In agreement with prosecutors, Boeing admits 737 MAX deception, will pay $2.5 billion
Boeing and federal prosecutors on Thursday entered into an agreement on a criminal charge related to the company’s conspiracy to defraud the Federal Aviation Administration in connection with an evaluation of the aircraft manufacturer’s 737 MAX.
Boeing will pay a criminal penalty of $243.6 million and compensation payments to Boeing’s 737 MAX airline customers of $1.77 billion. It will establish a $500 million crash-victim beneficiaries fund to compensate the heirs, relatives and legal beneficiaries of the 346 passengers who died in the Boeing 737 MAX crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302.
Boeing entered into the deferred prosecution agreement in connection with a criminal information filed on Thursday in U.S. District Court that charged the company with conspiracy to defraud the United States.
Fort Worth-based American Airlines, which operates 24 MAX aircraft and intends to add 16, last week became the first major carrier to put the plane back into service.
“The misleading statements, half-truths, and omissions communicated by Boeing employees to the FAA impeded the government’s ability to ensure the safety of the flying public,” Erin Nealy Cox, the U.S. Attorney
for the Northern District of Texas, wrote in a statement. “This case sends a clear message: The Department of Justice will hold manufacturers like Boeing accountable for defrauding regulators — especially in industries where the stakes are this high.”
Boeing admitted that two of its 737 MAX flight technical pilots deceived the FAA aircraft evaluation group about an important aircraft part that impacted the flight control system of the Boeing 737 MAX. Because of the deception, a key document published by the FAA lacked information about the part, and in turn, airplane manuals and pilot-training materials for U.S.-based airlines lacked information about it, the U.S. Attorney’s Office in Dallas said.
In November 2016, two of Boeing’s 737 MAX flight technical pilots discovered information about an important change to the control system part. Rather than sharing information about this change with the FAA, Boeing concealed the information and deceived the FAA about the part, the U.S. Attorney’s Office said.
In October 2018, Lion Air Flight 610, a Boeing 737 MAX, crashed shortly after takeoff into the Java Sea near Indonesia. All 189 passengers and crew members on board died. After the crash, the FAA learned that the control system part activated during the flight and may have played a role in the crash.
In March 2019, Ethiopian Airlines Flight 302, a Boeing 737 MAX, crashed shortly after takeoff near Ejere, Ethiopia. All 157 passengers and crew members on board died. Following the Ethiopian Airlines crash, the FAA learned that the part activated during the flight and may have played a role in the crash.
David Calhoun, Boeing’s president and chief executive officer, wrote to employees that the agreement “appropriately acknowledges how we fell short of our values and expectations.”
This story was originally published January 7, 2021 at 6:53 PM.
