Boeing pays $ 2.5 billion settlement over 737 Max

Boeing will pay $ 2.5 billion to regulate an investigation by the Justice Department and admit that employees misled regulators about the safety of their 737 Max aircraft, which suffered two fatal crashes shortly after entering the airline.

The government and the company said on Thursday that the settlement includes money for the crash victims’ families, airline customers and fines.

Prosecutors said Boeing’s employees made misleading statements and half-truths about the plane’s safety issues to the Federal Aviation Administration and then covered up their actions.

“Boeing’s employees chose the path of profit over sincerity,” said David Burns, acting deputy attorney general for the Justice Department’s criminal department.

Boeing blamed two former pilots who helped determine how much training was needed for Max. CEO David Calhoun said their behavior does not reflect Boeing’s employees as a whole or the company’s character.

“This is an essential solution to a very serious issue, and I am convinced that being part of this resolution is the right thing for us to do – a step that appropriately recognizes how we are not meeting our values ​​and expectations,” Calhoun said. in a memo to employees.

The government will lift the criminal charge of conspiracy to defraud the United States after three years if Boeing complies with the terms of the settlement.

The settlement removes uncertainty about crimes against the iconic American aircraft manufacturer, which is struggling to put the Max crisis behind it. Boeing is still facing lawsuits from the families of passengers who died in the accidents, it has lost more than 1,000 orders for Max, and its once fantastic reputation for technology has suffered.

Boeing began working with Max in 2011 in response to a new, more fuel-efficient model from European competitor Airbus. Boeing acknowledged in court applications that two of its technical pilot experts tricked the FAA into a flight control system called the Maneuvering Characteristics Augmentation System, or MCAS, which could point an aircraft’s nose down if the sensors indicated that the plane could be at risk for aerodynamics. stall – so that it can fall from the sky.

The system was not included in previous 737 models. MCAS was added because Max’s larger engines, which are mounted higher and further forward on the 737’s low-swept wings, gave the plane a tendency to tilt too far upwards in certain conditions.

Boeing downplayed the importance of MCAS and did not mention it in aircraft manuals. Most pilots did not know about it.

The first airlines began flying 737 Max in mid-2017. On October 29, 2018, a Max operated by Indonesia’s Lion Air crashed into the Java Sea. The FAA allowed Max to continue flying, and on March 10, 2019, another Max operated by Ethiopian Airlines crashed almost straight into a field. A total of 346 people were killed.

On both flights, MCAS was activated by an erroneous reading from a single sensor. The system repeatedly pulled up the aircraft’s noses and pilots could not regain control.

After the aircraft was grounded worldwide, Boeing changed the MCAS to always use two sensors, along with other modifications to make the automatic system less powerful and easier for pilots to override. The FAA ordered other modifications, including redirection of certain lines to avoid potentially dangerous short circuits.

In November, the FAA approved Boeing’s changes and several airlines, including American Airlines, have resumed aircraft.

According to the settlement announced on Thursday, Boeing will pay a fine of $ 243.6 million, $ 1.77 billion in compensation to airlines that could not use their Max jets while they were grounded and $ 500 million to a fund for the families. to passengers killed in the crashes.

Boeing is facing dozens of lawsuits from families who lost relatives in the crashes. Three lawyers who pressed cases in the Ethiopian crash said the settlement would not affect their pursuit of compensation.

Zipporah Kuria, a British citizen whose father died in the Ethiopian crash, said Boeing’s leaders were trying to “pay themselves out of responsibility” with the deal. The agreement “will not bring back our loved ones, but there is at least clarity that their death was not temporary and there is clarity in the responsibility.”

The chairman of the House Transport Committee, Peter DeFazio, D-Ore, meanwhile, said the deal amounted to “a blow to the wrist” for a company the size of Boeing.

“I hope the DOJ can explain its motivation for this weak settlement to the families, because from where I sit, this attempt to change the company’s behavior is pathetic and will do nothing to deter criminal behavior in the future,” DeFazio said in a statement.

Boeing said in a legislative application that it will charge a fee of $ 743.6 million to revenue due to the settlement.

Crashes and grounding of Max, Boeing’s best-selling plane, has plunged the Chicago-based company into its deepest crisis. This has led to billions in losses and resulted in the dismissal of former CEO Dennis Muilenburg in December 2019.