Boeing Co. has reached an agreement with the Department of Justice (DOJ) to plead guilty to a criminal fraud charge related to the tragic crashes of two 737 Max aircraft in Indonesia and Ethiopia, which resulted in a combined loss of 346 lives. This plea agreement allows the aerospace and defense giant to avoid a criminal trial, which has already led to billions in claims and penalties.
In documents filed with the U.S. District Court in Texas, the government indicated that Boeing will pay a maximum criminal fine of $487.2 million for the offense. Additionally, Boeing has committed to investing at least $455 million into its compliance and safety programs over a probationary period exceeding three years.
The agreement in principle includes several key terms: Boeing will acknowledge its material misstatements to the Federal Aviation Administration (FAA), pay the statutory maximum fine, and accept the imposition of an independent compliance monitor for three years. Furthermore, the court will have the discretion to determine restitution amounts for the victims' families in accordance with applicable law.
The DOJ noted that no further criminal charges will be brought against Boeing related to the identified conduct. Both Boeing and the DOJ anticipate submitting a written plea agreement to the court by July 19. However, the families of victims from Lion Air Flight 610 and Ethiopian Airlines Flight 302 intend to oppose the plea deal and have requested an opportunity to present their objections.
In March 2019, the 737 Max aircraft, previously the world's best-selling model, was grounded globally following the two fatal crashes, which occurred within six months of each other. Boeing reportedly settled criminal charges in 2021 for over $2.5 billion to resolve accusations of conspiracy to defraud the FAA during the 737 Max investigation.
In May of this year, the DOJ accused Boeing of violating the terms of the 2021 settlement that had helped the manufacturer avoid criminal prosecution. This development comes amid heightened scrutiny over Boeing's recent safety issues.
In April, the FAA initiated an investigation into an emergency landing by a Southwest Airlines Boeing 737-800 after its engine cover detached and struck the wing flap during takeoff. In January, an incident involving an Alaska Airlines Boeing 737-9 Max saw a mid-cabin door plug blow out mid-flight.
Following the Alaska Airlines incident, the FAA grounded approximately 171 Boeing 737 Max 9 aircraft for inspections, prompting an investigation into Boeing's manufacturing practices and production lines, which involved subcontractor Spirit AeroSystems. The DOJ also launched a criminal inquiry into the Max 9 incident.
In early March, the FAA's production audit of Boeing and Spirit AeroSystems revealed multiple quality control lapses, resulting in the suspension of production expansion for the Boeing 737 Max.
