A Former Secretary of Labor chimed in on Boeing Co‘s BA emblematic market position following years of safety concerns and a plea deal with the United States Department of Justice on Monday.
The Plea Deal: Boeing and the DOJ agreed to a preliminary plea deal, according to a court filing on Sunday night.
Boeing will plead guilty to criminal conspiracy to defraud the U.S. after allegedly misleading the Federal Aviation Administration regarding safety on its 737 MAX plane. Two crashes of the 737 Max in 2018 and 2019 resulted in the deaths of 346 passengers.
Under the deal, Boeing will spend at least $455 million on safety and compliance over the next three years, according to court filings. The agreement also requires Boeing to install a corporate monitor and allow the court to determine restitution for victims’ families.
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Reactions: Robert Reich, Labor Secretary under the Clinton Administration, called Boeing a “sh***y corporation” in the wake of its plea deal.
“Boeing's descent reveals everything wrong with American capitalism today,” Reich posted on X.
Speaking broadly on Boeing’s purported operational failures, Reich connected safety mishaps to the company’s merger with McDonnell Douglass in 1997. Reich believes that the merger was anticompetitive, and led Boeing to focus less on creating quality products in favor of cutting costs.
Reich also alleged that Boeing spent millions on stock buybacks and congressional lobbying instead of using its cash to ensure that its planes were safe. Furthermore, Reich alleged that Boeing’s workplace culture prioritized profits over safety.
“All of this inevitably led to the deadly safety issues Boeing faces today,” Reich said.
Reich said that Boeing should serve as a “cautionary tale,” and urged the government to increase antitrust enforcement, issue government contracts more carefully and ban stock buybacks as a means of preventing safety catastrophes.
Price Action: Boeing closed 0.55% higher at $185.84 on Monday. One of the worst performers in the S&P 500, its stock is down over 26% in 2024. Boeing is also down nearly 50% in the past five years.
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