Embattled aerospace company Boeing BA has agreed to plead guilty to criminal conspiracy to defraud the U.S. by allegedly misleading the Federal Aviation Administration regarding the safety of its 737 MAX, a late-Sunday court filing by the Department of Justice said, according to media reports.
What Happened: Boeing has agreed to pay up to $487.2 million, the maximum allowed by law, in criminal fines following an agreement in principle with the Justice Department. A judge will determine the actual fine amount, the DOJ reportedly said.
The agreement also requires Boeing to install a corporate monitor and spend at least $455 million to bolster its compliance and safety programs over the next three years. The implementation of the terms of the agreement is subject to court approval. The Arlington, Virginia-based company would also be subjected to three years of court-supervised probation.
A Boeing spokesperson confirmed the plea deal in an email reply to Benzinga. "We can confirm that we have reached an agreement in principle on terms of a resolution with the Justice Department, subject to the memorialization and approval of specific terms,” she said.
Paul Cassell. a law professor at the University of Utah who represents many family members of the 2018 Lion Air crash and 2019 Ethiopian Air crash victims, reportedly said, “This sweetheart deal fails to recognize that because of Boeing's conspiracy, 346 people died,” CNN reported.
"This deceptive and generous deal is clearly not in the public interest.”
The families are reportedly seeking a public trial on the charges.
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Why It’s Important: Boeing has found itself in trouble after 2 crashes involving its 737 Max aircraft in 2018 and 2019 killed 346 people. In Jan. 2021, the DOJ and Boeing announced an agreement to resolve the criminal charge related to a conspiracy to defraud the Federal Aviation Administration's Aircraft Evaluation Group. This agreement called for Boeing to pay a total criminal monetary amount of over $2.5 billion, composed of a penalty of $243.6 million, compensation payments to Boeing's 737 MAX airline customers of $1.77 billion, and the establishment of a $500 million crash-victim beneficiaries fund.
Just before the agreement was set to expire, Boeing suffered a setback after a fuselage panel blew off a 737 Max 9 jet operated by Alaska Airlines in early January. The DOJ said in May that the company breached the 2021 deferred prosecution agreement but the latter went onto defend itself, saying it disagreed with the Justice Department’s charges.
The guilty plea, though representing a low point in the company’s history, could help Boeing to leave the worst behind at a time it is facing strain in its finances and uncertainty regarding leadership, a Bloomberg report said.
Boeing ended Friday’s session up 0.28% to $184.83, according to Benzinga Pro data. The stock is down over 29% year-to-date and is among the worst-performing S&P 500 stocks.
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