Boeing pleads guilty, must pay $243.6 million in controversial settlement

Boeing has agreed to plead guilty to a criminal fraud conspiracy charge after the United States found the company violated an agreement intended to reform it following two fatal crashes of its 737 Max planes that killed 346 passengers and crew.

The Department of Justice (DoJ) said the planemaker had also agreed to pay a criminal fine of $243.6 million (£190 million).

However, families of those who died on those flights five years ago have criticized the settlement, calling it a “sweetheart deal” that would allow Boeing to avoid taking full responsibility for the deaths.

By pleading guilty, Boeing will avoid the spectacle of a criminal trial, which the victims’ families are demanding.

The airline has been in crisis over its safety record since two nearly identical crashes involving 737 Max planes in 2018 and 2019 led to the plane being grounded worldwide for more than a year.

In 2021, prosecutors charged Boeing with one count of conspiracy to defraud regulators, alleging it misled the Federal Aviation Administration (FAA) about its MCAS flight control system, which was implicated in both crashes.

It agreed not to sue Boeing if the company paid a penalty and met a three-year period of enhanced monitoring and reporting.

But in January, shortly before that period ended, a door panel on a Boeing operated by Alaska Airlines exploded shortly after takeoff, forcing the plane to land.

No one was injured in the incident, but it has heightened scrutiny of Boeing’s progress in improving safety and quality.

In May, the Justice Department said it found that Boeing had violated the terms of the agreement, opening the possibility of prosecution.

Boeing’s decision to plead guilty remains a significant black mark on the company because it means the company – which is a major military contractor to the US government – now has a criminal record.

It is also one of the two largest commercial aircraft manufacturers in the world.

It is not yet clear to what extent a criminal record could affect the company’s operations. The government generally prohibits or suspends companies with criminal records from participating in tenders, but it can grant exemptions.

However, Paul Cassell, a lawyer representing some of the families of those killed in the 2018 and 2019 flights, said: “The memory of the 346 innocent people killed by Boeing demands more justice than this.”

In a letter to the government in June, he urged the Justice Department to fine Boeing more than $24 billion.

Ed Pierson, executive director of the Aviation Safety Foundation and a former Boeing executive, said the appeal was “extremely disappointing” and “a terrible case for justice.”

“Instead of holding individuals accountable, they are just giving them another get-out-of-jail-free card,” he said.

A Boeing 737 Max operated by Indonesian airline Lion Air crashed in late October 2018 shortly after takeoff, killing all 189 people on board. A few months later, an Ethiopian Airlines plane crashed, killing all 157 passengers and crew.

As part of the 2021 settlement, Boeing also agreed to pay $2.5 billion to resolve the matter, including a $243 million criminal penalty and $500 million to a victims’ fund.

The deal has outraged family members, who were not consulted on the terms and have called for the company to be tried.

Senior Justice Department officials have recommended prosecution, CBS News, the BBC’s U.S. news partner, reported in late June.

At a hearing in June, Sen. Richard Blumenthal said he believed there was “almost overwhelming evidence” to support the prosecution.

Lawyers for the family members said the Justice Department was concerned it did not have a strong case against the company.

Mark Forkner, a former Boeing technical pilot who was the only person to face criminal charges stemming from the incident, was acquitted by a jury in 2022. His lawyers had argued he was being used as a scapegoat.

Mark Cohen, a professor emeritus at Vanderbilt University who has studied corporate sanctions, said prosecutors often prefer plea deals or deferred prosecution agreements, which allow them to avoid the risk of a trial and can give the government more power over a company than a traditional sentence.

“Because it’s easier to get than a trial, it may lessen the burden on the prosecutor, but the prosecutor may also think it’s a better sanction (because) they may be able to impose requirements that aren’t normally in the sentencing guidelines,” he said.

He said there was no doubt that Boeing’s status as a key government contractor played a role in determining how to proceed.

“We have to think about the collateral consequences,” he said. “We don’t take these kinds of cases lightly.”

The MCAS problems were not Boeing’s first run-in with the law.

The company has also paid millions of dollars in fines to the Federal Aviation Administration since 2015 to resolve a series of complaints about improper manufacturing and other problems.

The company also continues to face investigations and lawsuits sparked by the January incident on the Alaska Airlines flight.