Boeing reached a $2.5 billion deferred criminal prosecution agreement with federal prosecutors that says two former Boeing pilots deceived regulators about the safety of flight control software known as MCAS implicated in two deadly 737 MAX crashes.
Crash investigators earlier had found that MCAS (Maneuvering Characteristics Augmentation System) was partly at fault for pushing the MAX aircraft into fatal nosedives, killing 346 people in two MAX crashes in Indonesia and Ethiopia in 2018 and 2019. MAX planes were grounded globally from March 2019 to November 2020 but have recently returned to commercial service.
Boeing said in a statement released Thursday that the agreement with the U.S. Department of Justice was “based on the conduct of two former Boeing employees and their intentional failure to inform the FAA Aircraft Evaluation Group Event…about changes to MCAS.” As a result of their conduct, the FAA AEG “was not fully informed about MCAS’s expanded operating range” which impacted the way the FAA set out pilot training requirements for airlines using the MAX.
Under the agreement, Boeing must pay a penalty of $243.6 million as well as $500 million in additional compensation to families of victims of the crashes. Also, Boeing was required to commit to provide $1.77 billion to Boeing’s airline customers to compensate them for their financial losses due to the grounding of the 737 MAX. The agreement also recognizes that other Boeing employees did inform other people at other organizations inside FAA about the expanded operating range of MCAS.
Boeing was charged with one count of conspiracy to defraud the U.S. but will avoid prosecution as long as it avoids legal trouble for a period of three years. The arrangement means that Boeing can remain eligible for federal contracts.
Boeing CEO David Calhoun said in a statement that entering into the agreement was the “right thing to do—a step that appropriately acknowledges how we fell short of our values and expectations. This resolution is a serious reminder to all of us of how critical our obligation of transparency to regulators is, and the consequences that our company can face if any one of us falls short of those expectations.”
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