- Boeing’s problems continue to mount after shareholders launched a legal challenge Tuesday, claiming they were defrauded over safety deficiencies on the 737 Max aircraft.
- The lawsuit alleges securities-fraud violations. Boeing’s market cap has plummeted by $34 billion since a fatal crash in Ethiopia last month, the second of two in five months.
- The filing at a Chicago federal court alleges that Boeing “effectively put profitability and growth ahead of airplane safety and honesty,” as reported by Reuters.
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The fallout from Boeing’s recent difficulties over two fatal crashes continued Tuesday with shareholders filing a lawsuit against the company.
The filing at a Chicago federal court accuses the aerospace company of defrauding investors over the safety features of Boeing’s 737 Max aircraft, which was involved in both last month’s crash in Ethiopia and a crash in the Java Sea in October.
The filing alleges that Boeing “effectively put profitability and growth ahead of airplane safety and honesty,” as reported by Reuters.
The suit names Boeing CEO Dennis Muilenburg and the firm’s chief financial officer, Gregory Smith, as defendants.
The company’s market cap has fallen by $34 billion since last month’s crash. Ethiopian Airlines Flight 302 went down shortly after takeoff, killing all 157 people on board, apparently after its anti-stall software mistakenly pushed down its nose. Evidence has reportedly indicated that the plane’s pilots were unable to raise the plane’s nose even after following the relevant procedures.
The circumstances were similar to the October crash involving the Indonesian carrier Lion Air, in which 176 people were killed.
The lawsuit, filed by a shareholder named Richard Seeks, accuses Boeing of securities-fraud violations, saying it rushed out the 737 Max model to compete with Boeing’s European rival Airbus while neglecting to include “extra” or “optional”features that might have prevented the crashes, as reported by Reuters.
The 737 Max has been grounded globally, and orders for the aircraft have driedfollowing the incidents.
Boeing did not immediately respond to requests for comment.