Boeing to Plead Guilty to Criminal Fraud Charge in 737 Max Probe

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Skift Take

If the plea deal is accepted by the judge, it would make The Boeing Company a convicted felon. This in itself could have serious consequences for the firm.

Boeing has agreed to plead guilty to misleading U.S. safety regulators. According to a court filing, the plane-maker will formally acknowledge guilt and accept additional punishment due to its recent actions. These center on dealings with the Federal Aviation Administration (FAA) following fatal crashes involving the company’s 737 Max aircraft in 2018 and 2019.

By pleading guilty, Boeing will avoid a potentially lengthy and reputationally damaging criminal trial. However, the decision is not without risks of its own. By accepting a guilty plea, Boeing will become a convicted felon. 

This is significant as the U.S. government typically bars or suspends work with companies that have criminal records. Boeing’s status, with major defense contracts as well as its passenger jet business, could mean a waiver is granted. 

The Department of Justice (DOJ) said Boeing had also agreed to pay a criminal fine of $243.6m. The decision was disclosed in a filing by the DOJ at a federal court in Fort Worth, Texas.

Reaction from Victims’ Families

Representatives for families of some of the victims of the two crashes have been quick to respond to the news. “This sweetheart deal fails to recognize that because of Boeing’s conspiracy, 346 people died. Through crafty lawyering between Boeing and DOJ, the deadly consequences of Boeing’s crime are being hidden,” said attorney Paul Cassell. 

As previously reported by Skift, the DOJ initially entered a deferred prosecution agreement with Boeing over charges of defrauding the federal government in concealing certain information on the Max 8.

But DOJ prosecutors said in May that they believed Boeing had violated the terms of that agreement. Through this process, Boeing paid $2.5 billion to avoid criminal prosecution.

Plea Deal in Context

The developments follow a turbulent few weeks for Boeing. In late June, the National Transportation Safety Board (NTSB) sanctioned the firm after the plane-maker shared “non-public investigative information” with the media relating to the 737 Max safety probe. 

The agency alleged that Boeing “blatantly violated NTSB investigative regulations” in a media briefing. As well as sharing details of the investigation with the press, the NTSB said Boeing speculated about possible causes of the Alaska Airlines door-plug blowout on January 5. Boeing said it “deeply regretted” the information breach.

The blowout led the Federal Aviation Administration to ground the Max 9 — a different 737 Max variant from the one involved in the DOJ case —  for nearly a month. The agency also halted the production expansion of the 737 Max line, which has led major airlines to face delivery delays.

Southwest Airlines has trimmed its outlook due to certification issues with the Max 7 and United Airlines, a big Boeing customer, has been rethinking its fleet plans.

Boeing did not immediately respond to a request for comment.

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