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Boeing directors to face investor lawsuit over two fatal crashes

Boeing directors to face investor lawsuit over two fatal crashes
Boeing directors to face investor lawsuit over two fatal crashes

A US judge has reportedly ruled that the board of directors of Boeing, the American aircraft manufacturer, must face an investor lawsuit over the two deadly airplane crashes that involved the Boeing 737 Max airplane.

According to Morgan Zurn, Vice-Chancellor of the Court of Chancery, the first 737 crash was a large "red flag" that highlighted problems with a crucial safety system of the plane, which the board of directors should have heeded, but chose to ignored it.

Zurn, who ruled the judgment, also stated that the true victims were the deceased and their families, but that investors had also suffered losses worth billions of dollars.

In the judgment, the Delaware judge stated, that while it may appear heartless in the face of the families' losses, corporate law acknowledges another group of victims; Boeing as an enterprise and its investors.

Stockholders have petitioned to the court, alleging that Boeing's directors and officers neglected to monitor mission-critical aviation safety system in order to safeguard the company and stockholder value.

The 2018 and 2019 crashes, in Indonesia and Ethiopia respectively, claimed more than 346 passengers lives, prompting a worldwide grounding of all Boeing 737 Max airplanes.

An investigation eventually revealed a major flaw in the aircraft’s automated flight control system, commonly known as MCAS.

In January, Boeing agreed to pay $2.5 billion to settle all criminal charges that alleged that it withheld information about modifications to MCAS from safety regulators, actively contributing to the crashes.

However, it is still facing legal litigation from families, in addition to the current action by shareholders.

On Tuesday (7 Sept), Vice-Chancellor Zurn rejected several investors' claims, including one about a decision to pay former CEO Dennis Muilenburg a $60 million retirement package after he was sacked.

However, the judge stated that another allegation concerning oversight by board member can proceed. Following the crashes, shares in the plane manufacturer plummeted and have yet to fully recover.

Source credit: https://www.bbc.com/news/business-58483150

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Vinisha Joshi

Vinisha Joshi

Despite graduating with an engineering degree in electronics and communication, Vinisha Joshi chose the road less travelled, and decided to pursue her career in content writing . Currently, she pens down articles for cuereport.com and a few other distinguished news platforms, pertaining to business and finance.