The Justice Department’s plea agreement with Boeing over two fatal 737 MAX jet crashes amounts to largely symbolic punishment that, at the least, should shame the aerospace giant.
But the deal may have only a limited impact on a company that has proved immune to reforming its corporate culture in the face of repeated financial penalties and public embarrassment stretching back to the 1980s.
Boeing has agreed to plead guilty to a single count of conspiring to deceive federal safety regulators years ago about a 737 MAX flight-control system ultimately responsible for the crashes that killed 346 people.
In addition, the company must pay a $244 million fine and invest $455 million over three years to upgrade safety compliance programs. The deal, pending negotiations on detailed language and then approval of a final agreement by a federal judge, also includes appointment of an outside ethics monitor through 2027.
Still unresolved are whether families of crash victims — who have insistently demanded much tougher action — succeed in changing the terms. Most important for Boeing, it could take weeks or longer to reveal what impact, if any, a felony conviction will have on Boeing’s eligibility for new Defense Department and other federal contracts.
Even before the company’s recent high-profile safety violations prompted a Federal Aviation Administration crackdown, the fallout from the MAX scandal already cost Boeing an estimated $20 billion. Beyond roughly $10 billion in previous direct payments to victims’ families, airline customers and the U.S. government, there has been other economic pain.
Price cuts on new aircraft and lost business, for example, are significantly harder for outsiders to quantify. Meanwhile, the company has hemorrhaged roughly $8 billion in cash since January.
Considering that broader context, the latest projected financial hit of roughly $700 million spread over three years seems less daunting.
Boeing also has a dubious history with external ethics monitors, since it has faced four separate major felony investigations over the last four decades. After three of those inquiries, it was placed on a type of corporate probation without formally pleading guilty.
In the mid-2000s, Boeing was under court-mandated, outside oversight stemming from a Pentagon corruption and influence-peddling scandal affecting next-generation Air Force rockets and aerial tankers.
In the wake of that criminal probe, the company paid a then-record $615 million and pledged that more stringent ethics rules and practices finally were “woven into the fabric” of Boeing. One weird strategy: Some company employees were told to wear hats or buttons emblazoned with trite slogans such as “Honesty” or “Integrity.”
But fundamental internal change faltered, and in a few years, the promises instead resulted in more transgressions. By 2015, as part of a broad-ranging civil agreement with the FAA, Boeing acknowledged lax production controls and safety lapses affecting factories of some suppliers as well as a number of its own plants.
Barely four years later, Boeing again emerged as the target of a criminal probe — this time stemming from the dual 737 MAX tragedies. The upshot was a so-called “deferred prosecution” arrangement. The company avoided pleading guilty to anything, by vowing to stay out of legal trouble and implement enhanced compliance and ethics programs.
Now that federal prosecutors have determined Boeing’s violation of that 2021 agreement warrants a plea, the stage is set for courtroom battles over potentially harsher consequences.
Some critics will lambast the Justice Department leaders for devising “a sweetheart deal,” while victims’ families express “disgust” with the agency’s decision to forgo prosecuting current or former Boeing executives.
What hasn’t received enough attention, however, is that the original 2021 MAX agreement, negotiated during the chaotic last few weeks of President Donald Trump’s administration, poisoned the well for tougher future punishment of Boeing. That’s particularly true for statute of limitations issues covering those in the executive suite.
In a highly unusual break from traditional Justice Department practice, prosecutors in 2021 explicitly spelled out they found no evidence that senior company officials participated in illegal activities. (A midlevel company pilot working on the MAX program was charged but ultimately acquitted by a jury.)
At the time, prosecutors concluded the misconduct was “neither pervasive across the organization nor facilitated by senior management.”
Such sweeping declarations are rare in white-collar crime cases, because prosecutors almost always want to keep maximum options open to pursue new targets if additional evidence suddenly surfaces. Justice Department charging documents typically aren’t used to explicitly exonerate anyone.
In Boeing’s saga, however, those unusual, 3-year-old assertions provide a lifeline for company executives to this day. Any good defense lawyer — and Boeing certainly has legions of them — would argue vehemently that the government can’t reverse course and belatedly opt to prosecute individuals, especially given those earlier unequivocal statements.
Boeing’s pattern of avoiding guilty pleas by fervently promising to change its culture and lock in permanent safeguards has conspicuously failed to prevent recurrent criminality.
Yet the latest developments, which don’t provide immunity for any Boeing actions after the MAX crashes, provide a novel wrinkle. Separate from the formal guilty plea, the FAA has emphasized it was “too hands-off” in the past and won’t return to business as usual.
As agency chief Mike Whitaker said recently, the FAA is adamant that Boeing must conclusively demonstrate “a strong and unwavering commitment to safety that endures.”
If that occurs, the plea could turn out to be one of the catalysts that helped reverse Boeing’s decades of ethical drift.
Andy Pasztor, a former senior reporter for The Wall Street Journal, covered air safety and space including every major commercial aviation accident from the late 1990s through early 2021.
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