Boeing to Plead Guilty to Fraud in 737 Max Crashes, Faces $487 Million Fine

On Monday, July 8th, Boeing announced its agreement to plead guilty to a criminal fraud charge related to two fatal 737 Max crashes. This plea deal, which awaits federal judge approval, could see Boeing paying up to $487.2 million in fines, though the United States Justice Department has recommended crediting the company for half that amount paid under a previous settlement, reducing the fine to $243.6 million.

The deal stems from accusations that Boeing defrauded the Federal Aviation Administration (FAA) by misleading regulators about the flight-control system implicated in the crashes of Lion Air Flight 610 in October 2018 and Ethiopian Airlines Flight 302 in March 2019. These crashes resulted in the deaths of all 346 people on board. 

The plea agreement requires Boeing to operate under the supervision of an independent compliance monitor for three years and invest at least $455 million in compliance and safety programs. Additionally, Boeing’s board of directors will meet with the families of the crash victims. Despite these measures, many victims’ families are dissatisfied with the deal, calling it a “sweetheart deal” and demanding a public trial.

Paul Cassell, a lawyer representing several victims’ families, criticized the agreement, stating, “This sweetheart deal fails to recognize that because of Boeing’s conspiracy, 346 people died. It is an atrocious abomination.” Another family member, Zipporah Kuria, who lost her father in the Ethiopian Airlines crash, described the agreement as a “miscarriage of justice.”

Boeing’s guilty plea follows a series of safety and manufacturing crises for the aerospace giant. In January, a door panel on a 737 Max operated by Alaska Airlines blew out mid-flight, further damaging Boeing’s reputation. This incident, combined with previous issues, led to the Justice Department reconsidering the 2021 settlement, which had originally shielded Boeing from prosecution for three years.

Despite the company’s financial troubles, including core operating losses of $31.9 billion since the second 737 Max crash and nearly $47 billion in long-term debt, Boeing’s investors reacted positively to the plea deal, with shares rising by 3% in morning trading.

Boeing’s continued relationship with the U.S. government, which accounted for 32% of its $78 billion revenue last year, remains critical. The company avoids losing its right to conduct business with the government, a penalty that could have been devastating. Richard Aboulafia, managing director at AeroDynamic Advisory, emphasized the mutual reliance between Boeing and the federal government, noting the company’s significant role in the U.S. economy.

The agreement marks a significant moment for Boeing as it seeks to move past its recent crises and restore trust in its commitment to safety and compliance.