Boeing Co (NYSE:BA) reportedly faces serious criminal charges from the U.S. Justice Department related to two fatal 737 MAX crashes, with the department expected to offer Boeing a plea agreement, which includes a substantial financial penalty and the imposition of an independent monitor to oversee the company’s safety and compliance practices for three years.
The Justice Department’s offer is non-negotiable, giving Boeing until the end of the week to respond. Should Boeing decline the plea deal, prosecutors plan to bring the company to trial, reported Reuters.
The decision to charge Boeing comes after the company allegedly violated a 2021 agreement that shielded it from prosecution over the 2018 and 2019 crashes, which resulted in 346 deaths.
The plea agreement would compel Boeing to admit to conspiring to defraud the U.S. Federal Aviation Administration (FAA) regarding these incidents.
If Boeing agrees to the plea, it would face financial loss, including a $487.2 million penalty, only half of which is new since previous payments are credited.
Also Read: Boeing To Acquire Spirit Aerosystems For $4.7B After Months Of Negotiations
The proposed agreement also includes potential restitution and a three-year probation period. Moreover, Boeing’s ability to secure government contracts, including those with the U.S. military, could be jeopardized, although companies with felony convictions can apply for waivers.
Victims’ families were informed of the Justice Department’s decision during a call and expressed anger at the proposed plea deal, considering it insufficient to hold Boeing accountable.
The Justice Department’s push for a guilty plea follows recent safety concerns, including a January incident where a panel blew off a 737 MAX 9 jet during an Alaska Air Group Inc (NYSE:ALK) flight.
This incident occurred just days before Boeing’s deferred prosecution agreement from 2021 expired.
In June, U.S. lawmakers questioned Boeing’s CEO Dave Calhoun about the company’s safety record. Family members’ lawyers referenced these criticisms in their push for tougher penalties and prosecution.
Boeing stock has lost more than 13% in the last 12 months. Investors can gain exposure to the stock via IShares U.S. Aerospace & Defense ETF (BATS:ITA) and Invesco Aerospace & Defense ETF (NYSE:PPA).
Price Action: BA shares closed lower by 0.27% at $182.01 on Friday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Related Read: Southwest Airlines Faces Scrutiny Over Recent Closed Runway Takeoff: Report
Photo via Shutterstock
