Investors have filed a lawsuit against Boeing supplier Spirit AeroSystems, accusing Spirit AeroSystems (NYSE:SPR) of concealing information about production cuts after two 737 MAX crashes in 2018 and 2019, creating significant misinformation. Recently, a U.S. appellate court upheld the dismissal of this lawsuit.
The Tenth Circuit Court of Appeals in Denver, with a panel of three judges, ruled by a 2:1 vote that the proposed class action by investors against Spirit did not constitute fraud charges. Spirit AeroSystems has not yet responded.
The Federal Aviation Administration (FAA) grounded the 737 MAX in March 2019, with similar actions taken by regulatory bodies around the world. The model was not approved to return to service until November 2020.
After the grounding, Boeing reduced the production of 737 MAX from 52 fuselage components per month to 42, but still purchased 52 fuselage components from Spirit. Fuselage components include the aircraft's fuselage, seating, leading edges of the wings, thrust reversers, and engine nacelles.
In October 2019, Spirit assured that it would continue to produce 52 fuselage components for an extended period. In December 2019, Boeing informed Spirit to stop delivering 737 MAX fuselage components.
The plaintiffs claimed that despite Boeing's private notifications to Spirit about the plan to reduce purchases, Spirit's executives still issued soothing statements on production. These executives denied the allegations.
At the end of 2019, after a review, Spirit's auditing process was found not to comply with established procedures, leading Gilson to resign. Spirit stated that the Securities and Exchange Commission (SEC) closed its investigation into the matter in 2020 without recommending any enforcement action.
