Boeing settles with stock exchange regulator for $ 200 million

Boeing settles with stock exchange regulator for $ 200 million
Boeing settles with stock exchange regulator for $ 200 million

Aircraft manufacturer Boeing has reached a settlement of 200 million dollars (205 million euros) with the American stock exchange regulator. Former Boeing CEO Dennis Muilenburg agrees to a $1 million fine. The Securities and Exchange Commission (SEC) announced this on Thursday.

Boeing is accused of incorrectly and incompletely informing investors about the safety of its 737 MAX aircraft. With the settlement, Boeing buys out further prosecution by the SEC.

The regulator opened an investigation into the American group after two fatal accidents involving the 737 MAX in 2018 and 2019. A total of 346 people were killed in crashes in Indonesia and Ethiopia.

The SEC writes that the publicly traded company has failed to provide honest and truthful information regarding both accidents. According to the regulator, Boeing and CEO Muilenburg knew that there were safety problems with the 737 MAX after the first crash in 2018. Still, the company and the director assured the public that the aircraft was “as safe as any other aircraft”.

Information withheld

After the second crash in 2019, the group remained with this opinion, according to the regulator. For example, Muilenburg emphasized in a presentation for investors and stock analysts that Boeing had followed the correct procedure to have the 737 MAX certified. Any new aircraft must be approved by the aviation authorities of countries where it flies. At the time, the Boeing top already knew – also in writing – that the company had withheld crucial safety information from the aviation authorities.

By misleading the public and investors, Boeing and Muilenburg attempted to restore the damaged image of the manufacturer “despite being aware of incorrect information.” Boeing and Muilenburg emphasize that the settlement does not mean that they deny or admit the allegations.

An investigation revealed that both accidents were caused by a problem with an automatic flight control system. This Maneuvering Characteristics Augmentation System (MCAS) was to ensure that the 737 MAX would remain stable in flight. Instead, erroneous information from a sensor caused the noses of both crashed planes to be pushed to the ground. The pilots were unable to correct the automatic manoeuvre.

Crash in Java Sea

In October 2018, a 737 MAX aircraft of the Indonesian airline Lion Air crashed in the Java Sea. And in March 2019, the MCAS grounded an Ethiopian Airlines 737 MAX near the Ethiopian capital, Addis Ababa, with its nose in the ground.

Research commissioned by the US House of Representatives revealed not only the problem with the computer system. The report also exposed how the US aviation regulator the Federal Aviation Authority (FAA) had been cooped up by Boeing employees for years. Additional training for pilots who would fly with the MCAS was not necessary, Boeing employees told the FAA.

The SEC settlement — for misleading investors — isn’t the only lawsuit after the 737 MAX crashes. Boeing previously reached a $2.5 billion settlement (in fines and compensation) with the US Department of Justice and the FAA. Lawsuits with relatives of victims are scheduled for next year.

After both crashes, aviation authorities around the world grounded the 737 MAX for nearly two years. The fact that Boeing was not allowed to sell its intended bestseller has cost the manufacturer an estimated 20 billion dollars. The aircraft is now flying almost everywhere.

Boeing is now awaiting certification of two new types of the 737 MAX, a smaller and a larger variant of the first MAX. Irish budget airline Ryanair has been waiting for months for the larger 737 MAX-10. If certification isn’t finalized this year, Boeing fears the FAA will require the company to completely overhaul its cockpit design.

The article is in Dutch

Tags: Boeing settles stock exchange regulator million

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