Posts

Boeing Airplane

Boeing Set To Pay $2.5 Billion In Settlements Over 737 Max Fraud

Boeing will pay more than $2.5 billion to settle criminal charges that the company repeatedly lied about the 737 Max’s engineering problems which eventually led to two catastrophic crashes that killed hundreds of individuals; both crashes had no survivors. 

The company admitted to one count of conspiracy to defraud the United States, and beyond the settlements the company will face no further charges from the US Department of Justice. Acting Assistant Attorney General David Burns of the Justice Department’s Criminal Division recently released a statement regarding the charges. 

Embed from Getty Images

“Boeing’s employees chose a path of profit over candor by concealing material information from the FAA concerning the operation of its 737 Max airplane and engaging in an effort to cover up the deception.” 

Boeing is the nation’s second-largest defense contractor, and is now set to pay the Department of Justice a criminal penalty of $246.6 million. “The families and legal beneficiaries of the 346 passenger victims who died in the Lion Air Flight 610 in Indonesia in October 2018 and the Ethiopian Airlines Flight 302 in Ethiopia five months later will be paid from a fund of $500 million,” according to Burns. 

If split evenly that would equate to around $1.4 million for each family. A majority of the settlement will be given to airline companies that had purchased the faulty 737 Max aircraft and were forced to ground all of the planes following the two crashes. According to the Department of Justice all of the airlines impacted will receive $1.77 billion in compensations for their financial losses. 

Embed from Getty Images

“The tragic crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302 exposed fraudulent and deceptive conduct by employees of one of the world’s leading commercial airplane manufacturers.” 

Both crashes were caused by changes in the airplane’s Maneuvering Characteristics Augmentation System which forced the nose of 737 Max to tilt towards the ground, leaving the pilots completely powerless in preventing a fatal crash landing. 

Boeing President and Chief Executive Officer, David Calhoun, recently sent out a note to his employees throughout the nation, explaining that he “firmly believes that entering into this resolution is the right thing to do for Boeing, and is a step that appropriately acknowledges how the company fell short of its values and expectations.” 

“This resolution is a serious reminder to all of us of how critical our obligation of transparency to regulators is, and the consequences that our company can face if any one of us falls short of those expectations,” Calhoun continued. Internal Boeing documents revealed that engineers of the 737 Max aircraft notified the company of the Augmentation System’s “egregious problems” as early as 2016, so many are upset with the settlement announcement, claiming the company should be much more severely punished for such a careless mistake that claimed so many innocent lives.

Boeing Building

Boeing Under Fire For ‘Gambling With Public Safety’ After Two Crashes 

According to a report from US politicians, Boeing has jeopardized the safety of passengers by cutting certain costs and ignoring software flaws that contributed to two fatal crashes. The cut costs and software flaws mainly existed in the development of Boeing’s 737 Max, an aircraft that has since been grounded indefinitely. 

The first crash occurred in 2018 and involved a Lion Air 737 Max, and the second occurred in 2019 at an Ethiopian Airlines; in total 346 individuals were killed between both crashes. The committee on transportation and infrastructure – made up of members of the House of representatives – in the US published their report on Wednesday, and within the report they claim that “there have been repeated and serious failures by Boeing and its regulator, the US Federal Aviation Administration (FAA), in allowing the faulty aircraft to carry passengers.”

Embed from Getty Images

Democratic representative Peter DeFazio is the committee’s chair and expressed that Boeing and the FAA “gambled with public safety in the critical time period between the two crashes.” He attributes these failings to a “broken” safety culture at the company, and several gaps in the system that the FAA uses to regulate safety systems on these planes. These gaps are what led to the fatal crashes. 

After new reports of software fixes and new rounds of testing for the 737 Max plane, Boeing is hoping to re-certify the aircraft for public use. Between the coronavirus pandemic and these recent failings from Boeing, the company has had to cut over 16,000 jobs, so they’re hoping the re-certification of the 737 can help them recover. 

Boeing has been under investigation for the past 18 months, and within that investigation officials found that the company had cut some major costs in order to compete with its biggest competitor, Airbus. The report from the US government claims that this competition added an extreme financial strain to Boeing’s spending, which led to even more cut corners. 

Embed from Getty Images

“Among other things, this pressure resulted in extensive efforts to cut costs, maintain the 737 Max program schedule, and avoid slowing the 737 Max production line. There are several instances where the desire to meet these goals and expectations jeopardized the safety of the flying public.”

The report also found that Boeing had made some major errors in their aircraft design, specifically regarding the system put in place for the pilot should a crucial system malfunction during a flight. This system is referred to as the Maneuvering Characteristics Augmentation System, and it was initially designed to push the nose of the plane down during certain flying conditions to prevent it from stalling. However, this system kicked in on both fatal flights shortly after takeoff because of a faulty sensor. 

The report also criticized the FAA greatly on their relationship with Boeing and complete lack of concern over these safety measures that have been overlooked. Boeing not only withheld information from the FAA, but were able to influence their regulator into approving certain flights for travel. 

Boeing is currently working on regaining regulatory approval for its 737 Max aircraft, and the company has “full confidence in its safety,” however, the real test will be to see what airlines continue to have a relationship with Boeing as time goes on.