Boeing (NYSE:BA) has agreed to plead guilty to a criminal fraud conspiracy charge and pay a $243.6 million fine to settle a U.S. Justice Department (DOJ) investigation into two fatal 737 MAX crashes, according to a court filing on Sunday.
This plea deal, pending a judge's approval, would label Boeing as a convicted felon for the crashes in Indonesia and Ethiopia that occurred over five months in 2018 and 2019, resulting in 346 deaths.
The settlement has faced immediate backlash from the victims' families, who demand a trial and more severe financial penalties for Boeing. The DOJ’s move to charge Boeing intensifies an ongoing crisis for the company, which has faced continuous safety and quality issues, highlighted by a separate in-flight incident in January.
A guilty plea could jeopardize Boeing's ability to secure valuable government contracts with entities like the U.S. Defense Department and NASA, although the company may seek waivers. The Justice Department found in May that Boeing violated a 2021 settlement related to the crashes, making it vulnerable to criminal prosecution.
The plea deal, however, helps Boeing avoid a potentially contentious trial that could further scrutinize its decisions before the fatal crashes. This resolution could also facilitate Boeing’s plans, including the upcoming transition to a new CEO and the approval of its proposed acquisition of Spirit AeroSystems.
A Boeing spokesperson confirmed that the company had "reached an agreement in principle on terms of a resolution with the Justice Department."
Under the deal, Boeing committed to spending at least $455 million over the next three years to enhance safety and compliance programs. Moreover, Boeing's board will meet with the relatives of those killed in the MAX crashes.
An independent monitor will oversee Boeing's compliance, filing annual progress reports publicly, and the company will be on probation during this three-year term.
Lawyers representing some of the victims' families intend to urge Judge Reed O'Connor, who is overseeing the case, to reject the deal. They referenced O'Connor's February 2023 statement: "Boeing's crime may properly be considered the deadliest corporate crime in U.S. history."
Erin Applebaum, a lawyer with Kreindler & Kreindler LLP representing some of the victims' families, criticized the settlement as a "slap on the wrist."
Last month, families of the victims urged the Justice Department to pursue up to $25 billion in penalties.
The DOJ and Boeing are finalizing the written plea agreement, which is expected to be filed in federal court in Texas by July 19, according to the DOJ's court filing.