Boeing shares fall as safety check process in the spotlight
Boeing shares tumbled early yesterday on heightened scrutiny by regulators and prosecutors over whether the approval process for the company's 737 Max aircraft was flawed.
A person familiar with the matter said that the US Transportation Department's inspector general was examining the plane's design certification before the second of two deadly crashes of the almost brand-new aircraft.
Separately, the 'Wall Street Journal' reported that a grand jury in Washington, DC, on March 11 issued a subpoena to at least one person involved in the development process of the Max. And a 'Seattle Times' investigation found that US regulators delegated much of the plane's safety assessment to Boeing and that the company in turn delivered an analysis with crucial flaws.
Boeing dropped 2.8pc to $368.53 before the start of regular trading in New York, well below any closing price since the deadly crash of Ethiopian Airlines Flight 302 on March 10. Ethiopia's transport minister said on Sunday that flight-data recorders showed "clear similarities" between the crashes of that plane and Lion Air Flight 610 last October.
US Federal Aviation Administration staff warned as early as seven years ago that Boeing had too much sway over safety approvals of new aircraft, prompting an investigation by Transportation Department auditors who confirmed the agency hadn't done enough to "hold Boeing accountable."
The 2012 investigation also found that discord over Boeing's treatment had created a "negative work environment" among FAA staff who approve new and modified designs, with many saying they'd faced retaliation for speaking up.
Their concerns pre-dated 737 Max development.
In recent years, the FAA has shifted more authority over the approval of new aircraft to the maker itself, even allowing Boeing to choose many of the personnel who oversee tests and vouch for safety.
Just in the past few months, Congress expanded the outsourcing even further. "It raises for me the question of whether the agency is properly funded, properly staffed and whether there has been enough independent oversight," said Jim Hall, who was chairman of the National Transportation Safety Board from 1994 to 2001 and is now an aviation-safety consultant.
At least a portion of the flight-control software suspected in the 737 Max crashes was certified by one or more Boeing employees who worked in the outsourcing arrangement, according to one person familiar with the work who wasn't authorised to speak about the matter.