American aircraft manufacturing company, Boeing faces a spate of lawsuits and their legal troubles grew even bigger with the new class action filed against the company for defrauding shareholders by concealing safety deficiencies. The financial woes from shareholders, victims of families, worldwide grounding and production cut could cost the company over $100 billion.
Boeing’s market value tumbled by $34 billion within two weeks of the Ethiopian Airlines crash six minutes after takeoff on March 10. Within the first two trading days after the crash, investors lost $26.6 billion as Boeing’s shares slid 11 percent from $422.54 to $375.41.
Many airlines are already seeking to cancel their Boeing aircraft order. Indonesian airline Garuda has gone ahead to cancel its order for Boeing’s 737 Max 8 passenger jet worth $4.9 billion.
Another monetary loss to Boeing are the monies paid to families under the
“release and discharge” clause, extinguishing victims of their right to sue Boeing, Lion Air or any of their subsidiaries. Given that many of the lawsuits filed against the manufacturers are done in the U.S., from the constitution, legal compensation payments for the crash victims could be around $2 million to $3 million per person, depending on the law applied.
In Indonesia, the victims are entitled to 1.2 billion rupiahs ($85,000) compensation and there were a total of 189 people on board the Lion Air who lost their lives. Meanwhile, in Ethiopia, victims are entitled to about $200,000 each. Although many are willing to sue the company, the company still has a lot of compensation to do and the initial compensation costs for all 157 passengers on board the Ethiopian Air could cost about $25 million, according to Reuters calculations based on the terms of the Montreal convention.
For the shareholders, they are seeking compensation for damages for securities fraud because Boeing’s Chief executive’s statement suggests that the manufacturer knew the challenges of their MAX 737 aircraft and decided to conceal the information, causing the stock price to decline upon becoming public from January 8 to March 21.
The case, Seeks v Boeing Co. et al filed in U.S. District Court, Northern District of Illinois with file Number 19-02394, noted that Boeing “effectively put profitability and growth ahead of airplane safety and honesty” by rushing the 737 MAX to market to compete with Airbus SE, while leaving out “extra” or “optional” features designed to prevent the Ethiopian Airlines and Lion Air crashes.
From Dennis Muilenburg, Boeing’s Chief Executive’s apology, the anti-stall system is suspected as a cause of the Lion Air crash in October and the Ethiopian Airlines crash.
Families of the victims of both the Lion Air and Ethiopian Airlines Crash are suing Boeing, so are the investors. Currently, the lawsuits are filed in the United States of America, mainly because Boeing is an American company, the design and safety checks for the aircraft were made in the U.S and American courts have jurisdiction to the case where all the complainants are seeking compensation.