Boeing makes $100m pledge for 737 MAX crash-related help

Boeing Co said that it would give $100 million over multiple years to local governments and non-profit organisations to help families and communities affected by the deadly crashes of its 737 MAX planes in Indonesia and Ethiopia.

The move appears to be a step toward repairing the image of the world’s largest planemaker, which has been severely dented by the crash of an Ethiopian Airlines plane in March just five months after a similar crash of a Lion Air flight in Indonesia.

The two crashes killed a total of 346 people.

Boeing is the target of a US Department of Justice criminal investigation into the development of the 737 MAX, regulatory probes and more than 100 lawsuits by victims’ families.

The multiyear payout is independent of the lawsuits and would have no impact on litigation, a Boeing spokesman said.

The $100 million, which is less than the list price of a 737 MAX 8, is meant to help with education and living expenses and to spur economic development in affected communities, Boeing said. It did not specify which authorities or organizations would receive the money.

Many of the passengers on board the Ethiopian Airlines flight were aid workers or involved with health, food, or environmental programs.

“If the money is spent on furthering the work of the people on that airplane it would be money well spent,” said Justin Green, a New York-based attorney representing several of the Ethiopia crash victims.

But he said the fund would not affect his clients’ courtroom strategy: “What families really want to know is why this happened. Could this have been avoided?”

Anton Sahadi, a representative of relatives of the Lion Air crash victims, said the families appreciated the $100 million fund but it did not mean they would stop lawsuits.

“We will continue to fight for our rights in the courts,” he said. “Boeing is doing this to build their image back.”

After the Lion Air crash on Oct. 29 Boeing started developing a software fix on a stall-prevention system called MCAS believed to have played a role in that disaster, as well as in the Ethiopian crash.

The 737 MAX was grounded worldwide after the second crash and regulators must approve the fix and new pilot training before the jets can fly again.

But just last month, regulators identified a new problem that will delay commercial flight for the jets until October at the earliest.

Boeing is in settlement talks over the Lion Air litigation and has separately offered to negotiate with families of Ethiopian Airlines victims, but some families have said they are not ready to settle, exposing the planemaker to a lengthy court battle.

“The Boeing brand is worth far more than $100 million and the board and executive leadership understand that is what is at stake,” said William Klepper, a Columbia Business School professor.

Following an initial response that public relations experts criticized as stilted and lawyer-driven, Boeing has been on a charm offensive, with executives at the Paris Airshow last month repeatedly apologizing for the loss of life. Boeing Chief Executive Officer Dennis Muilenburg posts regular Twitter updates on efforts to safely return the 737 MAX to service and win back public confidence.

Robert Clifford, a Chicago-based attorney with several of the Ethiopian crash cases, suggested some of Boeing’s $100 million pledge could be spent assisting efforts to return the remains of victims to their families.

“These families are distraught about the effort to get back their loved ones,” Clifford said. “They want closure.”

Boeing has also offered to match any employee donations in support of the families and communities impacted by the accidents through December.

New orders for US-made goods fell for a second straight month May while shipments barely rose, pointing to continued weakness in manufacturing.

Factory goods orders decreased 0.7%, weighed down by weak demand for transportation equipment, the Commerce Department said on Wednesday. Data for April was revised sharply down to show factory orders falling 1.2% instead of slipping 0.8% as previously reported.

Economists polled by Reuters had forecast factory orders falling 0.5% in May. Factory orders rose 0.9% compared to May 2018. Manufacturing, which accounts for about 12% of the economy, is struggling amid an inventory bloat, trade tensions between the United States and China, and a reduction in the production of Boeing’s 737 MAX aircraft. The weak factory orders data was flagged by a report last month showing the second straight monthly drop in demand for long-lasting manufactured goods in April, as well as a drop in manufacturing production.

Reuters