Troubles of plane maker, Boeing, are far from over, as shareholders of the company on Tuesday filled a new lawsuit accusing the company of defrauding shareholders by concealing safety deficiencies in its 737 MAX planes before two fatal crashes led to the worldwide grounding of the aircraft.
The proposed class action filed in Chicago federal court seeks damages for alleged securities fraud violations, after Boeing’s market value tumbled by $34 billion within two weeks of the March 10 crash of an Ethiopian Airlines 737 MAX which claimed 157 passengers onboard. Chief Executive Dennis Muilenburg and Chief Financial Officer Gregory Smith are named as defendants.
According to the complaint, 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 Ethiopian Airlines and Lion Air crashes.
Richard Seeks, the lead plaintiff, said he bought 300 Boeing shares in early March, and sold them at a loss within the last two weeks. The lawsuit seeks damages for Boeing stock investors from Jan.8 to March 21
Boeing said on Tuesday that aircraft orders in the first quarter fell to 95 from 180 a year earlier, with no orders for the 737 MAX following the worldwide grounding.
Commercial aircraft manufacturing is dominated by two heavyweights. Airbus was established in 1970 compared to Boeing which has been around since 1916.
According to reports by Financial Times, Boeing beat Airbus in 2018 commercial aircraft delivery race and the U.S. planemaker appeared on track to triumph over its European rival in the competition for orders as well. The chicago-based group has consistently won the deliveries race, while Airbus has been ahead on orders since 2013. Boeing delivered 806 aircraft last year, below its 2018 target of 810 to 815 but above 2017’s 763 and higher than Airbus, which said it delivered 800 planes, meeting its target of “around 800” subject to final auditing.
Shares of Boeing dropped 3.42percent to close trading at $365.85 on Tuesday.