Boeing and the U.S. Department of Justice on Thursday (January 8) reached an agreement by which the American airline manufacturer will pay more than $2.5 billion in fines and compensation over two plane crashes that killed a total of 346 people and led to the grounding of its 737 MAX jetliner.
The compensation amount includes $243.6 million fine, $1.77 billion compensation to airlines and a $500 million crash-victim fund over fraud conspiracy charges related to the plane’s defective design. The settlement will help Boeing avoid prosecution. However, the global airline maker will now have to adopt a new compliance program, or change its existing one, to have a robust system of internal controls to weed out fraud.
The agreement with Justice Department puts an end to a near two-year probe into the design and development of the 737 MAX carrier after two crashes – in Indonesia and Ethiopia in 2018 and 2019 respectively.
The crashes “exposed fraudulent and deceptive conduct by employees of one of the world’s leading commercial airplane manufacturers,” acting Assistant Attorney General David Burns said on the agreement.
“Boeing’s employees chose the path of profit over candor by concealing material information from the US Federal Aviation Administration (FAA) concerning the operation of its 737 MAX airplane and engaging in an effort to cover up their deception,” Burns said, referring to the Federal Aviation Administration.
The two accidents invited high-level probes and dented Boeing’s image and finances (the company has lost $20 billion worth business since then).
The 737 MAX was banned from flying in 2019. The ban sustained till November 2020 and was lifted only after Boeing made significant safety upgrades and improvements in pilot training.
Boeing confessed in the court that two of its 737 MAX technical pilots deceived the Federal Aviation Administration (FAA) about a safety system, which caused both the accidents.
Boeing Chief Executive David Calhoun wrote to Boeing employees that the agreement “appropriately acknowledges how we fell short of our values and expectations.”
The agree document clearly states that the $243 million fine represents “the amount of money Boeing saved by not implementing full-flight simulator training for the 737 MAX”.
Last year, Airbus — European aircraft manufacturer and Boeing’s main rival — agreed to a record $4 billion settlement with France, Britain and the United States over allegations of bribery and fraud.