Boeing’s failure to fix 737 Max cockpit light may draw penalty

Bloomberg

Boeing Co engineers discovered in 2017 that a software glitch had rendered a warning light on the newly introduced 737 Max inoperable on 80% of the planes. But the company chose not to fix it or to inform US regulators.
The next year, a Lion Air jet suffered the malfunction the alert was designed to detect and crashed in the Java Sea. The lack of an alert was cited as a factor in the crash by Indonesian investigators and Boeing’s failure to fix it drew stiff condemnation from lawmakers and families of the victims.
Now the inoperable warning light is threatening to become a costly new headache for the planemaker: its absence on the jet violated US Federal Aviation Administration (FAA) regulations.
The FAA is considering imposing civil penalties, according to documents and officials, which can amount to millions of dollars.
“A manufacturer cannot alter the airplane’s features after it has been certified,” the then-acting head of the FAA, Daniel Elwell, said in a letter to lawmakers last July, referring to the malfunctioning alert.
The fines could accrue quickly. The agency’s enforcement guidelines say large businesses such as Boeing can be assessed $3,000 to more than $34,000 per violation. That could be applied to each of the more than 300 planes on which the alert didn’t work.
Moreover, a 2015 agreement to settle 13 separate investigations against Boeing — some of them involving similar issues of aircraft certification — gives the FAA a way to take swift action against the company. Boeing paid $12 million in that case, but could be assessed an additional $24 million if the FAA finds the violations continued.
At the very least, the failure to disclose the inoperative warning light combined with other recent disclosures by the company — such as messages between employees mocking the FAA — have significantly soured the relationship between the Chicago-based manufacturer and its regulator.
JE Murdock, who served as FAA’s chief counsel and acting deputy administrator in the 1980s, said he’d never seen anything like what he called Boeing’s recent “disregard” for norms during his four decades of working in the aviation sector.
“I don’t know how this came about, but it’s worrisome to me,” Murdock said.
Boeing’s decision to withhold two troves of caustic and sarcastic text messages and emails between its employees from the FAA runs contrary to agency policy encouraging self-disclosure. Boeing had compiled at least some of the messages early last year, but didn’t disclose them to the FAA until last fall and in January.
The FAA said in a statement it doesn’t comment on potential enforcement actions.
Boeing spokesman Gordon Johndroe said the company wouldn’t comment on any possible open investigations. The company said it may be subject to unspecified penalties in a filing with the Securities and Exchange Commission (SEC) last month, but added it didn’t anticipate a significant impact on its bottom line.
Crashes involving the 737 Max — there was a second one in Ethiopia last March, in which the alert also didn’t work — killed 346, grounded the plane worldwide and will cost the company an estimated $18.6 billion.
The US Justice Department’s Criminal Division has gathered information about the plane through a grand jury. The SEC is also investigating whether Boeing properly disclosed issues with the plane to investors.
Congress is also looking into the disasters, including a provision of the law that permitted Boeing to designate employees to perform much of the Max certification functions on behalf of the agency. One such “designee” signed off on the decision not to immediately fix the warning light issue.
Elwell’s July letter provided a rare window into how the FAA views a high-profile matter that could become an enforcement case. It explicitly said the failure to fix the alert is a violation of agency regulations.