Boeing's board must face lawsuit on crashes

Boeing's board of directors must face a lawsuit from shareholders over two fatal crashes that killed hundreds of people in less than six months, a judge in the United States has ruled.

The manufacturer's 737 Max was grounded for 20 months worldwide in March 2019 after 346 people died in two crashes－a Lion Air flight in Indonesia in 2018 and an Ethiopian Airlines flight the following year. Boeing has said the two crashes have cost it some $20 billion.

A ruling in a Delaware court on Tuesday stated that the board should have heeded, but instead ignored, a "red flag" about the aircraft's safety systems, known as MCAS, following the first crash.

In the lengthy ruling, Vice-Chancellor Morgan Zurn found some evidence submitted by Boeing supported the shareholders' allegations.

"That the board knowingly fell short is also evident in the board's public crowing about taking specific actions to monitor safety that it did not actually perform," the ruling said.

Boeing said in a statement late on Tuesday that it was disappointed in the court's decision.

"We will review the opinion closely over the coming days as we consider the next steps," the statement said.

Brian Quinn, a professor at Boston College Law School, said the ruling clears the way for additional discovery and potentially a trial, though he considered that very unlikely.

"Right now, everything is lining up where the board of directors are telling their attorneys 'I don't want to go to trial. You need to pay them whatever it costs, and I cannot as a director admit liability'," he told Reuters.

In that scenario, the directors' insurance would likely pay any settlement, he said.

The ruling noted that the real victims of the crashes were the deceased and their loved ones. However, corporate law recognizes another set of victims:"Boeing as an enterprise, and its stockholders".

$2.5 billion fines

The company has faced steep fines following the two crashes.

At the beginning of the year, Boeing agreed to pay $2.5 billion in fines and settle a criminal charge over claims they defrauded regulators overseeing 737 Max.

Then in May, Boeing agreed to pay a $17 million fine and improve its supply chain and production practices after installing unapproved equipment on hundreds of planes.

In a summary of the shareholder's case, Zurn said the board "publicly lied about it and how it monitored the Max's safety".

Boeing's 737 Max aircraft were only cleared to return to the skies in late 2020, and the firm has also suffered from the collapse of the travel industry due to the COVID-19 pandemic.

Agence France-Presse, Reuters and Bloomberg contributed to this article.