Boeing agreed Sunday to plead guilty to one count of conspiracy to defraud the federal government following two fatal 737 Max crashes in 2018 and 2019, according to a late-night court filing.
In the settlement with the department, described in part in the court filing, Boeing also agreed to pay a $487.2 million penalty — the maximum allowed by law — and invest at least $455 million over the next three years to strengthen its compliance and safety programs.
The company will be placed on probation for three years, supervised by the U.S. District Court for the Northern District of Texas. As part of the probationary period, the Justice Department will appoint an independent compliance monitor to ensure that safety measures are in place and enforced, submitting annual reports to the government. The company will face additional penalties if any of the conditions are not met. The company’s board of directors will also be required to meet with the families of the crash victims.
Boeing’s decision to plead guilty is significant because the company has not been convicted of a federal crime in decades. In its filing, the department described the charge of conspiracy to defraud the federal government as “the most serious and easily provable offense.”
The settlement reached Sunday stems from violations of an agreement Boeing reached with the Justice Department in 2021 that it would make significant safety changes after the two fatal crashes. Under the Biden administration, the department has made it a priority to ensure companies like Boeing comply with those agreements.
The department and Boeing filed a joint brief Sunday night, informing the district court that they had reached a tentative agreement. The formal agreement will be filed in the coming week. The court will then schedule a hearing for the company to formally enter a guilty plea. The victims’ families will have a chance to speak at that hearing.
The victims’ families, who were notified of the broad terms of the settlement a week ago, said it did not go far enough. Paul G. Cassell, a lawyer for more than a dozen families, said they had sought an acknowledgement of liability in the deaths of 346 people killed in the crashes, which involved the troubled Boeing 737 Max in Indonesia and Ethiopia in late 2018 and early 2019. The families had hoped for harsher consequences for the company and its executives, including a trial.
The Justice Department acknowledged the families’ position in its court filing Sunday. In a separate filing, the families said they would oppose the deal and “intend to argue that the Boeing plea agreement unfairly gives Boeing concessions that other defendants would never receive and fails to hold Boeing accountable for the deaths of 346 people.”
Mr Cassell said the government’s deal with Boeing was “clearly not in the public interest”.
“This sweetheart deal ignores the fact that 346 people lost their lives because of Boeing’s conspiracy,” Cassell said. “Thanks to clever legal negotiations between Boeing and the Justice Department, the deadly consequences of Boeing’s crime are being obscured.”
Boeing’s decision to plead guilty does not grant its employees or executives any immunity. And the deal does not shield it from charges that could be brought in other investigations, including one into a Jan. 5 incident at Alaska Airlines in which a panel detached from a Boeing 737 Max shortly after the plane took off from an airport serving Portland, Oregon. While the explosion did not cause serious injuries, the incident could have been catastrophic if it had occurred minutes later, as the plane reached cruising altitude and flight attendants and passengers were moving around the cabin.
A Boeing spokeswoman confirmed that the company had reached an agreement with the Justice Department but declined to comment further.
The agreement updates a 2021 deferred prosecution agreement, reached in the final days of the Trump administration, that allowed Boeing to avoid criminal charges in the two fatal crashes. The company has already paid $500 million in restitution to the victims’ families and $243.6 million in fines.
The 2021 agreement with Boeing stipulated that the company would not commit any wrongdoing for three years. In May, the Justice Department said Boeing broke the agreement because the company failed to “design, implement and enforce” an ethics and compliance program across its operations to prevent and detect violations of U.S. fraud laws.
Under the 2021 agreement, the Justice Department said Boeing would only have to pay an additional $243.6 million if the company were found to be in violation. But a judge will ultimately decide whether the 2021 payment counts toward the total fine, said a Justice Department official, speaking on condition of anonymity to discuss the agreement. The judge will also decide how much additional restitution to pay at sentencing.
The 2021 indictment targeted two Boeing employees accused of withholding information from the Federal Aviation Administration about changes Boeing made to flight-control software involved in the two crashes.
Under the agreement, in addition to fines and restitution to victims’ families, Boeing paid more than $1.7 billion to its customers because they were unable to take delivery of 737 Max planes during a 20-month global ban on the aircraft.
In total, Boeing has spent about $20 billion because of the crashes, including fines, payments to families, reimbursements to airlines and other costs stemming from the FAA’s nearly two-year grounding of the 737 Max.
The Justice Department has faced competing pressures over how to punish already-struggling Boeing, one of the largest U.S. exporters and a major employer among the government’s major defense contractors. In 2023, nearly 40% of the company’s revenue came from U.S. government contracts.
Although full details of the deal were not included in the public court filing Sunday, Boeing is expected to get assurances from the government that a felony conviction will not interfere with its government contracts, reducing the impact of the charge on the company’s operations, said Mark Lindquist, an attorney for the families of the Max 8 crash victims who is now representing the passengers on the Alaska Airlines flight. Those exemptions would be separate from the plea deal, he added.
“While many of us would have preferred more vigorous prosecutions, a guilty plea to a crime is a serious step forward in accountability,” Lindquist said.
