Boeing to plead guilty to fraud over 737 Max crashes
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NTSB investigators look over debris at the crash site of Ethiopian Airlines Flight 302 on March 12, 2019, in Bishoftu, Ethiopia. Photo: Jemal Countess/Getty Images
Boeing will plead guilty to a criminal fraud charge in connection with two fatal 737 Max crashes in Indonesia and Ethiopia, per a Department of Justice court filing late Sunday.
Why it matters: If approved by the judge overseeing the case, the deal would brand one of the largest aerospace companies in the world a felon — a standing that could hurt its defense business.
- At the same time, the deal falls short of what the families of the crash victims had wanted, including a criminal trial and a fine as high as almost $25 billion.
The big picture: As part of the agreement to plead guilty in the U.S. District Court in Texas, Boeing would pay $487.2 million in penalties and at least $455 million over three years on bolstering its compliance and safety programs.
- Paul Cassell, an attorney for families in the case that stems from a 2018 crash in Indonesia and another the following year in Ethiopia that killed 346 people in total, responded soon after by filing an objection, the Washington Post notes.
- The families "intend to argue that the plea deal with Boeing unfairly makes concessions to Boeing that other criminal defendants would never receive and fails to hold Boeing accountable" for those who died in the crashes, per the New York Times.
The intrigue: Shares of Boeing traded higher on Monday as investors viewed the news as resolving one of the company's open questions.
What they're saying: "This sweetheart deal fails to recognize that because of Boeing's conspiracy, 346 people died," Cassell said, according to the NYT.
- "Through crafty lawyering between Boeing and D.O.J., the deadly consequences of Boeing's crime are being hidden."
- Representatives for the DOJ did not immediately respond to Axios' request for comment.
The other side: "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," per a Boeing statement early Monday.
Context: Following the Ethiopian Airlines crash in 2019, the Federal Aviation Administration grounded Boeing's 737 MAX series aircraft for some 20 months.
- The DOJ alleged in May that Boeing had breached the terms of a more lenient punishment issued as part of a 2021 agreement.
- Boeing had agreed to pay more than $2.5 billion to settle criminal charges related to the actions of two employees who withheld information from the FAA about changes made to the MCAS software that was implicated in both crashes.
- But about 70% of that amount were payments Boeing had already agreed to make to its airline customers, CNN notes.
Zoom in: Both crashes were caused by a combination of faulty readings from flight sensors and an automatic flight control feature meant to guard against a stall by automatically pushing the plane's nose down, according to the National Transportation Safety Board.
- In both cases, the program, called Maneuvering Characteristics Augmentation System, forced the planes' noses down after receiving faulty readings and the pilots could not correct its input.
Zoom out: Boeing has faced further federal investigations this year after a mid-air blowout with one of its 737 MAX 9 jets during an Alaska Airlines flight in January reignited safety concerns.
More from Axios:
- Boeing CEO Dave Calhoun to step down in wake of safety issues
- FAA opens new probe into Boeing over 787 Dreamliner inspections
- Boeing sanctioned by NTSB for "blatantly" violating investigative rules
- Boeing "far from perfect" but improving, embattled CEO tells Congress
Editor's note: This article has been updated with new details throughout.
