Boeing replied to the news by saying it would take a $743.6 million charge against its fourth-quarter 2020 earnings to reflect a deferred prosecution agreement. This is a form of corporate plea bargain.
The Justice Department deal, announced after the market closed on Thursday, caps a 21-month investigation into the design and development of the 737 MAX following the two crashes, in Indonesia and Ethiopia, in 2018 and 2019 respectively.
Acting Assistant Attorney general David Burns said in a statement “The crashes exposed fraudulent and deceptive conduct by employees of one of the worlds leading commercial airplane manufacturers.”
“Boeings employees chose the of profit over candor by concealing material information from the FAA concerning the operation of its 737 MAX airplane and engaging in an effort to cover up their deception.” Burns went on to continued in the statement, referring to the Federal Aviation Administration (FAA).
The crashes have already cost Boeing $20 billion.
This strengthens civil litigation in Chicago, where Boeing is based, commented the lawyers for the victims of the Ethiopian Airlines crash. Boeing has already settled most of the lawsuits related to the Lion Air disaster in Indonesia.
Legislation has now been passed in the US Congress on how the FAA certifies new planes.
The 737 MAX was grounded in March 2019 and grounding was not lifted until November 2020, after a number of significant safety upgrades and improvements in pilot training were made to grounded jetliner.