Boeing Hiked Fourth-Quarter Lobby Spend in 737 Max Crisis

Naomi Nix
Boeing Hiked Fourth-Quarter Lobby Spend in 737 Max Crisis

(Bloomberg) -- Boeing Co.’s spending on federal lobbying rose to $3.4 million in the last quarter of 2019 as the embattled plane-maker faced new threats in Washington after its 737 Max jetliner was grounded following two fatal crashes.

The aerospace giant’s lobbying outlay in the last three months of 2019 jumped 8% compared with the third quarter as the company’s crisis over the 737 Max deepened.

Former chief executive officer Dennis Muilenburg faced a bipartisan pummeling in two days of testimony in late October, with even GOP stalwarts like Senator Ted Cruz, a Texas Republican, delivering blows. That performance was the beginning of the end for Muilenburg, who was ousted in late December and replaced with David Calhoun.

The same month, the company was publicly rebuked by Federal Aviation Administration chief Steve Dickson for a litany of grievances. The agency complained that Boeing’s projections for returning the 737 Max to service were too optimistic and amounted to an attempt to put pressure on the regulator, according to an email the agency sent to lawmakers.

A Boeing spokesman declined to comment on the company’s lobbying spending.

Boeing said Tuesday that the grounded 737 Max won’t be cleared to fly until the middle of this year, months later than previously anticipated, in a new delay that will add to the company’s financial burden. The FAA hasn’t set a time frame for completing work on the Max.

Boeing’s shares fell 3.3% to $313.37 at the close in New York, the biggest decline on the Dow Jones Industrial Average and the lowest closing price in more than a year.

The FAA grounded the 737 Max in March of 2019 after two crashes within five months killed 346 people. Representative Rick Larsen, the Democrat who represents Boeing’s Seattle industrial hub, is spearheading a House investigation of the Max crashes with Peter DeFazio, an Oregon Democrat.

For decades, Boeing has spread big money around Washington, but the company struggled to shore up its image last year.

Lawmakers have accused Boeing of putting shareholders ahead of safety and questioned the design lapses behind a flight-control system that played a role in two fatal Max crashes. The company at times also clashed with federal regulators, though its interactions with FAA mostly aren’t considered lobbying under the law.

Boeing’s fourth-quarter lobbying spend was down 12% compared with a year earlier. Overall Boeing spent $13.8 million on federal lobbying last year, down 9% from what it spent in 2018.

Congress is mulling whether to rein in a decades-old program that delegates some certification work to aircraft manufacturers including Boeing. Though the FAA retains the ultimate responsibility for ensuring safe designs, Boeing approved features of the 737 jetliner with little input from the agency.

Earlier this month, key lawmakers vowed to change the system following the release of internal Boeing documents showing employees discussed deep unease with the 737 Max and the flight simulators used to train pilots on the new jetliner, while also mocking senior managers and regulators in messages.

(Updates with Boeing comment in fifth paragraph)

--With assistance from Bill Allison, Julie Johnsson and Alan Levin.

To contact the reporter on this story: Naomi Nix in Washington at nnix1@bloomberg.net

To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, Jon Morgan

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