Italian investigation reveals hidden aviation supply chain risks Boeing (BA.US) is in crisis again

The Zhitong Finance App learned that, according to reports, this Thursday, Italy will conduct a preliminary hearing on an aviation parts manufacturer suspected of supplying defective equipment to Boeing (BA.US). The investigation focused on Manufacturing Process Specification (MPS), a small supplier accused of deliberately misleading customers to use low-grade metals to produce floor fittings and other aircraft components. Although the company's executives have denied the prosecutors' accusations, the incident has attracted widespread attention.

According to information, about 500 Boeing 787 wide-body aircraft were equipped with unqualified components. In response, Boeing said that this issue does not pose a direct safety hazard. American aviation regulators are drafting guidelines to help airlines identify and replace any damaged parts, but no emergency instructions have been issued.

According to people familiar with the matter, MPS and its predecessor company only purchased a very small amount of special metal needed for Boeing 787 parts, and it is suspected that pure titanium with lower strength and cheaper price was used to replace high-strength titanium alloys. These non-compliant components have penetrated the aerospace supply chain through Italian company Leonardo, which produces parts of the Boeing 787 airframe at its Grottaglie plant.

Despite using unqualified materials, MPS successfully passed the audits of three different certification bodies between 2017 and 2021. These audits did not include physical inspection of aircraft components such as floor accessories.

In response, the US Federal Aviation Administration chose not to ground any Boeing 787 aircraft, but has drafted instructions requiring the defective parts to be inspected and possibly replaced. The proposal was released in May 2024 and involved nearly 500 aircraft. Leonardo became aware of MPS component issues after receiving a notice from Boeing at the end of 2020 and conducted additional tests on critical aviation components.

The investigation found that MPS provided 539 defective floor accessories to Boeing through Leonardo, affecting 477 operating aircraft. Analysts warn that in the event of an emergency landing, weak floor fittings may cause part of the aircraft's floor to collapse. The FAA acknowledged this risk, but indicated that multiple faults would have to occur at the same time.

In contrast, Italian prosecutors have charged MPS's owner, the company's quality director, and three members of their families with fraud and aviation safety violations. Additionally, two employees are facing environmental pollution charges for dumping chemical waste into sewers in the southern Italian port city of Brindisi.

Through the review, MPS and its predecessor company produced a total of about 6,000 parts, and most of the unstructured parts used the wrong metal. Francesca Conte, the MPS owner's legal representative, said the company worked closely with Leonardo and obtained the necessary certifications, and defense lawyers will present evidence to refute the charges during the trial.

Today, in order to supply aerospace giants such as Boeing and Airbus, manufacturers must be audited to ensure compliance with ISO-based quality management standards. Some special processes also require a separate US certification, called NADCAP. MPS and its predecessor have been approved by three auditors for aviation quality standards, most recently in May 2021.

Leonardo said that its review process requires MPS to have supplier qualifications for Leonardo and Boeing, and that supervision includes reviewing documents and joint audits, but these measures may not necessarily detect fraud. Since last year, the company has stepped up material testing for critical aerospace components.

The incident highlighted the potential weaknesses of the aerospace manufacturing voluntary audit system. Under this system, an independent certification body assesses whether a company has the proper processes, equipment, and personnel to meet the standards, and generally only performs physical inspections when manufacturers seek certification for specific products.

Although the Italian investigation did not target auditors or industry regulators, Accredia, the agency responsible for certifying Italian auditors, insisted that the existing certification agreement was “sound and well-structured,” stressing that the audit was aimed at evaluating compliance rather than uncovering fraud. The Industry Aerospace Quality Organization (IAQG) said it is working to update the regulations, but the responsibility for compliance lies with the certified organization itself.

Furthermore, the incident triggered a profound reflection on the aerospace supply chain management and audit system. Although relevant agencies and companies are taking steps to deal with it, a complete solution to this problem requires the joint efforts and collaboration of the global aerospace industry to ensure the transparency of the supply chain and the reliability of product quality.