Boeing Faces $5.4 Million Fine For Installing Faulty Parts on 737 Max Planes

Airplane maker allegedly used the faulty parts on 178 of the troubled model FAA says.
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Boeing (BA) - Get Report faces a $5.4 million penalty for installing faulty parts on 178 of its 737 Max aircraft, according to the Federal Aviation Administration.

The agency charges that “Boeing failed to adequately oversee its suppliers to ensure they complied with the company’s quality assurance system,” according to a press release announcing the proposed penalty. Last month, the FAA proposed a $3.9 million penalty for Boeing for installing the same kind of faulty parts on 133 of its 737 NG airplanes.

The move comes as Boeing continues to struggle to recover from the crisis over its 737 Max aircraft model, which was grounded last year after two fatal crashes killed hundreds of people. Last month Boeing ousted its CEO over his handling of the crisis and suspended production of the plane.

Emails between Boeing employees during the development of the 737 Max released this week showed employees questioning the safety of the aircraft and mocking regulators.

According to the FAA, the faulty parts were made by Southwest United Industries in late June and early July of 2018. The parts were then shipped to Spirit AeroSystems which then delivered them to Boeing.

On Friday, Spirit announced it is laying off 2,800 employees, or 20% of its workforce, at its Witchita, Kan. facility because of the 737 Max production suspension.

In the wake of Boeing’s troubles, Airbus has seen increases in orders for its planes.

The faulty parts are called slat tracks. They are "located on the leading edge of a Boeing 737’s wings and are used to guide the movement of panels known as slats. These panels provide additional lift during takeoff and landing," the FAA said in the release.

Boeing shares fell $6.42, or 1.91%, to end at $329.92 Friday.