Stock-Drop Class Action Alleges Boeing Concealed 737 MAX Safety Problems

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As the ink dries on two previous lawsuits, a Boeing shareholder has filed a proposed class action lawsuit in which he alleges the company and its top executives misled investors with regard to “the sustainability of Boeing’s core operation,” in part by deceptively maintaining that the now-grounded 737 MAX was “the safest airplane to fly the skies.”

The 31-page suit, which looks to represent those who purchased Boeing securities between January 8 and March 21, 2019 (the class period), states that despite the defendants’ public statements, Boeing concealed the full extent of the safety problems that resulted from the placement of larger engines on 737 MAX aircraft, the addition of which have since been linked to handling issues not seen with previous models. According to the lawsuit, the variation in handling characteristics of the newer 737 MAX aircraft created an increased tendency for the planes to pitch up that necessitated extra safety features that Boeing reportedly installed only as “extras” or “optional features.”

Boeing, the lawsuit claims, hid from investors and consumers that it prepared its own reports and statements to the Federal Aviation Administration (FAA) in which it certified its planes were safe to fly. The company’s statements, the suit stresses, were “undermined by Boeing’s conflict of interest” given that the company had authority delegated by the FAA to “examine, test and help certify its own planes,” not to mention provide the agency with safety analyses. Quietly noted in its reports to the FAA was Boeing’s installation of a new flight control system—called the Maneuvering Characteristics Augmentation System (MCAS)—in the 737 MAX aircraft to compensate for the planes’ increased pitch-up tendency, an add the lawsuit describes as a measure less costly than “properly designing a new aircraft as Boeing had originally planned.”

As the lawsuit tells it, the existence of the MCAS system “caught pilots and labor unions off-guard” given that, for instance, it was not mentioned in any flight crew operations manual. Further still, Boeing and other passenger airlines, the suit asserts, held back certain safety features from companies that purchased 737 MAX planes “in order to keep the price down to compete with [Europe’s] Aerobus.”

October 2018’s Lion Air Flight 610 crash and March 2019’s Ethiopian Airlines Flight 302 crash, both of which killed all on board, have been linked to MCAS system-related problems, the case continues. In the wake of the worldwide grounding of Boeing’s 737 MAX aircraft and numerous investigations, shares in the aerospace giant have reportedly plummeted from $440 during the class period to roughly $372 per share as of late March. According to the complaint, Boeing and its executives “were well aware” the aircraft lacked necessary safety features, given that they were sold separately.

The full lawsuit can be read below.