Boeing, the planemaker whose best-selling 737 MAX jetliner was grounded worldwide after two overseas crashes, has pledged $100 million to help families and communities of the 346 passengers who were killed.
The money, to be paid over several years, will help with hardship and living expenses for surviving relatives as well as economic development in regions affected by the disasters, which occurred in Indonesia in October and Ethiopia in March, Boeing said.
“We at Boeing are sorry for the tragic loss of lives in both of these accidents,” CEO Dennis Muilenburg said in a statement. “The families and loved ones of those on board have our deepest sympathies, and we hope this initial outreach can help bring them comfort.”
The Chicago-based company’s donation is its latest response to the two crashes, which were were linked to new anti-stall software that erroneously activated during takeoff, authorities said. The subsequent sidelining of the plane tarnished Boeing’s reputation, leading to heightened scrutiny of the Federal Aviation Administration’s initial approval of the 737 Max for commercial flights, and scrambled the summer flight schedules of airline customers.
Boeing shares have fallen 16% to $353.28 since the second 737 Max crash, in Addis Ababa, Ethiopia, which forced the planemaker to slow production and delivery of the aircraft. Boeing has garnered more than 4,600 orders for the single-aisle jetliner, though just 67 of the planes are flown in the United States, and fewer than 400 worldwide.
Airbus, Boeing’s rival in a global duopoly that dominates the commercial jet market, has gained 13% in the same period, while the U.S. manufacturer seeks regulatory approval of a software patch to correct the problem.
“There is a lot of progress that’s been made,” Chief Financial Officer Gregory Smith said at an aerospace and transport conference hosted by Swiss lender UBS in early June. “We’ve got the regulators around the world again coming in with more questions before we go to the next milestones,” which include testing the patch in computer simulations and then certification flights, he added.
Boeing only began delivering the Max in 2017 and was working to ramp production up to 57 a month, which would have netted a potential $30 billion in sales this year. It has since been forced to reduce output to 42 a month and book a $1 billion charge, since airline customers weren’t accepting deliveries until they could use the plane.
Fewer shipments, which is when Boeing receives the bulk of payment from buyers, and higher costs to store completed planes until they can be turned over to customers, have also curbed cash flow, Smith said.
In the first crash, a malfunctioning sensor on a 737 Max 8 operated by Lion Air fed incorrect data on the airliner’s ascent vector to the computer system, which attempted to lower the angle at which it was climbing to avoid a stall, officials said. That prompted a struggle between the new computer software, known as the Maneuvering Characteristics Augmentation System, and the pilot, who ultimately lost control.
The patch, which Boeing began developing afterward, hadn’t been completed by the time of the second crash. It wasn’t until data transmitted to satellites from the Ethiopian Airlines flight showed abrupt climbs and descents during takeoff, similar to those before the Indonesia catastrophe, that the FAA ordered carriers to park the planes. Regulators in the European Union, China, and Canada had already done so.
