Boeing directors reach a $225 million settlement with investors in the 737 Max safety negligence case. This follows three deadly crashes in Ethiopia and Indonesia, which left 346 people dead.

  • Boeing bosses were accused by shareholders of safety failures in the 737 MAX.
  • They reached an out-of-court settlement of $225 million to be paid by their insurers
  • Two fatal crashes involving safety failures occurred in the 737 MAX within six months.  

Boeing investors reached a $225million settlement with former and current company officials to settle a lawsuit arising from safety negligence in the 737 MAX.  

Boeing board members, as well as several executives, as well as current CEO David Calhoun were accused by shareholders of failing ensure that the control and information systems on the plane operated effectively.

According to Wall Street Journal, the compensation will not be paid by board members or executives, but by the insurers. 

Boeing investors have reached a $225million agreement with current and former company officials to settle a lawsuit over the safety negligence of the 737 MAX (pictured)

Boeing investors reached a $225million deal with former and current officials to settle a lawsuit arising from safety negligence on the 737 MAX (pictured).

Boeing also agreed to hire an intermediary to resolve internal issues and to appoint a representative on the board with aviation safety experience.

According to the WSJ the agreement, which will be filed by Delaware’s Court of Chancery on Friday, does not require Boeing to admit negligence for the benefit of those who were sued in the case.

Two crashes involving the 737 MAX killed 346 people, one being operated by Lion Air in Oct 2018 and one by Ethiopian Airlines on March 2019. 

Investigations revealed that both incidents were connected to the MCAS crash prevention system.

A crash in Ethiopia in March 2019 on a Boeing MAX 737 was related to the plane's crash prevention system. Pictured: rescuers work at the crash site in Addis Ababa

The plane’s crash prevent system was the reason for the crash that occurred in March 2019 in Ethiopia. Pictured: Rescuers work at Addis Ababa’s crash site 

AFP reached out to Boeing and the lawyers representing shareholders but they did not immediately respond.

According to internal documents, shareholders stated that the 737 MAX crashed in 2018 despite media reports linking the incident with the MCAS.

The 737 MAX was developed in 2011 and launched in 2017. It was banned from flying in March 2019, but it was declared safe again in November 2020.

In an amended complaint that was not sealed in February, Thomas DiNapoli, New York State Comptroller, who heads the state’s pension fund, and other investors argued Boeing’s board had breached their fiduciary duties. They also claimed that the board acted with gross negligence by failing to’monitor the safety’ of Boeing’s 737 MAX planes.

The lawsuit claims that the board failed to develop any tools to monitor and evaluate the safety of planes until after the 737 MAX crashes into Ethiopia and Indonesia in Indonesia, and that the fleet was grounded.

The 737 MAX was involved in a crash operated by Lion Air in October 2018 near Indonesia (pictured)

Lion Air operated a crash in October 2018 at the Indonesian border that involved the 737 MAX. (pictured)

Boeing asked Delaware to dismiss its shareholders’ lawsuit in March. Boeing claimed the board had engaged an ‘established and robust’ oversight of jet development.

Boeing stated that the plaintiffs had ignored “the robust systems that had been in place for a long time” to keep the board informed of significant risk issues.

“Boeing’s Directors maintained high scrutiny, moreover during a period when commercial aircraft, and Boeing in particular, achieved ever greater levels of safety,” Boeing stated. This contrasts with Plaintiffs’ simplistic narrative about an ‘engineering culture that was ‘intentionally dismantled’.

Boeing’s board has increased oversight of Boeing’s engineering operations and industrial operations since 2019, and added new members to the board.

The settlement agreement was expected provide additional oversight.

Boeing admitted as part of a January deferred prosecution deal with the U.S. Justice Department that it had hidden details from the U.S. Federal Aviation Administration about a critical flight control system involved in the two crashes.