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Boeing Faces $1.25M Civil Penalty Over Handling Of FAA-Allotted Oversight Staff

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Boeing Faces $1.25M Civil Penalty Over Handling Of FAA-Allotted Oversight Staff

Boeing Co (NYSE: BA) is facing a $1.25 million fine from the Federal Aviation Administration for allegedly not adhering to a program, where the company's own employees were deputed to act on behalf of the federal agency. 

What Happened

In a statement Tuesday, the aviation regulator claimed that unauthorized Boeing employees acted in managerial positions at the plane maker’s South Carolina factory under a program called Organization Designation Authorization (ODA), which deputizes company workers as regulators.

The FAA is also accusing Boeing managers of exerting undue pressure and of interference with actual ODA unit members.  

The aviation regulator said the alleged violations took place between November 2017 and July 2019, while a separate penalty was also proposed for exerting “undue pressure” on ODA members on February 26.

Boeing has the right to challenge the penalties and said it has taken corrective action. The airframer said it was cooperating with the agency on its probe, reported Bloomberg.

The House and the Senate are working on legislating more thorough scrutiny of the ODA program.

Why It Matters

Boeing ODA members reportedly approved a flawed design of its 737 MAX plane linked to two fatal crashes, according to Bloomberg.

A report released last month detailed Boeing’s lack of disclosure to regulators on issues related to MAX’s flight control system. Key FAA personnel were kept unaware of revisions the company had made to the system.

Aside from the ODA penalties, the Chicago-headquartered aerospace company paid $12 million to resolve 13 enforcement cases in 2015. An additional $24 million in penalties could apply if the FAA concludes that the violations didn't stop, as per Bloomberg.

Price Action 

Boeing shares closed almost 5.6% higher at $174.28 on Wednesday and added another 0.76% in the after-hours.

 

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