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Boeing has announced that it will be paying $200 million to its shareholders after the U.S. Securities and Exchange Commission accused the company of not disclosing known issues with the software system of Boeing 737 Max which caused two crashes in 2018 and 2019. The amount will be offered as a settlement against these charges as the former CEO of Boeing misled the investors. The continued use of defective software led to the crash of two Boeing airplanes, resulting in the death of 346 people.
According to the SEC, Boeing Company and its former CEO Dennis Muilenburg made several misleading statements publicly regarding the quality of the 737 Max and its automated flight-control system. The defective automated flight-control system led to two crashes, one in Indonesia and the other in Ethiopia. These misleading claims caused hundreds of deaths and kept the shareholders unaware of the issues. The first crash occurred with Indonesia's Lion Air where the 737 Max owned by Lion Air crashed into the Java Sea in October 2018. The second crash followed just a few months later as the 737 Max of Ethiopian Airlines crashed at Addis Ababa in March 2019, as the plane nosedived near the ground.
In response to these accusations, Boeing and former CEO Dennis Muilenburg refused to have anything to do with the issues and denied any form of wrongdoing. Instead, they agreed to pay the amount of $200 million in total, out of which $1 million would be paid by Dennis Muilenburg. Muilenburg left the company in December 2019.
Every plane by Boeing contains an automated flight-control system, which is known as MCAS or Maneuvering Characteristics Augmentation System. Several experts believe that the reason behind the failure of MCAS was the improper use of angle-of-attack sensors. The angle-of-attack sensor is used for measuring the angle between the plane’s chord line and the relative wind direction. Generally, the plane’s wings follow a similar critical angle, so in case wind conditions result in a shift in this angle, the angle-of-attack sensor warns the pilots. These sensors are used on both wings of the plane and need to be used together for getting maximum information. However, in the case of MCAS, the engineering solely relied on one only one sensor. As these sensors can easily fail due to a bird or by freezing, relying only on one sensor leaves an opportunity for major system failures.
As per allegations cast by the SEC, both Boeing and Dennis Muilenburg were aware of this system flaw. Failure in the MCAS left the pilots to struggle with a deadly situation, sending a plane into a nosedive situation, which is one of the hardest situations to recover the plane from. The SEC said that Boeing and Muilenburg had the perfect idea about this flaw, but lied publicly about it. Boeing and Muilenburg also did not disclose any irregularities or gaps in the certification procedures. Gurbir Grewal, director of the SEC’s enforcement division said that Boeing and Muilenburg put the company’s profit ahead of the safety and security of the people aboard.
Boeing later announced that it would resolve all the issues with its MCAS system and make it safe for international flights. Because of this, the Boeing 737 Max was restored to service in late 2020. However, the plane is still grounded in some countries such as China. Boeing has contacted the families of the crash victims and has offered them compensation.
Yash Ranjan09/23/2022
