Exclusive: Boeing union with over 220 workers authorize strike

(Reuters) – A union representing over 220 Boeing Co workers said on Friday that members have voted to authorize a strike after contract negotiations “have taken a turn for the worse.”

The statement was made by Teamsters Local 174.

Reporting by Tracy Rucinski; Editing by Leslie Adler

Boeing asks Delaware court to throw out investors’ 737 MAX lawsuit

SEATTLE (Reuters) – Boeing Co asked a Delaware court to throw out a shareholders’ lawsuit over the safety of its 737 MAX, saying the board engaged in “robust and well-established” oversight of the design and certification of the plane.

In an amended complaint unsealed in February, New York State Comptroller Thomas DiNapoli, who heads the state pension fund, and other investors argued that Boeing’s board breached its fiduciary duties and acted with gross negligence by failing “to monitor the safety of Boeing’s 737 MAX airplanes.”

The lawsuit, filed in Delaware Chancery Court, also alleges that the board did not develop any tools to evaluate and monitor airplane safety until after both 737 MAX crashes and the fleet was grounded.

In its motion to dismiss the complaint, made public on Monday, Boeing said the plaintiffs ignore “the robust systems that had long been in place” to keep the board informed about significant risk issues.

“Boeing’s Directors maintained this high scrutiny, moreover, during a period in which commercial aircraft, and Boeing’s in particular, achieved ever higher levels of safety,” Boeing said, “a trend that cannot be squared with Plaintiffs’ simplistic narrative about a ‘safety-engineering culture’ that had been ‘intentionally dismantled.’”

Boeing had management briefings at the board and an internal corporate audit group to evaluate risks, as well as a mechanism to receive reports on employee ethics and compliance complaints, Boeing said.

A Boeing representative did not immediately respond to a request for comment.

A lawyer representing the plaintiffs declined to comment.

Boeing enters into $5.28 billion revolving credit agreement

Boeing Co said on Monday it had entered into a $5.28 billion, two-year revolving credit agreement, as the U.S. planemaker contends with a prolonged slowdown in commercial air travel fueled by the COVID-19 pandemic.

Earlier this month, Reuters reported that the company had approached a group of banks for a new $4 billion revolving credit facility and had the option to raise the size of to as much as $6 billion. (reut.rs/3rbbe5p)

Citigroup, JPMorgan Chase Bank, BofA Securities and Wells Fargo Securities are the joint lead arrangers and joint book managers, the planemaker said here on Monday.

The credit agreement is scheduled to end on March 19, 2023, Boeing said in a filing.

Investment-grade rated companies use revolving credit facilities as backstop financing, with these facilities remaining undrawn for the most part.

Boeing names new head of crucial 737 MAX program: memo

SEATTLE (Reuters) – Boeing Co has named veteran engineer Ed Clark to be the head of its 737 MAX jetliner program, according to internal memo sent to employees on Friday.

Replacing Walt Odisho, who is retiring after being plucked from the auto industry to help Boeing boost productivity, Clark steps into the role as the U.S. planemaker works to clear an inventory of hundreds of 737 MAX aircraft and rebuild its image with passengers after the nearly two-year MAX grounding following fatal crashes.

This week marked the second anniversary of the second accident, in Ethiopia, with a final investigative report expected any day.

Clark, who was chief mechanic and engineer for Boeing’s cash cow narrowbody program, will run the sprawling manufacturing hub at Renton, Washington.

Clark is the fifth person in four years to take the helm of the program, which has over the years grappled with quality shortfalls, parts shortages and then the safety ban following the crashes.

Mark Jenks, vice president in charge of airplane programs, announced the change in a Friday memo to employees.

The move was reported earlier by Bloomberg Business

Airbus targets Boeing’s freight fortress with potential A350 cargo jet – Sources

Airbus is canvassing airline support for a potential freighter version of its A350 passenger jet, targeting a key stronghold of U.S. rival Boeing as e-commerce lifts demand for transported goods, people familiar with the matter told Reuters.

The jet would be the first freighter spin-off of the latest generation of carbon-fibre jets and help stabilise output of wide-body jets that have been badly hit by the COVID-19 crisis.

But a launch depends on identifying enough buyers willing to take a punt on fickle cargo demand in the midst of the aviation industry’s worst downturn, which has trampled airline finances.

“We are always looking at product developments but do not comment on specific programmes,” an Airbus spokesman said.

Air freight demand, which was weak before the COVID-19 crisis, has soared as home-bound shoppers turn to e-commerce, but analysts warn it is volatile and prone to extended downturns.

Normally about half the world’s air cargo is carried in the bellies of passenger jets, but a hit to travel from the pandemic has left the world more reliant on dedicated freighters and conversions of passenger planes.

Although it has vaulted past Boeing as the world’s largest producer of passenger jets, Airbus has had limited success in penetrating the freighter fortress of its arch-rival.

It pulled the plug on a freighter version of its A380 superjumbo almost 15 years ago and has had no freighters in its order pipeline since December, when Turkey’s MNG Airlines cancelled three A330 freighter.

Boeing has delivered 202 of the rival 777 freighter, compared with 38 of the A330 cargo version. Dominating the trade lanes is Boeing’s 747 freighter with more than 260 delivered.

‘BRIGHT SPOT’

It is not the first time a possible new freighter has been mooted. The latest design on the drawing board at Airbus’s Toulouse headquarters in France involves a slightly longer aircraft than the best-selling Airbus A350-900 jetliner.

Its development poses technical challenges since it would involve placing a cargo door in the composite shell chosen by Airbus to compete with Boeing’s lightweight composite 787.

Experts say cutting composite is more challenging than traditional aluminium, though Airbus could reap benefits from a decision – seen as costly at the time – to build the A350 from composite panels rather than barrel sections used on the 787.

Industry sources estimate Airbus would need commitments for some 50 aircraft to go ahead with a launch, with Chief Executive Guillaume Faury focusing on carrying out a major restructuring while directing resources towards an A321XLR passenger plane.

A development would cost an estimated $2-3 billion.

Temptingly, the booming freight market offers respite from a slump in demand for big jets that has forced Airbus and Boeing to slash production, with A350 output halving to five a month.

More than a third of wide-body jets sold by Boeing in the past year have been freighters.

But the same crisis that crippled passenger travel has also created a glut of unused passenger planes that can be converted more cheaply into freighters than buying new. That means the business case for developing a new aircraft must be watertight.

“Given the A350 production rate has been cut … and the cargo market is the one bright spot in the wide-body market, one would have to say the likelihood of an A350F has increased compared to a year ago,” said Richard Evans, senior consultant at UK-based Ascend by Cirium.

While not imminent, a launch could jog Boeing into reacting with a freighter version of its larger 777X, he added, though Boeing must also grapple with delays in its certification.

Ethiopian Boeing 737 MAX crash: Families set to obtain key Boeing documents

Families of victims of the deadly 2019 Ethiopian Airlines jet crash may obtain as soon as Thursday Boeing’s reports to U.S. regulators that helped keep its 737 MAX flying after a prior disaster with the same jet in Indonesia five months earlier.

The National Transportation Safety Board (NTSB), an independent U.S. government investigative agency, told Boeing Co in a letter on Monday it should turn over nearly 2,000 documents to lawyers representing families who want to determine what the company knew about its flight systems after the Indonesian crash on Lion Air.

The agency said international rules mandate the release of the documents after two years from the crash date, even though Ethiopia has yet to produce a final crash report which the agency cited in blocking the documents until now, according to the letter reviewed by Reuters.

Boeing said it plans to produce the investigation-related information to the plaintiffs beginning today following the NTSB guidance that, at the second anniversary of the Ethiopian accident, the restrictions would be lifted.

The plaintiffs lawyers said they expect the papers to show what Boeing executives knew of defects in the flight system of the newly designed aircraft following the Indonesian crash. An automated flight-control system called MCAS has been implicated in both crashes, which together killed 346 people.

The plane continued to fly until the Ethiopian crash prompted a global grounding.

“What we want to see are the documents upon which Boeing resisted the grounding of the airplane and based its assertion to its customers that the airplane was safe,” plaintiffs’ attorney Justin Green told Reuters.

Any evidence showing that Boeing executives were aware of the 737 MAX problems could expose Boeing to huge punitive damages, which are unusual in air transportation accidents because planes rarely fly with a known deadly defect.

Boeing has already provided plaintiffs 112,587 documents encompassing millions of pages, Greene said, but the records under pursuit are believed to be an important part of the case.

BUILDING A CASE

Boeing has said it has implemented changes that ensure accidents like the ones in Indonesia and Ethiopia never happen again, and numerous aviation regulators have re-approved the plane for flight.

The company resolved a 737 MAX criminal probe in January with a $2.5 billion Department of Justice settlement and has mostly settled the Lion Air crash litigation.

It still faces an investor lawsuit in Delaware against its board and around 140 lawsuits by families of the Ethiopian crash.

In the DOJ settlement Boeing admitted that two of its 737 MAX technical pilots, who are still under criminal investigation, had deceived the U.S. Federal Aviation Administration (FAA) about MCAS.

While the settlement exonerated Boeing’s senior managers, legal experts said it bolsters one part of the plaintiffs’ punitive claim that Boeing intended to defraud the FAA and succeeded.

However, the experts said punitive damages are rarely awarded in aircraft crash cases, in part because they are difficult to prove.

Boeing could argue, for example, that the Ethiopian Airlines’ pilots were informed after the Lion Air crash about the steps to follow in the event of an MCAS failure, said Kenneth Quinn of International Aviation Law.

Still, Boeing will likely work hard to settle the cases and avoid a jury trial, a path followed by most companies involved in crash lawsuits, according to Gary Kennedy, former general counsel for American Airlines.

“From the company’s perspective, the worst thing is a headline that relives the final moments of someone’s life onboard that aircraft,” said Kennedy, who was with American during litigation stemming from the Sept. 11, 2001 attacks and a separate deadly crash in New York two months later.

Boeing looking for new $4 billion revolving credit facility – source

Boeing Co has approached a group of banks for a new $4 billion revolving credit facility, according to a person familiar with the matter, as the planemaker battles a prolonged slowdown in commercial air travel due to the COVID-19 pandemic.

Investment-grade rated companies use revolving credit facilities as backstop financing, with these facilities remaining undrawn for the most part.

The U.S. jet manufacturer has the option to raise the size of the two-year credit facility to as much as $6 billion, the person said on Thursday.

A Boeing spokesman declined to comment. The development was earlier reported by Bloomberg News.

Boeing Chief Financial Officer Greg Smith had discussed raising more debt at the company’s quarterly earnings call in January.

Smith said Boeing has “sufficient liquidity” currently, but it continues to consider all options to strengthen its balance sheet.

Boeing to build pilotless fighter jets for U.S. and Australian Air Force

Boeing Plane-maker will use a pilotless, fighter-like jet developed in Australia as the basis for its U.S. Air Force Skyborg prototype, an executive at the plane maker said on Tuesday.

The “Loyal Wingman”, the first military aircraft to be designed and manufactured in Australia in more than 50 years, made its first flight on Saturday under the supervision of a Boeing test pilot monitoring it from a ground control station in South Australia.

Boeing’s Loyal Wingman is 38 feet long (11.6 metres), has a 2,000 nautical mile (3,704 km) range and a nose that can be outfitted with various payloads. The plane can also carry weapons and act as a shield to help protect more expensive manned fighter jets.

The U.S. Air Force in December awarded multi-million dollar contracts to Boeing, General Atomics, Aeronautical Systems, Kratos Defense and Security Solutions to produce unmanned aerial prototypes that can team with crewed jets.

“The airpower teaming system is the basis for our Skyborg bid,” Boeing airpower teaming programme director Shane Arnott told reporters. “Obviously the U.S. market is a big market. That is a focus for us, achieving some sort of contract or programme of record in the United States.”

Defence contractors are investing increasingly in autonomous technology as militaries around the world look for cheaper and safer ways to maximise their resources.

Australia, a staunch U.S. ally, is home to Boeing’s largest footprint outside the United States and has vast airspace with relatively low traffic for flight testing.

The Australian government said on Tuesday it would invest a further A$115 million ($89 million) to acquire three more Loyal Wingman aircraft for the Royal Australian Air Force (RAAF) to develop tactics for using the jets with crewed planes, on top of its initial investment of A$40 million.

“Our aim with Boeing is to understand how we can get these aircraft to team with our existing aircraft to be a force multiplier in the future,” RAAF Air-Vice Marshal and head of air force capability Cath Roberts said.

Britain in January signed a GBP 30 million ($42 million) contract with the Belfast unit of Spirit AeroSystems for a similar type of pilotless aircraft to have a trial flight in the next three years.

During the test flight in Australia, the Loyal Wingman took off under its own power before flying a pre-determined route at different speeds and altitudes to verify its functionality and demonstrate the performance of the design.

Arnott said that three Loyal Wingman aircraft would be used for teaming flights this year and that the Australian government’s order would take the number available to six.

Boeing has said up to 16 Loyal Wingman jets could be teamed with a crewed aircraft for missions.

($1 = 1.2900 Australian dollars)

($1 = 0.7200 pounds)

China studies recertification plan for Boeing 737 MAX: Aviation regulator

China’s aviation regulator is studying a plan with Boeing Co on the recertification of Boeing 737 MAX, which has been grounded for nearly two years, the agency’s vice head Dong Zhiyi said on Monday.

The Civil Aviation Administration of China (CAAC) will conduct airworthiness tests in a orderly and planned way until the major safety concerns are properly addressed, Dong told a press conference.