Boeing has reached a US$237.5 million proposed settlement with shareholders over a lawsuit filed last year following the 737 MAX crashes.
Under the proposed agreement – yet to be approved by the court – the compensations will be paid out by insurers, not the board members or executives.
Middle of last year, a lawsuit was filed in the United States Delaware Courts, accusing Boeing’s directors and executive officers of breaching their safety duties, neglecting to ensure the aircraft was functioning correctly.
The two crashes in 2018 with Lion Air, and early 2019 with Ethiopian Airlines resulted in the death of 346 passengers and air staff, which led to the global grounding of the aircraft for 20 months.
While the aircraft was recertified late last year – and since has been reintroduced by many airlines – the groundings costed the planemaker billions of dollars and continuous scrutiny from trusting customers.
The lawsuit was filed by New York State Comptroller Thomas P. DiNapoli and the Fire Police Pension Association of Colorado, and both were appointed co-lead plaintiffs of the case in August 2020.
“This settlement will send an important message that directors cannot shortchange public safety and other mission-critical risks,” DiNapoli said in a statement.
As part of the proposed settlement, Boeing has agreed to hire a mediator for internal issues and appoint a board representative with aviation safety experience.
The planemaker is also required to implement an ombudsman program where employees can raise workplace concerns, after the Federal Aviation Administration launched an investigation in August to decipher whether Boeing “culture” led to the concealment of safety issues.
It would also require Boeing to disclose annual public reports on safety-related improvements, following the crashes.
At the time of the filing, DiNapoli said Boeing’s board and executive officers “cut corners and put safety in the back seat, with catastrophic human and financial consequences”.
“As co-lead plaintiff with our partners, we look forward to this opportunity to hold the company leadership accountable for their derogation of duty to the company and indifference to public safety,” DiNapoli added.
In a statement, Boeing said it has taken significant steps to improve aviation safety since 2019, through several organisational changes.
“Today’s proposed settlement builds on those actions with additional oversight and governance reforms that will further advance safety and quality in the work that we do,” the planemaker said in a statement released on Friday.
Meanwhile, the directors and executive officers being sued denied any wrongdoing in the case.
In October, a federal grand jury returned an indictment charging a former Boeing chief technical pilot of “deceiving” regulators over evaluations made on the 737 MAX aircraft.
The indictment from the Northern District of Texas revealed 49-year-old Mark A Forkner provided the FAA with “false, inaccurate and incomplete” information about flight control updates for the Maneuvering Characteristics Augmentation System (MCAS).
When the MAX was being developed in 2011, several updates were made to the aircraft, to which Forkner was obliged to disclose.
The court documents revealed in 2016, Forkner allegedly discovered information about changes to the MCAS, but withheld it to obtain millions of dollars for the planemaker.