Boeing Accused Of Dragging Its Feet In Response To Fatal Air Crashes

Boeing has maintained that it acted urgently in response to the fatal plane crashes that killed 346 people on board two of its 737 MAX aircrafts, but newly released company documents may contradict these claims, according to The Wall Street Journal.

A lawsuit by shareholders against Boeing (BA) suggests that directors breached their fiduciary duties in overseeing management’s response to the fatal crashes, and also accuses then lead-director and current CEO, David Calhoun, of exaggerating the degree to which board members reacted to safety concerns about the aircrafts, WSJ reports.

According to the lawsuit, directors were reportedly “notified immediately” about the first 737 MAX crash in Indonesia on Oct. 29, 2018, but the WSJ has revealed that newly released portions of the suit show that directors only received their first written communication a week after the accident.

Furthermore, the board only held its first formal meeting around seven weeks after the initial crash, and minutes from this meeting indicate that “no substantive discussion” regarding safety issues were discussed. Conversation around the 737 MAX was focused on production recovery, supply chains and engines as it was preparing to accelerate deliveries of its top moneymaker.

According to the WSJ, a Boeing spokesperson claimed that the lawsuit has distorted the CEO’s account of the incidents, adding that the claims present a “misleading and incomplete picture” of Boeing’s actions. (See Boeing stock analysis on TipRanks)

Morgan Stanley analyst Kristine Liwag double-upgraded her rating on Boeing two weeks ago from a Sell to a Buy, raising her price target to $230 from $165. This implies upside potential of around 9% from current levels.

Following the release of what was considered a “kitchen sink” earnings report, Liwag told Bloomberg that getting all the bad news out of the way sets up a clear runway for Boeing and called the aerospace giant “a COVID-19 recovery play with upside.”

Consensus among analysts is a Hold based on 9 Buys, 9 Holds and 4 Sells. The average analyst price target of $231.26 suggests upside potential of around 10% over the next 12 months.

Boeing Accused Of Dragging Its Feet In Response To Fatal Air Crashes – Report