Boeing (BA) Stocks fell Friday after the planemaker, as well as former CEO Dennis Muilenburg, agreed to pay just over $200 million in fines to the US Securities and Exchange Commission for misleading investors in the wake of two fatal 737 Max crashes.
The Securities and Exchange Commission said Muilenburg, who left Boeing in 2019, will pay a $1 million fine with Boeing paying $200 million. Neither party acknowledges or denies the Securities and Exchange Commission’s allegations that each party made “materially misleading public statements following the Boeing crashes in 2018 and 2019”.
Boeing, which officially acknowledged its software system played a role in two fatal 737 MAX 8 crashes in April of 2019, has agreed to pay $2.5 billion in fines and damages after a criminal investigation by the US Department of Justice.
The aircraft manufacturer said the fatal crash of Ethiopian Airlines Flight 302, which killed 157 people in Mach 2019, as well as the Lion Air 610 disaster in Indonesia in early October 2018, which killed 189 people, were caused by the activation. From the Maneuvering Characteristics Augmentation System, or MCAS, in response to a “wrong angle of attack information” from a broken sensor.
The Securities and Exchange Commission said that after the first Lion Air crash, “Boeing and Muilenburg learned that MCAS poses an ongoing aircraft safety problem, but nonetheless assured the public that the 737 MAX was “as safe as any aircraft that has ever flown in the sky.”
“In times of crisis and tragedy, it is especially important that public companies and CEOs provide full, fair and honest disclosures to the markets,” said Gary Gensler, SEC Chairman. “Boeing and its former CEO Dennis Muilenburg failed in this fundamental commitment.”
Boeing shares were down 0.7% in premarket trading to indicate an opening bell price of $137.75 per share, a move that would extend the stock’s year-to-date decline to about 33.3%.
While the 737 MAX has been brought back into service in the United States, as well as many other markets around the world, it remains in China.
The Civil Aviation Authority issued an “airworthiness directive” on December 2 last year that instructed airline operators on required changes from the 737 Max before the aircraft could be included in fleet operations, but final approval has yet to be issued after months of negotiations.
Boeing CEO Dave Calhoun said last week that he felt there was a “chance” that regulators would remove the 737 MAX 10 before the end of the year, but chief financial officer Brian West also indicated the company could “remarket”, or sell some of its 140 flying planes. to China for other customers around the world, if regulators continue to delay approval.