Boeing will plead guilty to a criminal fraud charge related to two 737 Max crashes that killed 346 people, the Justice Department announced Sunday. This comes after the government determined that Boeing violated an agreement that had shielded it from prosecution for over three years.
Federal prosecutors gave Boeing a choice last week: enter a guilty plea and pay a fine as part of its sentence or face trial on the felony criminal charge of conspiracy to defraud the United States.
Prosecutors accused Boeing of deceiving regulators who approved the airplane and pilot-training requirements for it.
The plea deal, which still requires federal judge approval, calls for Boeing to pay an additional $243.6 million fine, the same amount paid under a 2021 settlement the Justice Department said Boeing breached. An independent monitor will oversee Boeing’s safety and quality procedures for three years. Additionally, Boeing must invest at least $455 million in its compliance and safety programs.
The plea deal covers only Boeing’s wrongdoing before the crashes in Indonesia and Ethiopia, which killed all 346 passengers and crew members aboard two new Max jets. It does not give Boeing immunity for other incidents, including a panel that blew off a Max jetliner during an Alaska Airlines flight over Oregon in January, according to a Justice Department official.
The deal does not cover any current or former Boeing officials, only the corporation. In a statement, Boeing confirmed the deal with the Justice Department but had no further comment.
In a Sunday night filing, the Justice Department said it expected to submit the written plea agreement to a U.S. District Court in Texas by July 19. Lawyers for some relatives of those who died in the crashes have said they will ask the judge to reject the agreement.
Federal prosecutors alleged Boeing conspired to defraud the government by misleading regulators about a flight-control system implicated in the crashes, which occurred less than five months apart.
As part of the January 2021 settlement, the Justice Department agreed not to prosecute Boeing if it complied with certain conditions for three years. Prosecutors last month alleged Boeing had breached those terms.
U.S. District Judge Reed O’Connor, overseeing the case, has criticized Boeing’s “egregious criminal conduct.” O’Connor could accept the plea and its sentence or reject it, leading to new negotiations between the Justice Department and Boeing.
The case dates back to the crashes in Indonesia and Ethiopia. In the first crash, Lion Air pilots were unaware of flight-control software that could push the nose down without input. Ethiopian Airlines pilots knew about it but couldn’t control the plane when the software was activated based on faulty sensor information.
In 2021, the Justice Department charged Boeing with deceiving FAA regulators about the software, which did not exist in older 737s, and the necessary pilot training. Boeing paid a $2.5 billion settlement, including a $243.6 million fine, and agreed to comply with anti-fraud laws for three years.
Boeing, blaming two low-level employees for misleading regulators, sought to move past the crashes. After grounding Max jets for 20 months, regulators allowed them to fly again following adjustments to the flight software. Max jets have since logged thousands of safe flights, with orders from airlines increasing significantly.
This changed in January when a panel covering an unused emergency exit blew off a Max during an Alaska Airlines flight over Oregon.
Pilots landed the 737 Max safely without serious injuries, but the incident led to closer scrutiny of the company. The Justice Department opened a new investigation, and the FAA said it was stepping up oversight of Boeing.
A criminal conviction could jeopardize Boeing’s status as a federal contractor. The plea announced Sunday does not address that, leaving it to government agencies to decide whether to bar Boeing.
The Air Force previously cited “compelling national interest” in letting Boeing compete for contracts after the company paid a $615 million fine in 2006 to settle criminal and civil charges, including using information stolen from a rival to win a space-launch contract.
Boeing, based in Arlington, Virginia, has 170,000 employees and numerous airline customers worldwide. Its best customers for the 737 Max include Southwest, United, American, Alaska, Ryanair, and flydubai.
Last year, 37% of Boeing’s revenue came from U.S. government contracts, mostly for defense work, including military sales arranged by Washington for other countries.
Boeing also makes a capsule for NASA. Two astronauts will stay at the International Space Station longer than expected while Boeing and NASA troubleshoot issues with the capsule’s propulsion system.
Even some Boeing critics worry about crippling a key defense contractor.
Relatives of the Max crash victims are pushing for a criminal trial to uncover what Boeing knew about deceiving the FAA. They also want top Boeing officials prosecuted, not just the company.
At a recent Senate hearing, Boeing CEO David Calhoun defended the company’s safety record, apologizing to Max crash victims’ relatives seated behind him for “the grief that we have caused.”
Before the hearing, the Senate investigations subcommittee released a 204-page report with new allegations from a whistleblower concerned about defective parts in 737s. The whistleblower is among several current and former Boeing employees who have raised safety concerns and claimed retaliation.
