Boeing’s 737 Max aircraft was grounded worldwide back in March 2019 following two crashes, killing 346 passengers. Now Boeing is facing up to criminal charges, and it’s going to cost the company over $2.5 billion dollars.
The Department of Justice reports that Boeing has entered into an agreement relating to “a conspiracy to defraud the Federal Aviation Administration’s Aircraft Evaluation Group (FAA AEG) in connection with the FAA AEG’s evaluation of Boeing’s 737 MAX airplane.” The company is charged with one count of conspiracy to defraud the United States, and has accepted a deferred prosecution agreement (DPA) with a huge payout attached.
Boeing will pay a criminal monetary penalty of $243.6 million, compensation to Boeing 737 Max airline customers of $1.77 billion, and will establish a $500 million crash-victim beneficiaries fund “to compensate the heirs, relatives, and legal beneficiaries of the 346 passengers who died in the Boeing 737 MAX crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302.”
The company has admitted in court documents that it chose to deceive the FAA regarding the Maneuvering Characteristics Augmentation System (MCAS), which forms an important part of the flight control system on the 737 Max. It led to FAA documents lacking information about the MCAS, which in turn meant airplane manuals and pilot-training materials also lacked vital information about MCAS.
“The tragic crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302 exposed fraudulent and deceptive conduct by employees of one of the world’s leading commercial airplane manufacturers,” said Acting Assistant Attorney General David P. Burns of the Justice Department’s Criminal Division. “Boeing’s employees chose the path of profit over candor by concealing material information from the FAA concerning the operation of its 737 Max airplane and engaging in an effort to cover up their deception. This resolution holds Boeing accountable for its employees’ criminal misconduct, addresses the financial impact to Boeing’s airline customers, and hopefully provides some measure of compensation to the crash-victims’ families and beneficiaries.”
David L. Calhoun, Boeing President and Chief Executive Officer, said in a note to employees: “I firmly believe that entering into this resolution is the right thing for us to do—a step that appropriately acknowledges how we fell short of our values and expectations. This resolution is a serious reminder to all of us of how critical our obligation of transparency to regulators is, and the consequences that our company can face if any one of us falls short of those expectations.”
Since the grounding of all 737 Max aircraft Boeing has worked to regain regulatory approval to start selling the Max once again. The FAA cleared the aircraft to return to service on Nov. 18 last year and that was followed by an American Airlines demonstration flight on Dec. 3. American started offering a 737 Max passenger service on Dec. 29.
