Boeing Faces Additional Legal and Regulatory Scrutiny Over 737 MAX

Justice Department and FAA officials are investigating the safety of Boeing's assembly line, a media report says.
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Legal and regulatory officials are looking at factory problems for Boeing's  (BA) - Get Report 737 MAX, a media report says.

Knowledgeable sources told The Wall Street Journal that the issues indicate the Chicago aerospace giant may have violated legal production rules and safety procedures.

The sources said that Boeing faces criminal and civil investigations - from the Justice Department and the Federal Aviation Administration - over quality-control deficiencies in the 737 MAX production process.

The plane last year was grounded by regulators worldwide after two crashes in five months killed 346 people.

The new investigations could generate more legal exposure for Being than industry and government experts previously expected, the sources told the Journal.

Among the problems: “Boeing found debris mistakenly left behind by workers in fuel tanks or other interior spaces of approximately half of the MAX aircraft it inspected starting last November, according to a company spokesman,” the Journal reports.

That debris, including tools and rags, could cause major problems for a jet while it’s in the air.

The FAA is considering a civil-enforcement action and a multimillion-dollar fine against Boeing for the problems, according to one of the Journal’s sources.

Meanwhile, Morningstar analyst Burkett Huey slashed his share-price target for Boeing by 15% Monday to $281, “as we adjust how we value the firm’s increased debt burden due to the continued 737 MAX grounding amid the coronavirus pandemic,” he wrote in a report.

Boeing stock recently traded at $129.93, up 1%. The stock has dropped 59% over the past three months.