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Boeing: Directors to face investor lawsuit over fatal crashes

Reuters American Airlines flight 718, the first U.S. Boeing 737 MAX commercial flight since regulators lifted a 20-month grounding in November, takes off from Miami, Florida, U.S. December 29, 2020Reuters
The 737 Max was cleared to fly again late last year, after being grounded since March 2019

Boeing's board of directors must face a lawsuit from shareholders over two fatal crashes involving its 737 Max plane, a US judge has ruled.

Morgan Zurn said the first crash was a "red flag" about a key safety system on the aircraft "that the board should have heeded but instead ignored".

She said the real victims were the dead and their families but investors had also lost billions of dollars.

Boeing said it would "consider next steps".

In her ruling the Delaware judge said: "While it may seem callous in the face of [the families'] losses, corporate law recognizes another set of victims: Boeing as an enterprise, and its stockholders.

"Stockholders have come to this court claiming Boeing's directors and officers failed them in overseeing mission-critical airplane safety to protect enterprise and stockholder value."

The crashes in Indonesia and Ethiopia in 2018 and 2019 killed all 346 people on board, leading to the 737 Max being grounded around the world.

Investigations later found a flaw in an automated flight control system, known as MCAS, was at fault.

In January, Boeing paid $2.5bn to settle criminal charges it concealed information about changes to MCAS from safety officials, contributing to the crashes.

But it still faces civil lawsuits from families along with the latest action from shareholders.

On Tuesday, Vice Chancellor Zurn dismissed some of the investors' claims, including one regarding a decision to award former chief executive Dennis Muilenburg a $60m retirement package after he was fired.

However, the judge said another claim about board member oversight could go ahead. Shares in the plane maker slumped following the accidents and are yet to fully recover.

A Boeing spokesperson said: "We are disappointed in the court's decision to allow the plaintiffs' case to proceed past this preliminary stage of litigation.

"We will review the opinion closely over the coming days as we consider next steps."

The Max was cleared to fly in the US in November 2020, and in Europe and Canada in January this year. It remains grounded in China.

The crashes have already cost Boeing about $20bn in fines, cancelled orders and other costs.