In a recent development, Boeing BA has agreed to plead guilty to defrauding the U.S. government over safety failures. However, experts predict that the impact on the company will be minimal.
What Happened: According to experts, Boeing’s stock price, credit rating, or U.S. government revenue will have a negligible impact, Financial Times reported on Tuesday.
Moody’s Jonathan Root said, "The dollar amount of the fine is of a size that is not material to our view of the credit profile,"
"The problem is this settlement gives you the idea that justice can be bought — and bought very cheaply," said Prataj Chatterjee, executive director of watchdog group CorpWatch.
Specialists in government contracting also anticipate that Boeing will retain its ability to supply the Pentagon. Paul Seidman, a partner at Seidman & Associates, said it would be “unusual: for a large firm like Boeing to be suspended or disbarred as they are essential to defense and competition is limited.
Why It Matters: Boeing reached a settlement with the U.S. Department of Justice to admit to misleading aviation regulators about flight control software that led to two fatal crashes of the 737 Max. The plea deal includes a fine of approximately $487 million, half of which has already been paid by Boeing. The company is also required to invest $455 million into safety and compliance programs.
Former Secretary of Labor, Robert Reich, commented on Boeing’s market position following years of safety concerns and the plea deal. He stated that the plea deal symbolizes what is wrong with American capitalism.
Price Action: At the time of writing, Boeing was trading 0.15% higher at $186.11 on Tuesday pre-market after closing at $185.84 on Monday, as per Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
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