Boeing to pay $2.5b to settle US criminal probe into 737 MAX crashes

Boeing Co will pay more than $2.5 billion in fines and compensation after reaching a settlement with the US Department of Justice over two plane crashes that killed a total of 346 people and led to the grounding of its 737 MAX jetliner, Reuters reports.

The settlement, which allows Boeing to avoid prosecution, includes a fine of $243.6 million, compensation to airlines of $1.77 billion and a $500 million crash-victim fund over fraud conspiracy charges related to the plane’s flawed design.

Boeing said it would take a $743.6 million charge against its fourth-quarter 2020 earnings to reflect the deferred prosecution agreement, a form of corporate plea bargain. Boeing had put aside reserves of $1.77 billion in prior quarters to provide for compensation to airlines.

The Justice Department deal, announced after the market close 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.

The crashes “exposed fraudulent and deceptive conduct by employees of one of the world’s leading commercial airplane manufacturers,” acting Assistant Attorney General David Burns said in a statement accompanying the agreement.