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Boeing offers $100m to families of 737 Max crash victims

Jul 03 2019 20:29
Richard Clough and Alan Levin, Bloomberg

Boeing said it would offer $100m to support the families of victims and others affected by the recent crashes of its 737 Max jetliner, which killed 346 people and led to scores of lawsuits.

The money will go toward "education, hardship and living expenses for impacted families, community programs and economic development in impacted communities," Boeing said on Wednesday in a statement. The funds will be committed over multiple years.

The pledge - described in the statement as an "initial outreach" - underscores the high stakes for Boeing as it navigates one of the worst crises in its 103-year history. The Chicago-based planemaker has come under scrutiny from wary passengers, investors, customers and regulators after a pair of fatal crashes prompted the grounding of its marquee Max jet.

The offer comes as Boeing faces at least 80 lawsuits on behalf of victims of the accidents. Consumer advocate Ralph Nader, whose grand-niece was among those who died, also has lobbied to permanently remove the plane from service.

Settling the litigation could cost Boeing about $1bn, according to an estimate by Bloomberg Intelligence, although legal experts have said the payouts could be higher if evidence shows Boeing knew about flaws in the planes before the tragedies. Settlement talks related to the first crash had been set to begin this month.

Boeing’s stock was little changed at $352.57 a share at 11:42 Wednesday in New York. Through Tuesday, the shares had fallen 16% since March 10, when an Ethiopian Airlines crash marked the second Max accident in five months.

Control system

Boeing has struggled to contain the fallout over the accidents, which began in October when a Max jet operated by Lion Air plunged into the Java Sea. After the Ethiopian flight crashed under similar circumstances, regulators worldwide moved to ground the plane. In both incidents, Boeing’s design of a system designed to prevent aerodynamic stalls has been implicated.

Investigations into the causes for each accident haven’t been concluded.

At least 46 claims have been filed by families of victims in the Indonesia crash, with almost as many for the Ethiopian fatalities, court records show. The cases are all in the early stages.

Congressional hearings

Some family members of victims have been highly critical of Boeing in the aftermath of the crashes, and have attended congressional hearings and met with officials at the Federal Aviation Administration and the National Transportation Safety Board.

"We wanted to be assured that everything within the power of these agencies that can be done is being done to ensure the future safety of these planes," said Nadia Milleron, mother of victim Samya Stumo, in a June 11 press release after meeting aviation officials in Washington. Milleron is Nader’s niece.

Boeing Chief Executive Officer Dennis Muilenburg, who was criticised for a subdued initial response to the tragedies, has taken pains recently to express sympathy for the victims. In Wednesday’s statement, he apologised again for "the tragic loss of lives in both of these accidents" and said the situation "will continue to weigh heavily on our hearts and on our minds for years to come."

Boeing said it would work with local governments and nonprofit organisations to deploy the funds.

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