Boeing has agreed to plead guilty to charges of conspiracy to defraud the U.S. government following two fatal 737 MAX crashes in 2018 and 2019 that resulted in the deaths of 346 passengers. This agreement comes after the U.S. Department of Justice (DOJ) found Boeing in violation of a previous 2021 settlement, which mandated penalties, compensation, and major safety changes.
In May, the DOJ announced that Boeing had breached its 2021 agreement when a cabin panel blew off an Alaska Airlines flight at 16,000 feet earlier in the year. On June 30, the DOJ offered Boeing a plea deal with a one-week deadline to accept or face trial. The new plea, if approved by a federal judge, would label Boeing as a convicted felon and impose a criminal fine of $243.6 million.
Boeing’s agreement includes a commitment to invest at least $455 million over the next three years to enhance its safety and compliance programs, under the oversight of a DOJ-appointed third-party monitor. This monitor will be required to file annual progress reports with the court.
Critics argue that the deal is insufficient for the crash victims. Paul Cassell, a lawyer representing some families, stated, “This sweetheart deal fails to recognize that because of Boeing’s conspiracy, 346 people died. Through crafty lawyering between Boeing and DOJ, the deadly consequences of Boeing’s crime are being hidden.”
The plea deal helps Boeing avoid a contentious trial, potentially shielding many of the company’s decisions leading up to the crashes from greater public scrutiny. However, it could threaten Boeing’s ability to secure future government contracts, although waivers may be sought.
Boeing’s new CEO, set to take office later this year, will be tasked with navigating these challenges while pursuing the approval for its planned acquisition of Spirit AeroSystems.
Financial Penalties and Compensation
In 2021, Boeing agreed to pay $1.77 billion in compensation to its customers after the 737 MAX was grounded for 20 months. The settlement also included $243.6 million in fines and $500 million for a crash-victim fund for the heirs, relatives, and legal beneficiaries of the passengers killed in the crashes near Indonesia and Ethiopia.
The FAA’s Aircraft Evaluation Group (FAA AEG) found that the Maneuvering Characteristics Augmentation System (MCAS) activated during both flights, likely causing the crashes. It was revealed that two Boeing 737 MAX technical pilots had deceived the FAA AEG two years before the first crash by concealing information about a critical change to the MCAS.
Continuing Safety Issues at Boeing
The DOJ’s renewed prosecution of Boeing followed a January incident where a panel blew off a new Boeing 737 MAX 9 jet during an Alaska Airlines flight, just two days before the deferred prosecution agreement shielding Boeing from further charges expired. This event exposed continuing safety and quality issues at the company.
The agreement requires Boeing’s board of directors to meet with the relatives of those killed in the MAX crashes, further underscoring the ongoing impact of these tragedies on the victims’ families.
The agreed penalty, including the $243.6 million fine, brings Boeing’s total fines to the maximum allowed under the law. Despite this, the families of the victims have criticized the agreement and pushed for the DOJ to seek as much as $25 billion in penalties from Boeing. The DOJ has held several meetings with the victims’ families throughout its investigation into Boeing’s breach of the 2021 deal.
Featured Image courtesy of LINDSEY WASSON/REUTERS