Boeing directors reach $225m settlement with investors over 737 Max

Boeing directors reach $225million settlement with investors over 737 Max safety negligence case following crashes in Ethiopia and Indonesia that left 346 dead

  • Shareholders accused Boeing bosses of safety failures in the 737 MAX
  • They reached an out of court settlement of $225million to be paid out by insurers
  • The 737 MAX had two fatal crashes within six months related to safety failures  

Boeing investors have reached a $225million agreement with current and former company officials to settle a lawsuit over the safety negligence of the 737 MAX.  

Shareholders had accused Boeing board members and several executives as well as current CEO David Calhoun of failing to ensure that control and information instruments on the plane were functioning effectively.

According to the Wall Street Journal, the compensation will be paid out by insurers, not the board members and executives. 

Boeing investors have reached a $225million agreement with current and former company officials to settle a lawsuit over the safety negligence of the 737 MAX (pictured)

Boeing has also agreed to hire a mediator to handle internal issues and appoint a board representative with aviation safety experience.

The agreement, expected to be filed by Delaware’s Court of Chancery by Friday, will not require Boeing to admit to negligence on behalf of persons sued in the case, the WSJ reported.

The 737 MAX was involved in two crashes – one operated by Lion Air in October 2018 and the other by Ethiopian Airlines in March 2019 – that killed a total of 346 people. 

Investigations revealed that both incidents were related to the crash prevention system (MCAS).

A crash in Ethiopia in March 2019 on a Boeing MAX 737 was related to the plane’s crash prevention system. Pictured: rescuers work at the crash site in Addis Ababa 

Lawyers for the shareholders and Boeing did not immediately respond to request for comment by AFP.

Based on internal documents, shareholders said that proper safety procedures were not implemented on the 737 MAX after the 2018 crash, despite media reports linking the incident to the MCAS.

Developed in 2011 and launched in 2017, the 737 MAX was banned from flying in March 2019, before being declared safe again in November 2020.

In an amended complaint unsealed in February, New York State Comptroller Thomas DiNapoli, who heads the state pension fund, and other investors argued that Boeing’s board had breached its fiduciary duties and acted with gross negligence by failing ‘to monitor the safety of Boeing’s 737 MAX airplanes.’

The lawsuit alleges that the board did not develop any tools to evaluate and monitor airplane safety until after the 737 MAX crashes in Ethiopia and Indonesia and the fleet was grounded.

The 737 MAX was involved in a crash operated by Lion Air in October 2018 near Indonesia (pictured)

In March, Boeing asked the Delaware court to throw out the shareholders’ lawsuit, saying the board had engaged in ‘robust and well-established’ oversight of jet’s development.

In its motion to dismiss the complaint, Boeing said the plaintiffs ignored ‘the robust systems that had long been in place’ to keep the board informed about significant risk issues.

‘Boeing’s Directors maintained this high scrutiny, moreover, during a period in which commercial aircraft, and Boeing’s in particular, achieved ever higher levels of safety,’ Boeing said, ‘a trend that cannot be squared with Plaintiffs’ simplistic narrative about a ‘safety-engineering culture’ that had been ‘intentionally dismantled.”

Since 2019, Boeing’s board has improved oversight of Boeing’s engineering and industrial operations, and added new board members.

The settlement agreement was expected to add additional oversight.

Boeing acknowledged, as part of a deferred prosecution agreement with the U.S. Justice Department in January, that the company concealed details about a crucial flight control system at the center of the two crashes from the U.S. Federal Aviation Administration.

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