Company Violated Deferred-Prosecution Agreement

Aircraft manufacturer Boeing avoided a messy trial and potentially much higher financial penalties by pleading guilty to a charge of conspiracy to defraud the federal government via the FAA.

The offense is a felony and grew out of two plane crashes in 2018 and 2019 involving its 737 MAX commercial jetliner operated by Indonesian airline Lion Air and Ethiopian Airlines.

The agreement requires Boeing to pay a fine of $243.6 million and spend at least $455 million in the next three years to strengthen its safety and compliance programs. An independent monitor to track progress and compliance will be appointed and will file annual reports. During that time Boeing will be on probation.

Relatives of the 346 victims who died in the crashes are not happy with the plea agreement and through their attorneys are urging the judge overseeing the case, Judge Reed O’Connor to reject the deal. 

A further requirement imposed by the deal is that Boeing’s board of directors will have to meet with the families.

The two accidents in the case were tied to the software for pilot management of the Maneuvering Characteristic Augmentation System (MCAS) that was designed to automatically push the aircraft’s nose down under certain conditions.

The fraud charge revolved around Boeing making false representations to the FAA about the software that cut costs for operators by requiring less training for pilots.

The guilty plea may threaten the company’s ability to obtain government contracts through the Department of Defense and NASA. Such deals are lucrative but the company could seek waivers.

FMI:  www.boeing.com/commercial/737max