Boeing agrees to a $243.6m fine and compliance measures following 737 Max crash investigations
Boeing Co. has agreed to plead guilty to criminal conspiracy charges related to the two fatal crashes of its 737 Max jetliner, as reported by BNN Bloomberg.
This agreement helps Boeing avoid a lengthy courtroom battle while it attempts to recover from multiple crises.
Under the agreement with US prosecutors, Boeing faces a criminal fine of up to $487.2m, though the US Justice Department requested that a judge credit Boeing for a previous fine paid, potentially reducing the new penalty to $243.6m.
As part of the deal, Boeing will install a corporate monitor and spend at least $455m over the next three years to enhance its compliance and safety programs. Additionally, Boeing will undergo a period of court-supervised probation.
This plea marks a significant low point in Boeing’s history, following the crashes of its 737 Max aircraft in 2018 and 2019, which resulted in the deaths of 346 people.
The agreement may complicate Boeing’s role as a major defense contractor and builder of presidential aircraft, although the company might seek a waiver to continue those operations.
The deal allows Boeing to avoid the distractions of a criminal trial during a period of financial instability and leadership uncertainty. The company has been in crisis mode for six months following a near-catastrophic accident that led to the guilty plea.
In May, the Justice Department found that Boeing breached a 2021 deferred-prosecution agreement related to the crashes. This decision followed a fuselage panel blowout on a 737 Max 9 in January, just before the previous deal was set to expire.
The DOJ concluded that Boeing failed to implement an effective compliance program to prevent and detect violations of US fraud laws.
The final plea agreement is expected to be filed by July 19.
The fuselage incident has led to turmoil in Boeing’s executive suite as the board searches for a new CEO to succeed Dave Calhoun.
Financial strains have been exacerbated by a production slowdown after the January accident, with plans to improve quality and retrain workers under close FAA supervision. Boeing expects to burn through approximately $8bn in cash during the first half of 2024.
Boeing confirmed it had reached an agreement in principle with the DOJ, pending approval of specific terms. In June, Boeing disagreed with the DOJ’s finding that it violated the earlier deal.
As part of the 2021 agreement, Boeing paid a $243.6m criminal fine and admitted to deceiving the FAA about a flight control system linked to the crashes. The government agreed to withdraw a criminal charge after three years if Boeing complied with the deal.
Families of the crash victims have criticized the new agreement, filing a notice to object to its terms. The deal requires Boeing’s board to meet with the victims' families, addressing their previous request.
Erin Applebaum, a lawyer representing the victims' families, expressed disappointment with the DOJ’s decision, calling the plea deal “wholly inadequate.” She acknowledged that Boeing cannot choose its own monitor but believes the deal does not ensure meaningful change within the company.
The agreement specifies that the government will select and oversee the corporate monitor, ensuring its independence. Boeing also faces investigations by the US Securities and Exchange Commission, Congress, and a Seattle-area grand jury regarding the January accident on an Alaska Airlines plane.
Mark Lindquist, another attorney for the victims' families, stated that while the guilty plea represents increased accountability compared to the initial Deferred Prosecution Agreement, Boeing should fully accept responsibility in civil cases and comply with the conditions of the guilty plea.
