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07/09/2024 |

Boeing to Plead Guilty to Fraud in 737 MAX Case

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Key Takeaways

  • Boeing to plead guilty to criminal fraud conspiracy.
  • Up to $487.2 million in fines.
  • Potential government contract suspensions
Plea Deal and Financial Penalties

BA (Boeing) has agreed to plead guilty to criminal fraud conspiracy in a Justice Department deal, reversing their previous ‘not guilty’ plea from January 2023. This agreement stems from Boeing‘s actions to mislead FAA regulators prior to two fatal 737 MAX crashes in Indonesia (2018) and Ethiopia (2019). The deal includes fines up to $487.2 million, $243.6 million of which were paid in a 2021 settlement. Additionally, Boeing will spend $455 million to enhance compliance and safety and will operate under a corporate monitor for three years.

Potential Implications and Challenges

The plea deal, which marks Boeing as a corporate felon, presents several new risks. It could be rejected by a judge, and families of the crash victims have vowed to oppose it. A criminal conviction might also jeopardize Boeing’s ability to contract with the federal government, its largest customer, potentially disrupting its business significantly. This agreement follows the revocation of legal protections from a 2021 deferred prosecution agreement related to the two 737 MAX crashes that resulted in 346 fatalities. Boeing‘s stock remained relatively flat following the news but is currently trading down over 28% on the year.