TITLE: Boeing nearly escaped criminal charges over its 737 Max crashes when Alaska Airlines lost a door mid-flight—and it could blow the case wide open again
https://fortune.com/2024/01/09/boeing-deferred-prosecution-doj-criminal-charges-737-max-crashes-alaska-airlines/
EXCERPT: Last week’s accident involving a Boeing Co. 737 Max 9 not only resulted in the grounding of scores of jets, but could complicate a deferred prosecution agreement that Boeing struck with the Justice Department in 2021 that was set to expire over the weekend.
That deal resolved a probe into Boeing following the crashes of Lion Air Flight 610 in October 2018 and Ethiopian Airlines Flight 302 in March of 2019, which together killed 346 passengers and crew. The agreement allowed the DOJ to dismiss a criminal charge against Boeing if the company demonstrated that it had beefed up its compliance programs.
A lawyer for the families of the victims of those crashes is now pushing the DOJ to review the latest incident before taking any steps to dismiss the case related to the Lion Air and Ethiopian Airlines crashes.
The deferred prosecution pact was a victory for Boeing, which faced significant legal exposure, especially after the Ethiopian Airlines crash. That disaster, which took place five months after the Lion Air accident, raised questions about what the company’s senior executives had known about the 737 Max flight control system and what they’d told regulators, their customers and the public.
“The public was promised in this DPA that Boeing would have a renewed commitment to safety and new procedures put in place and new oversight,” said Paul Cassell, a former federal judge who represents the families. “The reality is, and people on that Alaska Airlines flight know, that it doesn’t look like the renewed commitment or enhanced commitment to safety that the DPA promised is being delivered on.”
The Alaska Air Group Inc. flight lost a panel during flight on Friday, leaving passengers exposed to a gaping hole in the side of the aircraft. While nobody was seriously injured, the accident puts the spotlight on possible manufacturing defects at Boeing and its suppliers. Investigators said it’s too soon to determine whether the fault lies with Boeing, Alaska Air or a third party.
Boeing didn’t respond to requests for comment.
Almost all corporate deferred prosecution cases result in charges being dismissed. But if the Justice Department determines that Boeing hasn’t met the terms of the deal, it could extend the agreement for one or more years. And in the unlikely case that prosecutors ultimately determine that Boeing breached the agreement, they can tear it up and charge the company with the conduct that it admitted to as part of the deal.
Under the terms of the DPA, dated Jan. 6, 2021, the Justice Department now has six months to determine whether Boeing has complied with the compliance obligations imposed by prosecutors. If it concludes that the company fulfilled its duties, the government would file a motion to dismiss a criminal charge against Boeing, one count of conspiring to defraud the United States.
TITLE: Boeing Supplier Ignored Warnings Of “Excessive Amount Of Defects,” Former Employees Allege
https://www.levernews.com/boeing-supplier-ignored-warnings-of-excessive-amount-of-defects-former-employees-allege/
EXCERPT: Spirit was established in 2005 as a spinoff company from Boeing. The publicly traded firm remains heavily reliant on Boeing, which has lobbied to delay federal safety mandates. According to Spirit’s own SEC filings, the company’s “business depends largely on sales of components for a single aircraft program, the B737,” the latest version of which — the 737 Max 9 — has now been temporarily grounded, pending inspections by operators.
Spirit and Boeing are closely intertwined. Spirit’s new CEO Patrick Shanahan was a Trump administration Pentagon official who previously worked at Boeing for more than 30 years, serving as the company’s VP of various programs, including supply chain and operations, all while the company reported lobbying federal officials on airline safety issues. Spirit’s senior vice president Terry George, in charge of operations engineering, tooling, and facilities, also previously served as Boeing’s manager on the 737 program.
Last week’s high-altitude debacle — which forced an Alaska Airlines 737 Max 9’s emergency landing in Portland — came just a few years after Spirit was named in FAA actions against Boeing. In 2019 and 2020, the agency alleged that Spirit delivered parts to Boeing that did not comply with safety standards, then “proposed that Boeing accept the parts as delivered” — and “Boeing subsequently presented [the parts] as ready for airworthiness certification” on hundreds of aircraft.
Then came the class-action lawsuit: In May 2023, a group of Spirit AeroSystems’ shareholders filed a complaint against the company, claiming it made misleading statements and withheld information about production troubles and quality control issues before media reports of the problems led to a major drop in Spirit’s market value.
An amended version of the complaint, filed on Dec. 19, provides more expansive charges against the company, citing detailed accounts by former employees alleging extensive quality control problems at Spirit.
Company executives “concealed from investors that Spirit suffered from widespread and sustained quality failures,” the complaint alleges. “These failures included defects such as the routine presence of foreign object debris in Spirit products, missing fasteners, peeling paint, and poor skin quality. Such constant quality failures resulted in part from Spirit’s culture which prioritized production numbers and short-term financial outcomes over product quality, and Spirit’s related failure to hire sufficient personnel to deliver quality products at the rates demanded by Spirit and its customers including Boeing.”
The court documents allege that on Feb. 22, 2022, one Spirit inspection worker explicitly told company management that he was being instructed to misrepresent the number of defects he was working on.
“You are asking us to record in a inaccurately [sic] way the number of defects,” he wrote in an email to a company official. “This make [sic] us and put us in a very uncomfortable situation.”
The worker, who is unnamed in the federal court case, submitted an ethics complaint to the company detailing what had occurred, writing in it that the inspection team had “been put on [sic] a very unethical place,” and emphasizing the “excessive amount of defects” workers were encountering.
“We are being asked to purposely record inaccurate information,” the inspection worker wrote in the ethics complaint.
He then sent an email to Spirit’s then-CEO, Tom Gentile, attaching the ethics complaint and detailing his concerns, saying it was his “last resort.”
When the employee had first expressed concerns to his supervisor about the mandate, the supervisor responded “that if he refused to do as he was told, [the supervisor] would fire him on the spot,” the court documents allege.
After the worker sent the first email, he was allegedly demoted from his position by management, and the rest of the inspection team was told to continue using the new system of logging defects.
Ultimately, the worker’s complaint was sustained, and he was restored to his prior position with back pay, according to the complaint. He quit several months later, however, and claimed that other inspection team members he had worked with had been moved to new positions when, according to management, they documented “too many defects.”
TITLE: ‘Cautionary tale’: How Boeing won a US Air Force program and lost $7B
https://www.defensenews.com/industry/2024/01/09/cautionary-tale-how-boeing-won-a-us-air-force-program-and-lost-7b/
EXCERPT: The U.S. Air Force’s next-generation tanker was supposed to be the ideal candidate for a fixed-price development program.
Indeed, when Boeing first won the deal to build what’s now known as the KC-46, the defense contractor said it would use a “low-risk approach,” basing its design on the existing Boeing 767 commercial airplane. The contract was firm-fixed-price, meaning Boeing was on the hook if costs ran higher than expected.
Nearly 13 years later, Boeing has absorbed $7 billion in cost overruns, far more than the contract value of $4.9 billion. For years, the tanker, designed to refuel aircraft in flight, has been plagued by delays, production errors and a faulty vision system that required a complete redesign.
While Boeing has paid the financial price, the company and the Air Force have spent years trying to make the program work. The initial contract award called for the combat-ready tankers to arrive in August 2017; the first arrived in January 2019.
In the years that followed, the KC-46 program was beset by further delays, including production line problems that regularly stalled deliveries and an underperforming vision system. That system is years behind schedule and expected to come in October 2025.