Boeing Co. has agreed to pay at least $17 million to settle a pair of enforcement cases related to the installation of unapproved equipment on hundreds of 737 aircraft.
The cases, which had been announced in 2019 and 2020, involve installing so-called Head-up Guidance Systems and devices on the wing that didn’t comply with federal standards.
The violations involve the Max as well as older models known as Next Generation, but were not directly related to the two Max crashes that led to that plane’s grounding, the Federal Aviation Administration said Thursday in a press release.
The action is the latest blow to the planemaker’s image during an extraordinary two-year period dominated by the 18-month grounding of the Max, billions in losses and multiple civil and criminal probes of the company.
“Keeping the flying public safe is our primary responsibility,” FAA Administrator Steve Dickson said in a press release. “That is not negotiable, and the FAA will hold Boeing and the aviation industry accountable to keep our skies safe.”
Boeing rose 3.6% to $250.00 a share at 9:44 a.m. in New York, the largest increase in a Standard & Poor’s index of aerospace and defense companies.
Boeing will have to pay an additional $10.1 million if it doesn’t make improvements in its procedures. The company has agreed to strengthen how it reviews parts, improve its oversight of parts suppliers and allow FAA inspectors to more closely observe the process.
The violations occurred on more than 1,000 planes, according to FAA. While they didn’t involve the design flaw that helped lead to both crashes, the FAA action came after the intense scrutiny prompted by the accidents that killed 346 people.
Thursday’s settlement agreement comes months after the company agreed to pay $6.6 million in a separate case that arose from a promise in 2015 to make improvements that it failed to achieve.
In January, the company agreed to settle federal criminal charges that it concealed information about the Max’s design prior to the crashes. The company paid $2.5 billion in penalties and compensation in that case.
“We take our responsibility to meet all regulatory requirements very seriously,” Boeing said in a statement. “These penalties stem from issues that were raised in 2019 and which we fully resolved in our production system and supply chain.”
The company said it is focusing on continuing to make improvements internally and with its subcontractors.
Unrelated to the FAA’s action, Boeing has been grappling with problems and delays across its product lineup. More than 100 Max jets were grounded until earlier this month as a result of electrical components that were improperly installed. The planemaker last week resumed 737 Max deliveries, ending a five-week drought.
The Chicago-based company also has been reviewing factory processes to eliminate quality lapses and out-of-sequence work, Chief Executive Officer Dave Calhoun said during its earnings call last month.
There were some signs of progress in April. Boeing delivered nine 787 Dreamliners, the highest monthly total for the carbon-fiber, wide-body aircraft in more than a year. The planemaker has about 100 of the planes in inventory after halting production for five months to inspect and repair small structural defects.
— With assistance by Julie Johnsson
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May 27, 2021 at 06:50PM
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Boeing (BA) Settles 737 MAX Violation Cases for $17 Million - Bloomberg
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