A recent lawsuit alleges 'excessive' defects at Boeing parts supplier

A quality-control inspector working at a key supplier for Boeing's 737 Max plane reported finding an "excessive amount of defects" at a plant in Kansas, according to documents filed in federal court last month.

The allegations add to the scrutiny of Spirit AeroSystems, which made the fuselage and the door plug that blew out of the side of an Alaska Airlines 737 Max 9 during a flight last Friday with 171 passengers and six crew members aboard. No serious injuries were reported.

The FAA has grounded all Max 9 jets with door plugs for safety inspections since that near-catastrophe. The agency also sent Boeing a letter on Thursday to inform the company of an investigation into the incident, saying the circumstances "indicate that Boeing may have failed to ensure its completed products conformed to its approved design and were in a condition for safe operation," citing testing and inspection requirements.

"This incident should have never happened and it cannot happen again," the FAA said.

The court documents were filed as part of an ongoing lawsuit by shareholders who accuse Spirit's leaders of mismanaging the company and misrepresenting details about its operations — resulting, the plaintiffs say, in sharp declines in Spirit's stock value. News of the lawsuit was first reported by The Lever.

The lawsuit doesn't specifically mention potential defects in manufacturing door plugs like the one that was blown out. When asked about the lawsuit's allegations by NPR, a Spirit representative declined to comment.

Last week's incident is under investigation. National Transportation Safety Board Chair Jennifer Homendy said this week that while investigators know "what broke" on the plane over Oregon — a system of bolts failed to keep the door plug from being blown out of the plane's side — they are still working to learn how and why that took place.

What does the former Spirit worker say?

The court filings allege that a former Spirit employee was asked to perform his duties in an "unethical" way that was meant to obscure quality problems. He also accuses Spirit managers of retaliating against him for raising a red flag about the way defects were reported by demoting him.

The lawsuit doesn't name the former Spirit employee, who is described as a 12-year veteran of the company, a "quality manager" who worked as an inspector and then led a team of inspectors. In that job, the suit says, he "oversaw various processes at the 'end of the line,' also known as the 'rail pit,' where Spirit finished working on products before shipping them to customers."

"This included preparation for completed fuselages to be shipped to Boeing, and oversight for the 'final shake,' which is what Spirit called its final inspection before shipment," the lawsuit states.

Another former employee, identified in the lawsuit as an internal quality auditor, is quoted in the court filing as saying that "auditors repeatedly found torque wrenches in mechanics' toolboxes that were not properly calibrated," according to the court filing. "This was potentially a serious problem, as a torque wrench that is out of calibration may not torque fasteners to the correct levels, resulting in over tightening or under-tightening that could threaten the structural integrity of the parts in question."

According to the former employee, Spirit required auditors to seize wrongly calibrated tools — a move that he said angered managers and mechanics, including some who allegedly locked their toolboxes to block the audit.

Documents filed as part of the suit include internal company emails and an ethics complaint filed with Spirit's human resources department dating back as far as February 2022. They were filed with a federal court in December, but they're drawing interest now after an Alaska Airlines 737 Max 9 jet that Spirit worked on suffered a calamity over Oregon.

What is Spirit, and how is it involved with Boeing?

Spirit is "one of the world's largest manufacturers of aerostructures for commercial airplanes, defense platforms, and business/regional jets," its website states. The company builds a range of airplane parts, such as fuselages and wings, with its client companies then performing the final assembly.

Spirit's customers include both the EU-based Airbus and Boeing, but the company has longstanding ties to Boeing: Spirit was spun off from the U.S. aircraft maker in 2005, and in 2020 it said the 737 Max accounted for more than 50% of its annual revenue.

Its headquarters are in Wichita, Kan., where Spirit is listed as the city's largest employer, with some 9,500 workers. Its global reach spans to Malaysia, France, Northern Ireland, and Morocco.

But Spirit AeroSystems has faced a string of challenges in recent years, and last November the company reported a net loss of $691.6 million in the first three quarters of 2023. It also said it was $3.87 billion in debt.

The Federal Aviation Administration grounded the 737 Max in March of 2019 after 346 people died in a pair of deadly crashes of 737 Max 8 planes. Those crashes were blamed on software problems, but the FAA investigation also found hardware issues, citing an "improper manufacturing process" in some planes.

The 20-month grounding of the popular plane rocked Spirit financially: As orders for the Boeing airliner dried up, production and deliveries halted, and Spirit laid off some 2,800 employees.

By the time the 737 Max was cleared to fly again in late 2020, the aviation industry was in the grips of the COVID-19 pandemic with air travel reduced to a trickle.

When the aviation industry quickly rebounded, Spirit faced pressure to deliver plane parts to Boeing as airlines moved to update their fleets and serve robust customer demand. At the end of the third quarter last year, Spirit reported a backlog of $42.2 billion, which it linked to work for Airbus and Boeing.

As concern over defects grew last fall, Spirit replaced CEO Tom Gentile — who is named in the shareholder lawsuit — with former Boeing executive Pat Shanahan. Boeing and Spirit also announced an agreement to try to boost both production and quality.

The Max is the fourth generation of Boeing's 737, with its first commercial flight in 2017. The Max 9, the model currently under scrutiny, has a longer fuselage than the Max 8. The narrow-body 737 has been among the world's bestselling aircraft since it was first produced in 1968.

Is Spirit involved in the current investigation?

NTSB head Homendy said on Monday that her agency asked Spirit AeroSystems to be a party to its investigation of the recent blowout on the Alaska Airlines 737 Max 9. The aircraft, with tail number N704AL, had been certified as airworthy and entered into service only months before Friday's incident.

That means Spirit can contribute technical information and expertise to the investigation and submit its own "proposed findings of cause," according to the NTSB. But the agency itself would be responsible for the analysis and final report.

"A Spirit team is now supporting the NTSB's investigation directly," the company said in a message to NPR on Wednesday. "As a company, we remain focused on the quality of each aircraft structure that leaves our facilities."

This week, Alaska Airlines and United Airlines, the only U.S. carriers that use the Max 9, reported finding loose bolts on 737 Max 9 aircraft, and inspections are continuing. Other iterations of the 737, such as the Max 8, have not been affected by the grounding. And some airlines use a configuration of the Max 9 that doesn't have door plugs like the one that blew out.

Full answers about precisely what happened could be months away.

"Our investigations can take anywhere from a year to 18 months," NTSB Aerospace Engineer Clint Crookshanks said in a briefing earlier this week.

What is the lawsuit about?

The class-action lawsuit alleges that when Spirit's leaders told investors in recent years that the company is dedicated to safety and defect-free manufacturing, they were making false or misleading statements. The suit accuses Spirit of having a company culture "which placed an emphasis on pushing out product over quality."

A large chunk of the suit focuses on how executives allegedly handled a problem that made headlines last summer. That's when news emerged that Spirit had misdrilled holes on part of some 737 Max planes: their aft pressure bulkhead, a critical piece of the structure around the cabin.

The plaintiffs say that in October 2022, Joshua Dean, who was then a quality auditor at Spirit, had identified the bulkhead problem as a significant defect and reported it to managers in several departments.

"However," the suit alleges, "Spirit concealed this issue from investors until it was revealed by independent reporting in August 2023, ten months after Spirit had identified it."

That problem became public knowledge as Spirit was already dealing with another issue: Last April, Boeing revealed a defect in the way tail fin fittings were joined to the aft fuselage on some models of the 737 MAX, resulting in a production slowdown.

The shareholders' lawsuit notes that when the problems became public knowledge, stock prices for both Spirit and Boeing sank.

"Defendants concealed from investors that Spirit suffered from widespread and sustained quality failures," the lawsuit alleges. "These failures included defects such as the routine presence of foreign object debris ('FOD') in Spirit products, missing fasteners, peeling paint, and poor skin quality."

Boeing performed quality audits at the Spirit facility, the lawsuit notes — but it claims those inspections were undermined by advance word about when and where they would take place. With that warning, the suit alleges, Spirit's management was able to ensure sections audited by Boeing were able to pass inspection.

The plaintiffs want a jury trial, seeking "compensatory damages ... for all damages sustained as a result of Defendants' wrongdoing," along with legal costs and expenses.