Boeing to plead guilty to fraud charge over 737 Max crash deal

Boeing is to plead guilty to conspiracy to defraud the US government after it violated a deal struck with the Department of Justice in the wake of two deadly crashes involving its 737 Max aircraft, prosecutors said in a court filing on Sunday.

The US aerospace group faces a fine of $487.2mn, the maximum by law, a justice official said. Boeing is expected to pay half that sum, subject to court approval, given it has already paid $243.6mn over the matter.

The official said the proposed plea agreement over the one charge did not involve immunity for individual staff, including executives. It only applies to misconduct preceding the 737 Max crashes and does not shield Boeing for any other conduct, including the mid-air blowout aboard an Alaska Airlines flight this year, the official added.

Boeing confirmed it had “reached an agreement in principle on terms of a resolution with the justice department”.

A lawyer for the families of the 346 people who were killed in the 737 Max crashes — off the coast of Indonesia in 2018 and in Ethiopia in 2019 — called the agreement a “sweetheart deal” that failed to hold Boeing accountable. After the crashes the jet was grounded worldwide for nearly two years.

“The plea deal . . . unfairly makes concessions to Boeing that other criminal defendants would never receive,” the families argued in a court filing. “As a result, the generous plea agreement rests on deceptive and offensive premises.”

Under the proposed agreement, Boeing will have to invest at least $455mn over the next three years to improve compliance and safety programmes, and work with an independent compliance monitor picked by the justice department. There would be no cap on any restitution that a court could demand the company make to victims’ families.

The criminal conviction could affect Boeing’s eligibility to win US defence contracts, a pillar of its business.

The department offered Boeing the plea deal last week as an alternative to facing a criminal trial.

The company was charged in 2021, with Boeing admitting it had deceived federal aviation regulators about flight-control software installed on the 737 Max. The software could be erroneously triggered to push the nose of the jet downward.

Following that charge, the department deferred prosecution and agreed to dismiss the charge as long as Boeing adhered to a compliance programme established after the crashes.

However justice officials this year notified Boeing it had breached the earlier deal after a door panel blew off a jet in January during a commercial flight. Boeing disputed that it had violated the agreement.

Boeing paid $2.5bn under the 2021 deal, of which $244mn went towards fines. Another $500mn established a fund for the families of crash victims, while the bulk of the payment went to airlines, which are the company’s customers.

The families of those killed have been fighting Boeing and the justice department in federal court in Texas. In October 2022 Judge Reed O’Connor ruled that the families legally qualified as crime victims, a status that requires the department to confer with them.

O’Connor will now need “to decide whether this no-accountability deal is in the public interest”, said Paul Cassell, an attorney representing the families.

He said the families would ask the judge “to reject this inappropriate plea and simply set the matter for a public trial, so that all the facts surrounding the case will be aired”.