Shareholders have filed a lawsuit against Boeing, accusing the company of prioritizing profits over safety and misleading them about its dedication to manufacturing safe aircraft. This comes in the wake of a mid-air cabin panel blowout on an Alaskan Airlines 737 MAX 9 on January 5.
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The proposed class action lawsuit, filed on Tuesday, alleges that Boeing spent over four years following the crashes of two other MAX planes in October 2018 and March 2019, which resulted in 346 fatalities, assuring investors that it was committed to safety and would not compromise it for profit. Shareholders argue that these statements were deceptive and concealed the company's "poor quality control" on its production line, leading to an inflated stock price. From January 5 to January 25, 2024, Boeing's share price dropped by 18.9%, following the Federal Aviation Commission's decision to prohibit Boeing from increasing MAX production due to safety concerns. This resulted in a loss of over $28 billion in market value. A Boeing representative declined to comment on the matter on Wednesday.
The lawsuit, filed in the federal court of Alexandria, Virginia, represents shareholders from October 23, 2019, to January 24, 2024, and is spearheaded by Rhode Island General Treasurer James Diossa. Other defendants in the case include Boeing's CEO Dave Calhoun and his predecessor Dennis Muilenburg, as well as CFO Brian West and his predecessor Gregory Smith. Diossa stated in a comment that the case could potentially bring about changes in Boeing's practices to ensure passenger safety in the future. The blowout on January 5 led the FAA to temporarily ground 171 MAX 9 planes, causing numerous flight cancellations for Alaska Air Group and United Airlines. While there were no fatalities on the Alaska flight, some passengers have filed lawsuits against Boeing and the airline.
On Wednesday, Boeing announced that it was unable to provide full-year financial targets due to uncertainties surrounding its aircraft. Despite this, the company reported better-than-expected fourth-quarter results, which included a loss of $30 million, revenue of $22 billion, and cash flow of $3.38 billion. The case is officially known as State of Rhode Island Office of the General Treasurer v Boeing Co et al, U.S. District Court, Eastern District of Virginia, No. 24-00151.