Boeing Co will pay over US$ 2.5 billion to resolve a U.S. investigation into criminal conspiracy charges related to two deadly 737 MAX crashes that killed 346 people, the Justice Department said, but the plane maker will not be required to plead guilty.
The settlement includes a criminal fine of US$ 243.6 million and compensation payments to Boeing’s 737 MAX airline customers of US$ 1.77 billion, the Justice Department said. It also establishes a US$ 500 million crash-victim beneficiaries fund to compensate heirs, relatives, and legal beneficiaries of passengers killed.
The 737 MAX crashes in Indonesia and Ethiopia killed 346 people within five months in 2018 and 2019. They triggered a hailstorm of investigations, frayed U.S. leadership in global aviation and have cost Boeing some US$ 20 billion.
Because of the crashes, the U.S. Congress in December passed legislation reforming how the Federal Aviation Administration (FAA) certifies new airplanes.
“The tragic crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302 exposed fraudulent and deceptive conduct by employees of one of the world’s leading commercial airplane manufacturers,” said Acting Assistant Attorney General David P. Burns.
“Boeing’s employees chose the path of profit over candor by concealing material information from the FAA concerning the operation of its 737 Max airplane and engaging in an effort to cover up their deception.”
Boeing said it expects to incur additional charges of US$ 743.6 million in the fourth quarter as part of the settlement.
In March, 2019, the 737 Max was grounded. The grounding was just lifted in November, 2020, after Boeing made significant safety upgrades and improvements in pilot training.
Boeing was charged with one count of conspiracy to defraud the United States. The largest U.S. airplane manufacturer faces a three-year deferred prosecution agreement, with the charge dismissed if it complies.
Boeing admitted in court documents that two of its 737 MAX flight technical pilots deceived the FAA about a safety system called MCAS, which was tied to both fatal crashes.
Boeing Chief Executive David Calhoun said in a statement the agreement “appropriately acknowledges how we fell short of our values and expectations.”
The deal comes almost exactly a year after European rival Airbus agreed a record US$ 4 billion settlement with France, Britain and the United States over allegations of bribery, fraud and corruption. Together, the Boeing 737 MAX safety scandal and the probe into the use of middlemen at Airbus represent the worst crises to hit the world’s largest plane makers in decades and have left both rivals facing new compliance obligations.