REPORT: Lawyers advise Ethiopian Airlines against ‘financially disastrous’ settlement offer by Boeing

Protestors calling on Boeing executives to be prosecuted for their roles in two 737 MAX crashes that killed 346 people. (PHOTO: Shutterstock)

Use this oneThe Seattle Times is reporting that American attorneys for Ethiopian Airlines, which lost 157 passengers and crew in the second fatal crash of a Boeing 737 MAX in early 2019, have advised the carrier not to accept a settlement Boeing has offered but instead to sue the manufacturer for punitive damages in the US.

The newspaper said the airline’s Chicago-based attorneys warned Ethiopian CEO Tewolde GebreMariam that the offer falls “grossly short” of what the airline could win before a US  jury particularly since Boeing recently accepted responsibility for criminal fraud during the plane’s certification by regulators. The settlement Boeing has offered is “a mere fraction” of the actual damage, the lawyers told Tewolde, and accepting it “will inevitably leave substantial money on the table and would be a tremendous political and financial mistake for Ethiopian Airlines.”

Families and friends of the passengers killed in two crashes of the 737 MAX hold up photos of the dead at a US Senate hearing on Boeing and the 737 MAX.

Yet like many airlines, Ethiopian is now desperate for cash, the newspaper said. Before the 2019 crash of Flight ET302, state-owned Ethiopian was the largest and most successful airline in Africa. It lost business after the tragedy and the subsequent grounding of the MAX fleet. Then last year its revenue plummeted further when the COVID-19 pandemic paralysed air travel.

The letter conveys the attorneys’ concern that direct settlement negotiations between Boeing and the airline’s management are close to done and that a “financially disastrous” deal may be imminent. Levitt’s letter argues that Boeing’s Deferred Prosecution Agreement with the Department of Justice (DOJ) earlier this month provides Ethiopian new legal leverage because of “Boeing’s admission of its criminal conduct.”

Boeing admitted in the deferred prosecution agreement that the accusations of fraud involving the two pilots were “true and accurate” and acknowledged that the company is responsible for criminal acts by its employees, the newspaper reported. Levitt wrote that Boeing’s “admissions would prove a case of fraud and would also support a punitive damages claim.”

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