Prosecutors said two Boeing pilots withheld key information from the Federal Aviation Administration about a new automated control system for the Max. That system was implicated in both crashes, causing them to go into uncontrolled dives.
By agreeing to plead guilty Because of a single felony count filed just before a midnight deadline Sunday, the company will avoid going to trial in the high-profile case.
The Justice Department filed the plea deal paperwork in a Texas federal court late Sunday, setting up a hearing at which family members — who have criticized the pending deal — will be allowed to speak. The court will then decide whether to accept the plea deal.
Boeing had already agreed to pay $2.5 billion in penalties and restitution in 2021. Under the new agreement, the company will pay an additional $487.2 million in penalties, agree to oversight by an independent monitor, spend at least $455 million to strengthen compliance and safety programs and be placed on supervised probation for about three years, according to a Justice Department official.
The deal also included something that families of the crash victims had long demanded: a meeting with Boeing’s board of directors.
“This criminal conviction demonstrates the department’s commitment to holding Boeing accountable for its misconduct,” the Justice Department official said.
It’s rare for a company of Boeing’s stature to plead guilty to a crime, and the moment marks a new low for the century-old planemaker’s already battered reputation. The plea underscores the long-standing shadow of fatal crashes and also comes as Boeing tries to rebuild trust with regulators and passengers amid a new safety crisis that began in January when a panel detached from the side of a newer Max model in mid-flight.
In a statement, Boeing confirmed that it had reached “a tentative settlement agreement with the Department of Justice, subject to the achievement and approval of specific conditions.”
The court filing Sunday did not include information about what waivers Boeing, with its myriad defense and space contracts, might have to seek if its conviction triggers bans on federal agency procurement.
Paul Cassell, an attorney for the affected families and a professor at the University of Utah’s S.J. Quinney School of Law, immediately filed an objection to the deal on their behalf.
“Through cunning negotiations between Boeing and the Justice Department, the deadly consequences of Boeing’s crime are being covered up,” Cassell said.
Erin Applebaum, a partner at Kreindler & Kreindler, who worked with Cassell to represent the family members, added: “We are extremely disappointed that the Justice Department is moving forward with this wholly inadequate plea agreement despite the families’ strong opposition to its terms.”
The criminal case focused on the design of the Max, an updated version of the hugely popular single-aisle 737. Boeing was racing to put the plane into service in the 2010s, competing with European rival Airbus, which also had a new model. The automated system involved in the crashes — which was supposed to push the plane’s nose down limit circumstances — was necessary because of new, larger engines on the Max.
Prosecutors said the two technical pilots withheld information from an FAA watchdog office that the automated system could be triggered under a wider range of conditions, leading to mention of the system being removed from a safety report. That means airline pilots in the United States and around the world haven’t had to undergo costly training on the new system. But it also means pilots did not know how it worked. The FAA office was only informed of the expanded scope of the system’s operations after the first accident, prosecutors said.
In January 2021, the Justice Department and Boeing announced that they had reached a deferred prosecution agreement that would allow the company to avoid criminal charges.
Under the three-year agreement, Boeing acknowledged that its technical pilots misled federal regulators about the software system and was charged with one count of fraud. One of those pilots was acquitted by a federal jury in 2022 of charges that he lied to the Federal Aviation Administration about changes to the software system. His defense argued publicly before trial that the pilot, Mark Forkner, was the scapegoat.
Boeing agreed to pay $500 million to victims’ families, strengthen its internal fraud detection and prevention programs and cooperate in future investigations or prosecutions. The agreement expired two days after an Alaska Airlines 737 fuselage door panel exploded in mid-air in January, an incident that remains the subject of a criminal investigation by federal authorities.
In May, federal prosecutors concluded that Boeing violated terms of the 2021 agreement, in part by failing to create agreed-upon compliance and ethics programs.
The families of the crash victims were not consulted about the initial settlement between Boeing and the Justice Department. But they successfully defended their right to be heard in court and received briefings about the case from prosecutors this year.
John C. Coffee, a law professor and director of the Center on Corporate Governance at Columbia Law School, said the inclusion of an effective federal monitor will be essential to ensuring that Boeing meets its obligations under the agreement.
“I have long said that the greatest failure of the old [deferred prosecution agreement] “It’s that he hasn’t created an effective observer,” he said by email. “But the two sides are likely to fight fiercely over how much power the observer should have.”
Relatives of the crash victims have pushed prosecutors to take a tougher line against the aerospace giant, especially after the mid-air explosion earlier this year. While no one was seriously injured in that crash, multiple investigations into the calamity — including those conducted by Boeing itself — have revealed myriad deficiencies in the company’s manufacturing and quality control systems.
A preliminary report by the National Transportation Safety Board, which is investigating the Jan. 5 crash, found that the bolts holding the door panel together were not replaced after the part was removed to make repairs to another part of the plane as it was going through final assembly at Boeing’s Renton, Washington, plant. Boeing’s internal investigation found that documentation justifying the removal of that part of the plane was never created, a violation of company policy.
While the crashes of a Lion Air plane in October 2018 and an Ethiopian Airlines flight five months later in March 2019 Although linked to design issues with the Max, the January problems have been linked to problems at Boeing’s manufacturing plant outside Seattle.
The FAA audited the company’s production line and launched its own investigation, demanding fixes to ensure every plane that leaves the factory is built to specifications. The agency took the unusual step of barring Boeing from increasing the number of 737 Max planes This is done every month, until regulators are satisfied that improvements have been implemented.
Boeing has been accused of fraud by the government before. In 2006, the company settled a bribery case over a space launch contract by paying $615 million in civil and criminal penalties. As part of that settlement, the government agreed not to pursue criminal charges against Boeing after saying the company cooperated with its investigation.
As Boeing tries to recover from the current crisis, it announced in recent days a deal to acquire Spirit AeroSystems, a supplier that makes the Max fuselage, in a bid to gain greater control over its supply chain. But the task of rebuilding the company’s reputation will largely fall to a new chief executive. Current CEO Dave Calhoun plans to step down at the end of the year.
