US prosecutors, Transportation Department scrutinising Boeing 737 Max development: Sources

Boeing Co Chief Executive Dennis Muilenburg also said a software upgrade for the 737 Max aircraft that the planemaker started in the wake of October's deadly Lion Air crash in Indonesia was coming "soon". PHOTO: REUTERS
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WASHINGTON/SEATTLE (BLOOMBERG, REUTERS) - Federal prosecutors are scrutinising the development of Boeing Co's 737 Max jetliners which have been involved in two fatal crashes since October, a person briefed on the matter confirmed late Monday (March 18).

The US Justice Department is looking at the Federal Aviation Administration's (FAA) oversight of Boeing, the person said. Separately, the US Department of Transportation's inspector general was also scrutinising the FAA's oversight of Boeing and the development of the 737 Max, according to a person with knowledge of the matter who spoke on condition of anonymity.

The Transportation Department's Inspector General's office conducts both audits and criminal investigations in conjunction with the Justice Department.

US federal authorities had begun exploring a criminal investigation of how the 737 Max was certified to fly passengers before the latest crash in Ethiopia involving the new jet, according to people familiar with the probe.

The investigation was prompted by information obtained after a Lion Air 737 Max 8 crashed shortly after takeoff from Jakarta on Oct 29, said one person, who wasn't authorised to speak about the investigation and asked not to be named.

The investigation has taken on new urgency after the March 10 crash of an Ethiopian Airlines 737 Max 8 near Addis Ababa that killed 157 people.

Boeing shares fell 1.8 per cent to US$372.28 in New York on Monday.

The Justice Department is now in the process of gathering information about the development of the 737 Max, including through a grand jury subpoena, according to a person familiar with the matter who wasn't authorised to speak publicly about it.

The Justice Department's Criminal Division, which is overseeing the effort, declined to comment. The grand jury's involvement was earlier reported by the Wall Street Journal.

Separately, a Seattle Times investigation published on Sunday found that US regulators delegated much of the plane's safety assessment to Boeing and that the company in turn delivered an analysis with crucial flaws. Both Boeing and the Transportation Department declined to comment about the investigation.

Ethiopia's transport minister said Sunday that flight-data recorders showed "clear similarities" between the crashes of that plane and Lion Air Flight 610 last October.

A possible criminal investigation during an aircraft accident investigation is highly unusual. While airline accidents have at times raised criminal issues, such as after the 1996 crash of a ValuJet plane in the Florida Everglades, such cases are the exception.

US Federal Aviation Administration employees warned seven years ago that Boeing had too much sway over safety approvals of new aircraft, prompting an investigation by Transportation Department auditors who confirmed the agency hadn't done enough to "hold Boeing accountable."

The 2012 investigation also found that discord over Boeing's treatment had created a "negative work environment" among FAA employees who approve new and modified aircraft designs, with many of them saying they'd faced retaliation for speaking up.

Their concerns pre-dated the 737 Max development. In recent years, the FAA has shifted more authority over the approval of new aircraft to the manufacturer itself, even allowing Boeing to choose many of the personnel who oversee tests and vouch for safety.

Just in the past few months, Congress expanded the outsourcing arrangement even further.

"It raises for me the question of whether the agency is properly funded, properly staffed and whether there has been enough independent oversight," said Jim Hall, who was chairman of the National Transportation Safety Board from 1994 to 2001 and is now an aviation-safety consultant.

At least a portion of the flight-control software suspected in the 737 Max crashes was certified by one or more Boeing employees who worked in the outsourcing arrangement, according to one person familiar with the work who wasn't authorised to speak about the matter.

While people like Hall have raised concerns about the potential for a conflict of interest, the FAA has been designating authority for certification work and other tasks to employees of companies it regulates for decades and executives at the agency believe it is necessary to keep up with the demands of industry.

The agency doesn't have the budget to do every test, and "the use of designees is absolutely necessary," said Steve Wallace, the former head of accident investigations at the FAA.

"For the most part, it works extremely well. There is a very high degree of integrity in the system."

In a statement on Sunday, the FAA said its "aircraft certification processes are well established and have consistently produced safe aircraft designs," adding that the "737 Max certification program followed the FAA's standard certification process."

Separately, Canadian transport authorities are re-examining the certification given to the 737 MAX, Reuters reported, citing Transport Minister Marc Garneau. Canada had earlier accepted FAA's certification of the plane in March 2017 under a deal where both countries accept each other's approvals.

Ethiopian Crash

The Ethiopian Airlines plane crashed minutes after it took off from Addis Ababa. The accident prompted most of the world to ground Boeing's 737 Max 8 aircraft on safety concerns, coming on the heels of the October crash off the coast of Indonesia that killed 189 people.

Much of the attention focused on a flight-control system that can automatically push a plane into a catastrophic nose dive if it malfunctions and pilots don't react properly.

In one of the most detailed descriptions yet of the relationship between Boeing and the FAA during the 737 Max's certification, the Seattle Times quoted unnamed engineers who said the planemaker had understated the power of the flight-control software in a System Safety Analysis submitted to the FAA.

The newspaper said the analysis also failed to account for how the system could reset itself each time a pilot responded - in essence, gradually ratcheting the horizontal stabilizer into a dive position.

Boeing told the newspaper in a statement that the FAA had reviewed the company's data and concluded the aircraft "met all certification and regulatory requirements."

The company, which is based in Chicago but designs and builds commercial jets in the Seattle area, said there are "some significant mischaracterisations" in the engineers' comments.

Boeing Chief Executive Officer Dennis Muilenburg said the company will soon release a software update for the plane and related pilot training to address concerns that emerged after the Lion Air tragedy.

Muilenburg, facing the biggest crisis of his tenure, said on Monday that the company understands "lives depend on the work we do" and was taking steps to "fully ensure"the 737 Max safety in the wake of deadly crashes.

"Based on facts from the Lion Air Flight 610 accident and emerging data as it becomes available from the Ethiopian Airlines Flight 302 accident, we're taking actions to fully ensure the safety of the 737 MAX," Muilenburg said in a letter.

"We also understand and regret the challenges for our customers and the flying public caused by the fleet's grounding," he added.

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