The aircraft involved in both crashes was Boeing’s 737 Max airplane, whose flight control system was found to pose a serious safety risk following the 2018 Lion Air Flight 610 incident over Indonesia, which killed all 189 passengers and crew.
According to the U.S. Securities and Exchange Commission (SEC), Boeing was aware of the issue, but nevertheless assured the public that the 737 Max was “as safe as any airplane that has ever flown the skies.”
After the Ethiopian Airlines Flight 302 crash in March 2019, which claimed all 157 souls on board, Boeing still assured the public that the aircraft’s flight control system had been properly certified, despite their knowledge to the contrary.
An investigative report by the U.S. House of Representatives transport committee, however, revealed that the 737 Max crashes “were not the result of a singular failure…They were the horrific culmination of a series of faulty technical assumptions by Boeing’s engineers, a lack of transparency on the part of Boeing’s management, and grossly insufficient oversight by the FAA [Federal Aviation Administration].”
“Boeing and Muilenburg [Boeing’s former CEO] put profits over people by misleading investors about the safety of the 737 MAX all in an effort to rehabilitate Boeing’s image following two tragic accidents that resulted in the loss of 346 lives and incalculable grief to so many families," said Gurbir S. Grewal, Director of the SEC's Enforcement Division.
The errors and omissions on the part of Boeing and the FAA, as outlined in the report, are numerous, but are broken down by the transport committee into five central points.
Boeing was reportedly under “tremendous financial pressure” to compete with Airbus’ new A320neo aircraft. This necessitated extensive cost cutting measures without reducing the number of 737 Max aircraft coming off the production line.
The faulty flight control system, known as the Maneuvering Characteristics Augmentation System (MCAS), caused the plane’s horizontal stabilizer to push the nose of the aircraft downward, based on faulty data received from an insufficient number of angle of attack (AOA) sensors installed on board.
Despite learning of catastrophic risk the faulty MCAS posed to every potential 737 Max passenger after the 2018 crash, Boeing knowingly withheld this information from the FAA, the public, and even its own pilots.
To add onto this third point, the report found that Boeing test pilots needed “more than 10 seconds to diagnose and respond” to any automated MCAS action after it adjusted the aircraft’s trajectory against the pilot’s commands.
The transport committee also discovered that the FAA’s oversight structure had created a conflict of interest between the administration and Boeing that “jeopardized the safety of the flying public.”
Detailed in the investigation were several documented instances Boeing employees were allowed to represent the FAA in validating the 737 Max’s on board safety systems; concerns in the MCAS’ reliability that were discovered were ultimately kept internal and never relayed to the FAA.
Lastly, FAA’s management was found to have engaged in grossly negligible conduct in that when “FAA technical and safety experts determined that certain Boeing design approaches on its transport category aircraft were potentially unsafe and failed to comply with FAA regulations,” management overruled them and sided with Boeing’s assertions that the 737 Max was safe to fly.
The $200 million settlement halt any future prosecutions that Boeing and Muilenburg negligently violated antifraud provisions of federal securities laws, but it also allows them to avoid admitting or denying the SEC’s findings.
This quarter of a billion dollar penalty comes a year after Boeing paid over $2.5 billion to resolve criminal charges that it defrauded investors by lying about 737 Max’s safety standards following the Lion Air Flight 610 and Ethiopian Airlines Flight 302 crashes.
“There are no words to describe the tragic loss of life brought about by these two airplane crashes,” said SEC Chair Gary Gensler. “In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair, and truthful disclosures to the markets. The Boeing Company and its former CEO, Dennis Muilenburg, failed in this most basic obligation.”
