In response to accusations that it deceived investors about two fatal 737 Max crashes, Boeing will pay $200 million.
According to the US stock market watchdog, the aviation giant and its former CEO Dennis Muilenburg misrepresented safety-related risks.
According to the Securities and Exchange Commission, Boeing “placed profits over people” to improve its reputation (SEC).
After two crashes that resulted in the deaths of 346 people, the 737 Max was grounded for 20 months.
Mr. Muilenburg will also pay a $1 million fine as part of the agreement.
Gary Gensler, the chairman of the Securities and Exchange Commission, asserts that it is crucial for public firms and leaders to make comprehensive, accurate, and genuine disclosures to the markets during times of crisis and tragedy. But, he continued, “Boeing and its CEO, Mr. Muilenburg, failed in this most basic obligation.
Additionally, according to the SEC’s statement, neither Boeing nor Mr. Muilenburg admitted nor refuted the findings of the regulator.
In its response to the SEC’s announcement, Being stated that it would never forget the lives lost on Lion Air Flight 610 and Ethiopian Airlines Flight 302 and that, as a result, significant improvements had been made throughout the whole organization.
The airline continued by stating that fundamental adjustments have improved its safety culture, quality, and transparency and reinforced its safety procedures and oversight of safety-related concerns.
According to the SEC, a fund will be established for investors who lost money between 2018 and 2019 due to false information.
This agreement is mostly symbolic. Boeing has already suffered tens of billions in losses as a result of the 737 Max fiasco; an additional $200 million will hardly be noticeable.
However, it does allow the SEC to criticize Boeing and its former CEO Dennis Muilenburg for misleading investors by giving guarantees about the plane’s safety while already being aware of a significant flaw.
It’s unlikely that this will have a significant negative impact on Boeing. The incident had already done significant damage to the company’s reputation. The company is currently making great efforts to rebuild it and win back the trust of the general public and investors.
The settlement’s financial ramifications won’t be very onerous for Mr. Muilenberg personally. When he departed the company, he earned perks and pay worth almost $60 million. However, the SEC’s decision to charge him personally sends a strong message.
Some people have complained that the ex-boss has not been sufficiently held accountable for his role in the issue. But this time, he has been directly blamed.
Double crash for Boeing
All 189 people on board Lion Air Flight 610, which had been traveling from Jakarta’s Soekarno-Hatta International Airport, were killed when the aircraft crashed into the Java Sea on October 29, 2018, 13 minutes after taking off.
Six minutes after launching from Ethiopia’s capital Addis Ababa, Ethiopian Airlines Flight 302, another Boeing 737 Max on its way to Kenya, crashed less than five months later. There were 157 persons on board, and they were all killed.
The “Maneuvering Characteristics Augmentation System” (MCAS) of the Boeing 737 Max was blamed for the crashes.
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The SEC stated that “after the first disaster, Boeing and Mr. Muilenburg knew that MCAS constituted an ongoing airplane safety concern, yet told the public that the 737 Max was safe to fly.
Boeing has spent more than $20 billion due to the crashes, including payouts to the families of those deceased.
In response to the occurrences, the US Congress passed new legislation that changes how the Federal Aviation Administration (FAA), the nation’s aviation regulator, approves new aircraft.
To settle unresolved claims, a few trials are anticipated to begin early in the next year.
