Boeing faces $2.5bn fine for lying about 737 Max crashes

Washington, D.C.

8 January 2021

The Department of Justice has charged Boeing with defrauding the United States by lying to the Federal Aviation Administration (FAA) before and after the two 737 Max crashes of 2018 and 2019, which claimed the lives of 346 people.

The charges and fine were announced on Thursday, and were part of a deferred prosecution agreement. $243.6m of the fine will go towards a “criminal monetary penalty”; $1.77bn will be paid to airlines which had used the plane; and $500m will go towards a fund to help families and relatives of those who died in the crashes.

Boeing’s 737 Max was meant to be a more fuel-efficient offering from Airbus. But the company rushed the design of the model, making it susceptible to stalling in certain takeoff situations. A piece of software was created by Boeing to correct the 737’s design flaw by automatically dipping the plane’s nose down, but the company failed to communicate the update to the FAA, customer airlines, and pilots.

Boeing’s failure to communicate the design flaw and its counteractive software directly led to the two crashes – pilots of Lion Air flight 610 and Ethiopian Airlines flight 302 were left trying to counter software they were not aware existed.

“The misleading statements, half-truths, and omissions communicated by Boeing employees to the FAA impeded the government’s ability to ensure the safety of the flying public,” US Attorney Erin Nealy Cox said in a statement. “This case sends a clear message: The Department of Justice will hold manufacturers like Boeing accountable for defrauding regulators – especially in industries where the stakes are this high.”

The 737 Max has now been recertified by the FAA, and is in the process of being rolled out again. However, just last month, the US Senate released a report which should Boeing and the FAA had manipulated some of the tests executed as part of the recertification process. This has led to criticism being directed at the FAA for its lax approach to regulation.

No individuals have been criminally charged, although Boeing’s CEO at the time of the crashes was ousted without a severance package. Compared to the $12bn profit that Boeing reported in 2018, some feel that a $2.5bn fine amounts to little more than a slap on the wrist.

“This settlement amounts to a slap on the wrist and is an insult to the 346 victims who died as a result of corporate greed,” said Peter DeFazio (D-OR), the Chairman of the House Committee on Transportation and Infrastructure, in a statement. “Not only is the dollar amount of the settlement a mere fraction of Boeing’s annual revenue, the settlement sidesteps any real accountability in terms of criminal charges. I hope the DOJ can explain its rationale for this weak settlement to the families, because from where I sit this attempt to change corporate behavior is pathetic and will do little to deter criminal behavior going forward.”