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

[WASHINGTON] Boeing will pay more than US$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.

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

Boeing said it would take a US$743.6 million charge against its fourth-quarter 2020 earnings to reflect the deferred prosecution agreement, a form of corporate plea bargain.

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.

"Boeing's employees chose the path of profit over candor by concealing material information from the FAA concerning the operation of its 737 MAX airplane and engaging in an effort to cover up their deception," Mr Burns said, referring to the Federal Aviation Administration.

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The crashes have cost Boeing some US$20 billion.

Lawyers for families of victims of the Ethiopian Airlines crash said the settlement strengthens civil litigation in Chicago, where Boeing is based. Boeing has already settled most lawsuits related to the Lion Air disaster in Indonesia.

REUTERS