped out of the sky, the grounded for a while, it turned out Boeing had lost its engineering culture and its priority for safety, and it became clear that the 737 MAX had some serious design problems that they had tried to fix in software. And according to this article, the 737 MAX is Boeing's best selling plane ever. Why? Why…

None of the airlines are run by engineers who have a culture of safety either. That's why.

An engineer isn't the golden ticket to run every kind of job best.

In fact I wouldn't think an airline is the kind of company that needs nor should have an engineer at the helm. They're a transportation/marketing company, not a manufacturing company.

An airline markets a flight to a public which they perform on leased or purchased third party equipment based on negotiated route pairs/airport slots in a competitive market environment.

Even their 'digital' offerings are mostly outsourced (GDS, website/app, in-flight-entertainment) as they have low core competency in that, nor do they need to.

Re: Did a 1997 merger ruin Boeing?

#136

Post by truculent »

daedrdev wrote: post #63

One of the big signs of Boeings decline is that they don't make much of their planes directly, instead relying on large subcontractors to assemble most pieces of a plane and install the pieces. This was all done to reduce costs by squeezing suppliers, yet when the suppliers only work for Boeing, my theory is that eventually the cost cutting started to hit engineering and quality control. Additionally, it hilarious th…

Did that outsourcing start with the merger? OP seems to suggest so?

Re: Did a 1997 merger ruin Boeing?

#137

Post by noahtallen »

cratermoon wrote: post #124
inamberclad wrote: post #114

Earlier quoted context omitted.

Wonder how that will work out for Southwest after this.

Sometime in 2023 Alaska Airlines completed their efforts to sell off all their Airbus and Bombardier Q400 aircraft. Alaska acquired Virgin America and its all-Airbus fleet in 2016, and the Q400s were from their Horizon Air operations. The company sold the Airbus aircraft to American and retired the Bombardiers. The reason given at the time was the desire to simplify maintenance and parts logistics. Now Alaska's fleet…

I've been thinking about this one, but I'm not sure it makes sense. Let's say that Alaska flew half Airbus. And let's say half their 737 fleet is MAX's. (E.g. a quarter of the fleet, same number they have today.) And as time goes on, it becomes increasingly 737MAX as they upgrade to get better fuel efficiency.

How would this help them? A large % of the fleet is still grounded.

Re: Did a 1997 merger ruin Boeing?

#138

Post by truculent »

yongjik wrote: post #81
kazen44 wrote: post #32

Earlier quoted context omitted.

airbus was made as a very deliberate political project from various european countries to stay competitive in the airline bussiness. Mind you this happened around the same time many foundations of a lot of european institutions where formed, and airbus is the primary example of a intra-european company in both its bussiness form (being an S.E[0]) aswell as in the way its products get build across different member sta…

Which makes Airbus even more impressive, TBH. How many "deliberate political project from various countries to stay competitive in the X business" can you think of that actually became successful?

Boeing feels interesting through this lens, too - tracking the rise and decline of American business culture

Re: Did a 1997 merger ruin Boeing?

#139

Post by gumby »

Beldin wrote: post #87
throwup238 wrote: post #83

Earlier quoted context omitted.

The list of orders and deliveries is public: https://en.wikipedia.org/wiki/List_of_Boeing_737_MAX_orders_... Most orders were before the accidents but the vast majority haven't been canceled. Boeing has only delivered a fraction of them; they have another 3,000 to deliver before they get to the orders placed after the accidents (~1400).

If you cancel, you'll have to place an order elsewhere and end up at the back of their log. Since there isn't that much competition, this means Airbus. Moreover: this also means introducing another brand of aircraft into your fleet. That is a far greater maintenance headache than "merely" various types by the same company. Basically: Switching cost are stratospheric.

> Basically: Switching cost are stratospheric.

I can’t resist pointing out that an airline of all businesses should be comfortable with anything stratospheric!

Re: Did a 1997 merger ruin Boeing?

#140

Post by stg22 »

The role of McDonnell-Douglas is exaggerated. Boeing had achieved pretty close to a monopoly in the mid-1970s, but things had changed by the mid-1990s.

1. Domestic airlines protected by regulation had been effective monopolies and Boeing's engineer-led culture thrived in an environment where airlines didn't care about costs. But that environment died with airline deregulation in 1978 and an engineer-led culture made it more difficult to compete in a cost sensitive environment.

2. Airbus' rise put Boeing on the defensive for the first time in many decades. By 1996, Boeing's market share was less than twice Airbus' and falling rapidly enough that people could foresee the day when Airbus would overtake them. Although Airbus had good aircraft, their key advantage was they could sell them for lower prices than Boeing could.

3. Shareholders had become increasingly activist, quick to overthrow management when they weren't getting enough dividends and share price increases, and willing to install new management who would give them what they wanted.

Outsourcing, cost-cutting, and a move to an accountancy-led culture were the obvious responses to these challenges and Boeing's then CEO, Phil Condit, had already started the ball rolling on them before buying McDonnell-Douglas.

Post reply on HN