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Airbus Struggles with Ethical and Legal Challenges

Airbus SE, a European multinational aerospace corporation, has been under investigation for nearly four years for various forms of corruption. The company was investigated for using paid middlemen (or third-party consultants) who allegedly paid bribes to get fleet plane sales orders from commercial airlines. Airbus claims that it self-reported concerns of fraud, bribery, and corruption to regulators after an internal investigation revealed some inconsistencies or irregularities. The U.S. Department of Justice became involved as some of the Airbus components are manufactured in the United States.

Airbus has agreed to a nearly $4 billion settlement with fraud agencies in the U.S., U.K., and France. This settlement is still awaiting final approval from courts in each country. The settlement means that top executives would not have to face trial. Airbus has faced enormous negative publicity associated with the bribery and corruption scandal. Leadership and management at Airbus were removed. Systems that had never existed before were put into place, including a new ethics and compliance system that is designed to prevent and detect misconduct at the earliest stages.

Although Airbus has been damaged by the investigation and negative publicity, its major competitor Boeing has faced even greater scrutiny regarding the safety of its 737 MAX fleet of airplanes. Boeing's 737 MAX planes were involved in 2 crashes killing 346 people. The company states that the 737 MAX crisis has cost the company around $19 billion, and that does not include any cost of litigation and settlements with victims' families. Originally, while Boeing was experiencing all of the harm and negative publicity associated with the 737 MAX, Airbus took the number one position in deliveries. The two airlines are attempting to recover. Airbus is trying to recover from bribery and corruption activities in securing plane sales. Boeing is attempting to get the 737 MAX approval from the Federal Aviation Administration and get the planes into the hands of airlines and others who have contracted for the planes. The Boeing MAX is not projected to be in use before mid-2020.

Time will tell how the ethical issues and competition will ultimately play out.


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