A U.S. District Court ruled that Boeing Corp. shareholders may proceed with a class-action lawsuit contending that the aircraft builder misled investors about the safety of its aircraft and the safety procedures in place for its manufacturing processes, and thereby inflated the market value of their holdings.
Boeing has acknowledged violating the safety standards it committed to maintain under a previous federal agreement.
The shareholder suit is focused on the Boeing 737 MAX program, which continues to operate at a reduced rate of output as a result of federal oversight of its safety standards. The company’s 2024 performance was significantly impacted by the current production slowdown of that program, as well as the seven-week strike by International Assn. of Machinists workers during September and October last year.
Boeing shareholders filed the suit in January 2024, following the midair incident aboard a 737 MAX 9 aircraft, in which a side door panel failed. No one was injured in that event, but the National Transportation Safety Board determined that the door plug was missing four bolts meant to hold it in place – returning the 737 MAX program to scrutiny barely three years after it was reactivated from a 19-month shutdown following two fatal accidents, in 2018 and 2019.
In addition to a revision of the 737 MAX flight-control software implicated in the two crashes, the earlier sequence led to a federal settlement with Boeing involving financial penalties and a commitment to maintain strict safety standards in manufacturing and assembly programs.
The January 2024 event prompted the Federal Aviation Administration and NTSB to renew the scrutiny of the Boeing operations – and prompted the shareholders’ suit.
The federal court ruled that shareholders may not argue that Boeing’s actions artificially inflated its stock market valuation as early as 2019, but rather that their claims are confined to the period covered by the federal settlement resolving Boeing’s liabilities in the two crashes.
Boeing continues to operate under federal oversight. U.S. Transportation Secretary Sean Duffy and acting FAA Administrator Chris Rocheleau are due to visit the Renton, Wash., plant where 737 MAX jets are assembled. According to FAA, they are expected to stress "this administration's commitment to ensure Boeing fixes its systemic quality control issues."
