Boeing is facing a lawsuit from shareholders who allege the aerospace giant defrauded them by failing to disclose safety issues with the 737 Max planes, which were grounded worldwide following two deadly crashes.
The proposed class action, filed in Chicago federal court, seeks damages after Boeing’s stock shed about 13 percent of its value in the weeks following the March 10 crash of an Ethiopian Airlines 737 Max plane. In addition to Boeing, CEO Dennis Muilenburg and Chief Financial Officer Gregory Smith are named as defendants.
The company and its top executives “effectively put profitability and growth ahead of airplane safety and honesty,” the lawsuit alleges. “Defendants misled investors about the sustainability of Boeing’s core operation – its Commercial Airplanes segment – by touting its growth prospects and profitability, raising guidance, and maintaining that the Boeing 737 Max was the safest airplane to fly the skies.”
Regulators around the world grounded the plane last month after an Ethiopian Airlines Max crashed less than five months after a Lion Air Max plunged into the sea off the coast of Indonesia. In all, 346 people died.
Boeing has acknowledged that in each crash a faulty sensor improperly triggered an anti-stall system, pushing the plane’s nose down. Pilots on each flight fought unsuccessfully to regain control, according to flight data retrieved from the planes.
Deliveries of Boeing’s best-selling jet tumbled after the newest version of the plane was grounded around the world following two deadly crashes. The aviation giantthat it delivered 149 commercial airplanes, including 89 737s, in the first quarter. In the same period last year, the company delivered 184 planes, including 132 737s.