Boeing Risks Criminal Charges As US Prosecutors Reportedly Target Compliance Failures Post-737 MAX Crashes

Boeing Co BA risks potential criminal charges as U.S. prosecutors reportedly recommend legal action against the aerospace giant, after the company allegedly breached a 2021 deferred prosecution agreement following two fatal 737 MAX crashes.

The Justice Department has until July 7 to decide on prosecuting Boeing, which could result in huge penalties. The charges stem from accusations that Boeing violated its agreement by failing to adhere to compliance measures set out in 2021, and the recommendation of prosecutors handling the case has not been previously disclosed, reported Reuters.

The original deal was intended to shield Boeing from a conspiracy to commit fraud charge if it met specific terms, including compliance reforms and regular updates.

In 2021, Boeing avoided prosecution by agreeing to a $2.5 billion settlement over allegations it deceived the Federal Aviation Administration (FAA) about the 737 MAX jets.

The settlement required Boeing to implement rigorous compliance protocols and to provide ongoing reports on its practices. However, in May, officials concluded that Boeing had failed to meet these obligations.

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Boeing has denied any wrongdoing, asserting that it has adhered to the agreement’s terms. Despite this, discussions between Boeing and the Justice Department continue, with no final decision reached on whether to file charges.

Potential outcomes could include extending the original agreement by another year or introducing stricter compliance measures.

Should the Justice Department pursue criminal charges, Boeing could face severe repercussions, including financial penalties and possible restrictions on its business operations.

Families of the 737 MAX crash victims have long criticized the 2021 settlement, urging prosecutors to impose a fine of $25 billion and to hold Boeing accountable through criminal prosecution.

At a recent Senate hearing, Boeing CEO Dave Calhoun acknowledged the company’s safety failings and expressed apologies to the victims’ families.

Boeing stock has lost more than 14% in the last 12 months. Investors can gain exposure to the stock via IShares U.S. Aerospace & Defense ETF ITA and Invesco Aerospace & Defense ETF PPA.

Price Action: BA shares closed higher by 0.15% at $176.56 on Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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