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Boeing directors face shareholder lawsuit for ignoring safety red flags

08 Sep 2021 / global Print

Boeing faces shareholder suit for ignoring safety flags

A US judge has decided that Boeing's board of directors must face a lawsuit from shareholders over two fatal crashes involving its 737 Max plane.

The judge said the first crash was a "red flag" about a key safety system on the aircraft "that the board should have heeded but instead ignored".

He said the real victims were those who died and their families, but investors had also "lost billions of dollars".

A Boeing source said: "We are disappointed in the court's decision to allow the plaintiffs' case to proceed past this preliminary stage of litigation. 

"We will review the opinion closely over the coming days as we consider next steps." 

The crashes in Indonesia and Ethiopia in 2018 and 2019 killed all 346 people on board, leading to the 737 Max being grounded worldwide.


Probes found a flaw in an automated flight-control system, known as MCAS.

In January, Boeing paid $2.5 billion to settle criminal charges that claimed it concealed information about changes to the flight-control system from safety officials, contributing to the crashes.

But it still faces civil lawsuits from families, along with the latest action from shareholders.

"While it may seem callous in the face of [the families'] losses, corporate law recognises another set of victims: Boeing as an enterprise, and its stockholders,” the judge ruled. 

"Stockholders have come to this court claiming Boeing's directors and officers failed them in overseeing mission-critical airplane safety to protect enterprise and stockholder value."

A further claim, challenging the decision to award former chief executive Dennis Muilenburg a $60 million retirement package after he was fired, was dismissed.

However, the judge said that the claim about board-member oversight could go ahead.

Share slump

Boeing shares slumped following the accidents, and have not yet fully recovered.

The Max was cleared to fly in the US in November 2020, and in Europe and Canada in January this year. It remains grounded in China. 

The crashes have already cost Boeing about $20 billion in fines, cancelled orders and other costs.

Gazette Desk
Gazette.ie is the daily legal news site of the Law Society of Ireland