Boeing Agrees To Settle US Criminal Charges Related To 737 MAX Probe For $2.5B

Boeing Co BA has agreed to pay a penalty of $2.5 billion to settle a criminal investigation with the U.S. Department of Justice.

What Happened: The Justice Department levied a criminal monetary penalty of $243.6 million and instructed the company to pay additional compensations of $500 million to Lion Air and Ethiopian Airlines crash victims' families.

Boeing’s airline customers affected by the grounding of the 737 MAX aircraft line will receive $1.77 billion in compensation payments.

As per DOJ, Boeing admitted that two of its former employees intentionally concealed crucial information related to the aircraft’s Maneuvering Characteristics Augmentation System (MCAS) from the Federal Aviation Administration’s Aircraft Evaluation Group.

Why Does It Matter: The settlement comes as a conclusion of a two-year-long probe from the Justice Department. 

Boeing will avoid prosecution under the charge of defrauding the U.S. under the settlement as long as there are no further violations for a period of three years.

"This resolution holds Boeing accountable for its employees’ criminal misconduct, addresses the financial impact to Boeing’s airline customers, and hopefully provides some measure of compensation to the crash-victims’ families and beneficiaries,” Acting Assistant Attorney General David P. Burns of the Justice Department’s Criminal Division said in a statement.

Boeing said Thursday it had filed an 8-K form with the Securities and Exchange Commission to reflect a $743.6 million hit on its earnings in the fourth-quarter results.

Price Action: BA stock closed Thursday at $212.71, 0.80% higher.

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