Boeing (Boeing) reached an agreement with the U.S. Department of Justice on July 7 to reach a $2.5 billion settlement in a criminal investigation into deception of the Federal Aviation Administration (FAA) in passing a 737 MAX flight permit.
The FAA ordered the grounding of the 737 MAX in March 2019 and did not approve the Boeing 737 MAX to take to the air again until last November after upgrading its safety systems.
The Justice Department’s investigation noted that at least two Boeing employees were involved in deceiving authorities to certify flight safety between late 2016, when the airliner was in the final stages of safety evaluation, and the first crash in 2018. Boeing agreed to cooperate with any individual prosecution related to this case.
Under the agreement, Boeing is required to pay $243.6 million in criminal fines and $1.77 billion in restitution to affected passengers, as well as establish a $500 million beneficiary fund to provide compensation to the families of crash victims.
The Department of Justice will defer prosecution proceedings for three years, after which Boeing will withdraw its notice if there is no misconduct. Boeing Chief Executive David Calhoun said in a statement that the settlement was “right and necessary” and acknowledged that the company had not lived up to its values and expectations.
The $2.5 billion settlement is almost insignificant compared to Boeing’s losses over the past two years. Previously, Boeing had listed its losses at $20.7 billion, including damages, production costs, storage costs and victim compensation.
Experts even say that Boeing’s aircraft sales will cause another tens of billions of dollars in lost revenue under the impact of cut orders, delays or renegotiations. In terms of financial outlay and loss of human life, the Boeing 737 MAX could become one of the most expensive corporate decisions ever made.
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