Boeing has been criminally charged with conspiracy to defraud the United States by the Department of Justice and will have to pay a $2.5 billion fine for lying to the Federal Aviation Administration before and after the fatal 737 Max crashes in 2018 and 2019.
The Justice Department announced the charges and fine, which were part of a deferred prosecution agreement, on Thursday. The $2.5 billion fine includes a $243.6 million “criminal monetary penalty,” $1.77 billion that will be paid out to airlines that were customers of the plane, and $500 million that will go to a fund to help families and relatives of the people who died in the two crashes. Boeing generated $100 million in revenue and $12 billion in profit in 2018.
“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.”
Boeing’s 737 Max was supposed to be a plane that helped the company keep pace with a new, more fuel-efficient offering from rival Airbus. But the company rushed the design, and as a result, the plane was susceptible to dangerous stalls in certain takeoff situations. Boeing created a piece of software to counteract this design flaw by automatically pushing the plane’s nose down. But the company never told the FAA, airlines, or pilots about the software in order to save time and money.
What’s worse, this software worked off of readings from a lone sensor on the plane’s exterior — meaning there was no way to know if it was acting with bad information if the sensor was damaged.
It was this series of design flaws and Boeing’s lack of candor that led to the two fatal 737 Max crashes, as was discovered in subsequent Congressional investigations and reporting. By not disclosing them to regulators or the airlines, Boeing left the pilots of Lion Air flight 610 and Ethiopian Airlines flight 302 fighting software they didn’t even know existed.