Boeing Reeled From ‘Terrible’ Press After First Max Crash

Boeing Co. leaders were stunned by a barrage of negative articles after a 737 Max plunged into the Java Sea in October 2018, killing all aboard, according to internal communications.

The messages, unveiled Thursday under court order, show that executives and board directors worried about media coverage and indications that pilots on the Lion Air flight were caught unaware by an obscure flight-control system in the Max but not earlier 737 models. Lingering production snarls and the 737’s importance as Boeing’s biggest source of sales added to the tension.

“Press is terrible. Very tough. Lots of negative chatter I’m picking up. Not pleasant,” Ken Duberstein, at the time a veteran Boeing director, said in a Nov. 14 missive to then-Chief Executive Officer Dennis Muilenburg. Duberstein recommended that the company “address more aggressively” the emerging concerns about the Max, deliveries and Lion Air.

Boeing’s board didn’t moved to gain greater oversight of quality and safety until a second Max crashed in Ethiopia in March 2019, according to a complaint filed by the New York State Common Retirement Fund and the Fire and Police Pension Association of Colorado. The second disaster, which brought the death toll from the two accidents to 346, spurred a global grounding that plunged Boeing into one of the deepest crises in its century-long history.

The inaction amounts to an “epochal corporate governance catastrophe,” the New York and Colorado funds said in an amended Delaware Chancery Court complaint that was made public Feb. 5.

The plaintiffs cherry-picked documents to present a “misleading and incomplete picture of the activities of Boeing and its board of directors,” the company said in an email Thursday.

“As Boeing detailed in a motion to dismiss plaintiffs’ prior complaint, Boeing’s senior management and its board engaged in robust safety oversight during the time period in question, including through extensive reviews of Boeing’s engineering processes, airplane development programs, and production system,” the company said.

Boeing said the claims in the lawsuit lack merit and vowed to renew its motion to dismiss the lawsuit later this year.

MCAS Worry

The internal communications released Thursday were filed by Boeing in response to a court order in the case and made available in full for the first time.

The pension funds are suing current and former directors and officers, including current CEO Dave Calhoun, claiming they ignored red flags before the crashes.

The unsealed filings are part of a derivative suit first filed in 2019 by Boeing shareholders after the two tragedies. Unlike in shareholder class actions, judgments or settlements in derivative suits are usually paid back to the company from liability insurance policies for its directors and officers.

The newly released emails and memos, excerpts of which had been disclosed previously, show concern among Boeing leaders about media coverage of the so-called Maneuvering Characteristics Augmentation System. The feature, which was new to the Max, was activated by a faulty airspeed gauge in the Lion Air jet and tilted the plane’s nose down more than 20 times until the pilots were overwhelmed and lost control of the aircraft.

In two emails, Muilenburg, who would be forced out a year later over the Max crisis, sketched out a response that included providing background briefings to media and working with airlines to “counter pilot union comments (who are motivated to get separate type rate for Max - equals more pay.)”

Disclosure Dispute

Muilenburg also mentioned a memo he had shared with directors after consulting with “Dave C,” an apparent reference to Calhoun, a Boeing director who took over the top job at the start of 2020.

In the text of the 2018 communique, sent weeks after the initial crash, Muilenburg strongly pushed back on a Wall Street Journal story quoting U.S. pilot union officials, who had said that they weren’t aware that the so-called MCAS had been added to the Max, or provided instructions on how to respond when it was activated until after the crash in Indonesia.

“These statements, along with the article’s references to us ‘withholding information,’ are categorically false,” the Boeing chief told directors.

Disclosures months later would show that Boeing officials successfully lobbied the U.S. Federal Aviation Administration to remove MCAS from the flight crew operating manuals.

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