A Boeing 737 Max takes off at Renton Municipal Airport in 2019. (AP Photo/Ted S. Warren, File)

A Boeing 737 Max takes off at Renton Municipal Airport in 2019. (AP Photo/Ted S. Warren, File)

Boeing to pay $2.5B to settle criminal charge over 737 Max

The settlement includes money for crash victims’ families, airline customers and airlines, and a fine.

The Boeing Co. will pay $2.5 billion to settle a Justice Department investigation and admit that employees misled regulators about the safety of its 737 Max aircraft, which suffered two deadly crashes shortly after entering airline service.

The government and the company said Thursday that the settlement includes money for the crash victims’ families, airline customers and a fine.

Prosecutors said Boeing employees gave misleading statements and half-truths about safety issues with the plane to the Federal Aviation Administration, then covered up their actions.

“Boeing’s employees chose the path of profit over candor,” said David Burns, acting assistant attorney general for the Justice Department’s criminal division.

Boeing blamed two former pilots who helped determine how much training was needed for the Max. CEO David Calhoun said their conduct doesn’t reflect Boeing employees as a whole or the character of the company.

“This is a substantial settlement of a very serious matter, and I firmly believe that entering into this resolution is the right thing for us to do — a step that appropriately acknowledges how we fell short of our values and expectations,” Calhoun said in a memo to employees.

The government will drop the criminal charge of conspiracy to defraud the U.S. after three years if Boeing follows the terms of the settlement.

The settlement removes uncertainty about criminal charges against the iconic U.S. aircraft maker, which is struggling to put the Max crisis behind it. Boeing still faces lawsuits by the families of passengers who died in the crashes, it has lost more than 1,000 orders for the Renton-built Max, and its once-stellar reputation for engineering has suffered.

Boeing began working on the Max in 2011 as an answer to a new, more fuel-efficient model from European rival Airbus. Boeing admitted in court filings that two of its technical pilot experts deceived the FAA about a flight-control system called the Maneuvering Characteristics Augmentation System, or MCAS, which could point a plane’s nose down if sensors indicated the plane might be in danger of an aerodynamic stall — that it might fall from the sky.

The system was not part of previous 737 models. MCAS was added because the Max’s larger engines, which are mounted higher and farther forward on the 737’s low wings, gave the plane a tendency to tilt too far nose-up in some conditions.

Boeing downplayed the significance of MCAS and didn’t mention it in airplane manuals. Most pilots didn’t know about it.

The first airlines began flying the 737 Max in mid-2017. On Oct. 29, 2018, a Max operated by Indonesia’s Lion Air plunged into the Java Sea. The FAA let the Max keep flying, and on March 10, 2019, another Max operated by Ethiopian Airlines crashed nearly straight down into a field. In all, 346 people were killed.

On both flights, MCAS was activated by a faulty reading from a single sensor. The system repeatedly pushed the planes’ noses down, and pilots were unable to regain control.

After the planes were grounded worldwide, Boeing changed MCAS so that it always uses two sensors, along with other changes to make the automated system less powerful and easier for pilots to override. The FAA ordered other changes, including the rerouting of some wiring to avoid potential dangerous short-circuiting.

In November, the FAA approved Boeing’s changes, and several carriers, including American Airlines, have resumed using the planes.

Under the settlement announced Thursday, Boeing will pay a $243.6 million fine, $1.77 billion in compensation to airlines that were unable to use their Max jets while they were grounded, and $500 million into a fund for the families of passengers who were killed in the crashes.

Boeing faces dozens of lawsuits by families who lost relatives in the crashes. Three lawyers pressing cases in the Ethiopian crash said the settlement would not affect their pursuit of compensation.

Boeing said in a regulatory filing that it will take a $743.6 million charge against earnings because of the settlement.

The crashes and grounding of the Max, Boeing’s best-selling plane, has plunged the Chicago-based company into its deepest crisis. It has led to billions in losses and resulted in the ouster of former CEO Dennis Muilenburg in December 2019.

Talk to us

More in Herald Business Journal

A Boeing 787 operated by All Nippon Airways taxis under a rainbow created by fire trucks at Seattle-Tacoma International Airport, Monday, Oct. 1, 2012, in Seattle, during an official welcome ceremony after it landed on the first day of service for the aircraft on ANA's Seattle-Tokyo route. (AP Photo/Ted S. Warren)
Last Everett-built Boeing 787 rolls off the assembly line

Production of the once-hot Dreamliner is being consolidated at the company’s South Carolina plant.

Decarla Stinn, owner of Decarla’s Beauty Supply & Salon in Everett, sews in the first row of extensions on Hope Hottemdorf on Wednesday, Feb. 24, 2021 in Everett, Wa. (Olivia Vanni / The Herald)
Her short-term plan to run a beauty supply store went awry

Clients wouldn’t let her quit, and Decarla’s Beauty Supply & Salon in Everett is celebrating 17 years in business.

Erin Staadecker (left-right) Jael Weinburg and Kaylee Allen with Rosie formed the Edmonds firm Creative Dementia Collective. The company helps memory care patients and care-givers by providing art, music and other creative therapies. (Kevin Clark / The Herald)
This startup offers artful therapy for dementia patients

Creative Dementia Collective uses art and music to help them — and their caregivers.

The nose of the 500th 787 Dreamliner at the assembly plant in Everett on Wednesday morning on September 21, 2016. (Kevin Clark / The Herald)
U.S., EU agree to suspend tariffs in Boeing-Airbus dispute

The move eases a 17-year transatlantic dispute over illegal aid to the world’s biggest aircraft makers.

Karuana Gatimu of Snohomish, director of the customer advocacy group at Microsoft Teams Engineering. (Kevin Clark / The Herald)
Microsoft executive: Tech opportunities for women have grown

The sector hasn’t always been friendly to women or people of color, but it’s getting better, says a Snohomish resident.

Dawn Trudeau (Seattle Storm)
13 years ago this month, they bought the Seattle Storm

Dawn Trudeau and her partners didn’t foresee the challenges — or the championships — that were in store.

Elwin Pittman, 10, plays foosball with Ashley Kiboigo in the game room during a break at Safe Haven Cafe on Friday, Feb. 26, 2021 in Everett, Wa. (Olivia Vanni / The Herald)
Born of the pandemic, this business is a parental reprieve

Ashley Kiboigo’s Safe Haven WiFi Cafe in Everett is a place for kids to study and play.

Decarla Stinn (top left), Karuana Gatimu (top right), Dawn Trudeau (bottom left) and Ashley Kiboigo (bottom right).
Getting down to business during Women’s History Month

There have been great gains over the years, but challenges remain — especially this year.

(Getty Images)
You voted: The best cocktails in Snohomish County

Even during a pandemic, people still have their favorites.

Most Read