Risk & Compliance

Boeing Fined $2.5 Billion Over 737 Max Crashes

U.S. prosecutors alleged two senior Boeing pilots deceived the Federal Aviation Administration into certifying the aircraft as airworthy.
Matthew HellerJanuary 8, 2021
Boeing Fined $2.5 Billion Over 737 Max Crashes

Boeing is putting some of its legal problems from the two crashes of the 737 Max aircraft behind it, agreeing to pay $2.5 billion to settle a criminal charge of conspiracy.

The U.S. Department of Justice alleged two senior Boeing pilots deceived the Federal Aviation Administration into certifying the 737 Max as airworthy by concealing a change the company had made to the plane’s Maneuvering Characteristics Augmentation System (MCAS) flight control system.

A malfunction in the system has been blamed for the crashes of Lion Air and Ethiopian Airlines flights in October 2018 and March 2019, respectively, that killed a total of 346 people.

As part of a deferred prosecution agreement, Boeing will pay a criminal penalty of $243.6 million, make compensation payments to 737 MAX airline customers of $1.77 billion, and establish a $500 million fund for crash-victim beneficiaries.

“Boeing’s employees chose the path 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,” Acting Assistant Attorney General David Burns said in a news release.

The agreement averts a potential criminal conviction of Boeing as a company. “That’s important for Boeing as a key U.S. defense contractor; a conviction could have excluded it from future government contracts,” the Seattle Times noted.

However, U.S. House Transportation Committee Chair Peter DeFazio, the Oregon Democrat who led a major investigation into the crashes, called the agreement “a slap on the wrist” and an insult to the victims. “From where I sit, this attempt to change corporate behavior is pathetic,” he said.

The DoJ case centers on two former 737 MAX program employees, chief technical pilot Mark Forkner and his deputy Patrik Gustavsson. According to the government, they failed to notify the FAA of a change in the operational scope of MCAS that activated the system when the plane flew at low speeds.

The deception allegedly enabled Boeing to tell potential customers they would be spared the additional costs of having to retrain pilots to operate the 737 Max, a key element of its marketing pitch.