Rescuers work at the site of an Ethiopian Airlines plane crash near Bishoftu or Debre Zeit south of Addis Ababa in Ethiopia on Monday, March 11, 2019.
Mulugeta Aini | Reuters
Boeing Boeing Co. has agreed to plead guilty to criminal fraud linked to two deadly 737 Max crashes, a decision that brands the U.S. aviation giant a criminal but allows it to avoid trial as it tries to turn the page on safety and manufacturing crises.
Under the agreement, Boeing will face a fine of up to $487.2 million, though the Justice Department recommended the court award Boeing half of that amount, which it paid under a previous agreement, resulting in a fine of $243.6 million. The plea agreement requires approval from a federal judge to go into effect.
If the deal goes through, it could complicate Boeing’s ability to sell products to the U.S. government as criminal, though the company could seek exemptions. About 32% of Boeing’s roughly $78 billion in revenue last year came from its Defense, Space and Security unit.
A Defense Department official said Monday that the department will evaluate Boeing's plans to repair the damage and its agreement with the Justice Department “to determine the necessary and appropriate steps to protect the federal government.”
The plea deal also calls for an independent monitor to oversee Boeing’s compliance for three years during a probationary period. Boeing will also have to invest at least $455 million in compliance and safety programs, according to a court filing.
Boeing also agreed to have its board of directors meet with family members of the crash victims.
The U.S. Justice Department unveiled the agreement late Sunday, months after U.S. prosecutors said the airline giant had violated a 2021 settlement that shielded it from prosecution for three years.
The plea offer forced Boeing to choose between pleading guilty and conditions attached, or going to trial, at a time when the company was seeking to move past a manufacturing and safety crisis, choose a new CEO and acquire an airframer. Spirit Aerosystems.
“We can confirm that we have reached an agreement in principle on the terms of the resolution with the Department of Justice, subject to the filing and approval of certain conditions,” Boeing said in a statement after filing the lawsuit with the court.
In May, the U.S. Justice Department said Boeing had violated the 2021 settlement. Under the deferred prosecution agreement, Boeing agreed to pay $2.5 billion, including a $243.6 million criminal fine, restitution to the airlines, and a $500 million fund for victims’ families.
The 2021 settlement was set to expire two days after a door panel on a nearly new Boeing 737 Max 9 exploded. Alaska Airlines On January 5, there were no serious injuries, but the accident caused a new safety crisis for Boeing. A preliminary report from the National Transportation Safety Board found that the main bolts holding the door panel in place were not attached to the plane.
The United States has charged Boeing with conspiring to defraud the government by misleading regulators about its inclusion of a flight control system on the Max that was later implicated in two crashes — a Lion Air flight in October 2018 and an Ethiopian Airlines flight in March 2019. All 346 people on board the flights were killed.
U.S. prosecutors told families of the crash victims on June 30 that they planned to seek a guilty plea from Boeing, a plan the family's lawyers described as a “sweetheart deal.”
Shortly after the plea deal was entered in federal court late Sunday, family members of the victims said in a filing of their own that they would oppose the plea deal, arguing that it “offers unfair concessions to Boeing that other criminal defendants will never receive, and fails to hold Boeing accountable for the deaths of 346 people.”
Paul Cassell, an attorney for the victims' families, said the judge should reject the deal “and simply set the case for a public trial, so that all the facts surrounding the case are presented in a fair and open forum to the jury.”
The agreement stipulates that the company monitor who will oversee Boeing's probationary period will be independent, one aspect of the agreement aimed at resolving concerns raised by lawyers for the victims' families.
The agreement also provides for no cap on the compensation Boeing can pay to the families of surviving victims. However, lawyers said Boeing should go to trial.
“Boeing is a huge company,” said Erin Applebaum, another attorney for the family. “Whatever check they write to the families, it won’t bring them home.”
