Boeing Offers $100 Million ‘Outreach’ for Max Crash Victims
Boeing plans to work with local governments and nonprofit organizations to deploy the funds.
(Bloomberg) -- Boeing Co. is offering $100 million to support the families of victims and others affected by two crashes of its 737 Max jetliner, which killed 346 people and have 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 Wednesday in a statement. The funds would be committed over multiple years.
The pledge -- described 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 family.
Settling lawsuits on behalf of victims could cost Boeing about $1 billion, Bloomberg Intelligence estimated, although legal experts have said payouts could be higher if evidence shows that Boeing knew about flaws in the planes before the tragedies.
Claims Process
Robert Clifford, a Chicago lawyer who has filed suit on behalf of 23 victims in the second crash, called the new offer by Boeing “highly unusual.” He noted that such pledges of assistance after a crash often come with stipulations or limits.
“All you can really say about it is, the devil is in the details,” Clifford said in an interview. “Tell me how it works. Tell what the details of the claiming process will be. Who is the universe of beneficiaries?”
Boeing’s stock closed little changed at $354.47 a share Wednesday in New York as the session closed early for Independence Day. The shares have dropped 16% since March 10, when an Ethiopian Airlines crash marked the second Max accident in five months.
No Ties
Boeing plans to work with local governments and nonprofit organizations to deploy the funds. The total averages about $289,000 per crash victim, although the amount any person receives could be far less once payments are made to all stakeholders. The company isn’t placing restrictions related to litigation over how the money can be used, said spokesman Charles Bickers.
“It’s absolutely independent from the lawsuits by the families,” Bickers said. “It’s a constructive step that we can take right now.”
Sanjiv Singh, a co-council and member of the Kabateck LLP legal team representing families from both crashes, questioned the timing of Boeing’s announcement and said the funds being promised were inadequate.
"This is a child-size band-aid on a deep gaping wound,” Singh said in an emailed statement. “I am highly suspicious of this maneuver.”
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.
Civil and congressional inquiries have been launched into the design and certification of the plane. The cause for each accident hasn’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 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,” Nadia Milleron, mother of victim Samya Stumo, said in a June 11 press release after meeting aviation officials in Washington. Milleron is the niece of consumer advocate Ralph Nader, who has lobbied to permanently remove the plane from service.
Boeing Chief Executive Officer Dennis Muilenburg, who was criticized for a subdued initial response to the tragedies, has taken pains recently to express sympathy for the victims. In Wednesday’s statement, he apologized 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.”
Separately, he said the company is developing software to address a new safety issue on the Max revealed last week. In a video posted to his Twitter account, the CEO said the company was placing a strong emphasis on safety and would “take the time necessary to make these updates.”
--With assistance from Janan Hanna, Harry Suhartono and Angus Whitley.
To contact the reporters on this story: Richard Clough in New York at rclough9@bloomberg.net;Alan Levin in Washington at alevin24@bloomberg.net
To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Tony Robinson, Susan Warren
©2019 Bloomberg L.P.