A deeply wounded Boeing faces shareholders ready for a fight

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Boeing executives are expected to face shareholders’ tough questions about the 737 Max crisis at the company’s annual meeting in Chicago on Monday.

Shareholders have a lot to gripe about. The company’s stock has lost 10% of its value after the March 10 crash of an Ethiopian Airlines jet, the second fatal crash of the company’s bestselling plane. A Lion Air 737 Max crashed under similar circumstances in October. The second crash prompted a worldwide grounding of the 737 Max last month.

Boeing last week announced earnings fell 21% in the first quarter because of the crisis. Boeing suspended its share repurchase plans to conserve cash.

CEO Dennis Muilenburg will start the annual meeting with a moment of silence for the 346 people killed in the Ethiopian Airlines and Lion Air crash in Indonesia last October, according to his prepared remarks reviewed by CNN Business. He will insist that Boeing make safety its top priority, and he plans to say the company has been doing everything it can to find a solution. And he will vow the 737 Max will become the safest plane in the air once Boeing develops a fix to the automatic safety feature that is the focus of the two crash investigations.

“These enduring values are at the core of everything we do,” Muilenburg said in his prepared remarks. “Yet, we know we can always be better. We have a responsibility to design, build and support the safest airplanes in the sky. The recent accidents have only intensified our dedication to it.”

Among the shareholder votes taking place at the annual meeting is a proposal that would separate the positions of chairman and CEO, both of which are now held by Muilenburg. Boeing opposes that proposal.

The resolution predated the current crisis, and there was a similar proposal at last year’s annual meeting that was defeated with the support of only 25% of the company’s shares. But two shareholder advisory firms have recommended votes in favor of the resolution this time.

“Shareholders would benefit from the most robust form of independent oversight to ensure that the company’s management is able to regain the confidence of regulators, customers and other key stakeholders,” said one of those services, ISS, in a note urging support for the measure.

Questions remain as to whether Boeing did everything it could to ensure the planes were as safe as possible. For example, four Boeing employees called an Federal Aviation Administration whistleblower hotline to report damage to the wiring of sensors, CNN has reported. And Boeing made airlines pay extra if they wanted an alert that lets pilots know if two sensors are contradicting each other. After the crashes, the company said in congressional testimony it would make that feature standard on planes in the future.

Muilenburg defended that earlier decision to include the alert as an option in his prepared remarks.

“We don’t make safety features optional,” he said. “Every one of our airplanes includes all of the safety features necessary for safe flight.”

Muilenburg said again that the company is getting close to a software fix. It has completed 146 flights of the 737 Max, totaling roughly 246 hours of air time with the updated software. Last week he told investors that he personally has flown on some of those test flights.

The safety feature forces down the plane’s nose if a sensor detects it is climbing too fast and at risk of a stall. Apparently the sensor on the two flights gave a false reading. Two weeks after the Ethiopian crash, Boeing announced the software fix would add data from a second sensor that measures the horizontal tilt of the plane.

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