Boeing Accepts Plea Deal to Avoid Criminal Trial over 737 Max Crashes

The Justice Department says Boeing has agreed to plead guilty to a criminal fraud charge stemming from two deadly crashes of 737 Max jetliners.

Now it’s up to a federal judge whether to accept the plea and a sentence that is part of the aerospace giant’s deal with U.S. prosecutors.

Boeing’s decision on Sunday came a week after the Justice Department gave the company the choice of entering a guilty plea or facing a trial.

Prosecutors say Boeing violated a 2021 deal that had shielded the company from prosecution earlier.

Lawyers for some of the relatives of those who died in the two crashes have said they will ask the judge to reject the agreement.

One lawyer called it a “sweetheart deal.”

The criminal fraud charge stems from two crashes of 737 Max jetliners that killed 346 people after the government determined the company violated an agreement that had protected it from prosecution for more than three years, the Justice Department said Sunday night.

Federal prosecutors alleged Boeing committed conspiracy to defraud the government by misleading regulators about a flight-control system that was implicated in the crashes, which took place in Indonesia in October 2018 and in Ethiopia less five months later.

As part of the January 2021 settlement, the Justice Department said it would not prosecute Boeing on the charge if the company complied with certain conditions for three years. Prosecutors last month alleged Boeing had breached the terms of that agreement.

U.S. agencies can use a criminal conviction as grounds to exclude companies from doing business with the government for a set amount of time. Boeing is an important contractor of the Defense Department and NASA.

The case goes back to the crashes in Indonesia and in Ethiopia. The Lion Air pilots in the first crash did not know about flight-control software that could push the nose of the plane down without their input. The pilots for Ethiopian Airlines knew about it but were unable to control the plane when the software activated based on information from a faulty sensor.

The Justice Department charged Boeing in 2021 with deceiving FAA regulators about the software, which did not exist in older 737s, and about how much training pilots would need to fly the plane safely. The department agreed not to prosecute Boeing at the time, however, if the company paid a $2.5 billion settlement, including the $243.6 million fine, and took steps to comply with anti-fraud laws for three years.

Boeing, which blamed two low-level employees for misleading the regulators, tried to put the crashes behind it. After grounding Max jets for 20 months, regulators let them fly again after the Boeing reduced the power of the flight software. Max jets logged thousands of safe flights and orders from airlines picked up, increasing to about 750 in 2021, about 700 more in 2022 and nearly 1,000 in 2023.

The company based in Arlington, Virginia, has dozens of airline customers spanning the globe. The best customers for the 737 Max include Southwest, United, American, Alaska, Ryanair and flydubai.

That changed in January, when a panel covering an unused emergency exit blew off a Max during the Alaska Airlines flight over Oregon.

Pilots landed the 737 Max safely and no one was seriously injured, but the incident led to closer scrutiny of the company. The Justice Department opened a new investigation, the FBI told passengers on the Alaska plane that they might be victims of a crime and the FAA said it was stepping up oversight of Boeing.

A criminal conviction could jeopardize Boeing’s status as a federal contractor, according to some legal experts. The plea announced Sunday does not address that question, leaving it to each government agency whether to bar Boeing.

The Air Force cited “compelling national interest” in letting Boeing continue competing for contracts after the company paid a $615 million fine in 2006 to settle criminal and civil charges, including that it used information stolen from a rival to win a space-launch contract.

The company has 170,000 employees and 37% of its revenue last year came from U.S. government contracts. Most of it was defense work, including military sales that Washington arranged for other countries.

Even some Boeing critics have worried about crippling a key defense contractor.

“We want Boeing to succeed,” Richard Blumenthal, a Connecticut Democrat, said during a Senate hearing last month on what he termed the company’s broken safety culture. “Boeing needs to succeed for the sake of the jobs it provides, for the sake of local economies it supports, for the sake of the American traveling public, for the sake of our military.”

Relatives of the Indonesia and Ethiopia crash victims have pushed for a criminal trial that might illuminate what people inside Boeing knew about deceiving the FAA. They also wanted the Justice Department to prosecute top Boeing officials, not just the company.

“Boeing has paid fines many a time, and it doesn’t seem to make any change,” said Ike Riffel of Redding, California, whose sons Melvin and Bennett died in the Ethiopian Airlines crash. “When people start going to prison, that’s when you are going to see a change.”

At a recent Senate hearing, Boeing CEO David Calhoun defended the company’s safety record after turning and apologizing to Max crash victims’ relatives seated in the rows behind him “for the grief that we have caused.”

Hours before the hearing, the Senate investigations subcommittee released a 204-page report with new allegations from a whistleblower who said he worried that defective parts could be going into 737s. The whistleblower was the latest in a string of current and former Boeing employees who have raised safety concerns about the company and claimed they faced retaliation as a result.