Justice Department Accuses Boeing Of 2021 Settlement Breach

The U.S. Justice Department has accused Boeing Co. BA of violating a 2021 settlement agreement concerning the company's involvement in two fatal 737 MAX crashes. 

The settlement had allowed Boeing to avoid prosecution by agreeing to certain compliance obligations. 

Recent findings suggest that Boeing failed to meet these commitments, potentially exposing the company to criminal charges, according to a report from the Wall Street Journal.

Boeing admitted in 2021 that two employees misled federal regulators about the 737 MAX, which contributed to the crashes. 

A subsequent agreement imposed a $2.5 billion penalty and required Boeing to enhance its compliance programs. 

However, in January, an incident involving an Alaska Airlines 737 MAX prompted a new investigation, raising fresh concerns about Boeing's safety culture.

The Justice Department's letter to a Texas federal court revealed that Boeing recently disclosed potential lapses in inspections and falsified records related to its 787 Dreamliner jets. 

These allegations further question whether Boeing has adhered to the compliance standards set forth in the 2021 agreement.

Also Read: Boeing's Commercial Plane Deliveries Decline In April In The Wake Of Manufacturing Adjustments

The Justice Department might seek to extend Boeing's probation or push for a guilty plea. "For failing to fulfill completely the terms of and obligations under the DPA, Boeing is subject to prosecution by the United States for any federal criminal violation," federal prosecutors stated in the court filing.

Boeing maintained that it has honored the 2021 agreement's terms and is prepared to respond to the Justice Department's findings. 

In April, Justice Department officials informed the families of 737 MAX crash victims that findings from the Alaska Airlines investigation could impact Boeing's 2021 settlement. 

Paul Cassell, representing the victims' families, welcomed the renewed scrutiny but called for more decisive action against Boeing.

The case underscores the increased scrutiny of corporate probation deals under the Biden administration. The Justice Department has previously taken action against companies like Telefonaktiebolaget LM Ericsson ERIC and Deutsche Bank AG DG for similar violations, emphasizing stricter enforcement and accountability.

Boeing's status as a government contractor could be at risk if a conviction occurs, although experts believe the company may still retain defense contracts despite a potential felony.

Boeing stock has lost more than 10% 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 are trading lower by 1.36% at $178.30 at the last check Wednesday. 

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

Photo Courtesy: Robin Guess Via Shutterstock