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Boeing buys its way out of prison with $2.5 billion for 346 737 MAX deaths

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Boeing is paying $2.5bn to settle criminal charges in the United States that it hid critical safety information from officials. None of the individuals involved will face prison time.

The agreement acknowledges that Boeing was fraudulent and deceptive in its communication with the FAA. Certification of the 737 MAX involved:

Boeing 737 MAX scimitar wingtip

“two of the Company’s 737 MAX Flight Technical Pilots deceiving the Federal Aviation Administration’s Aircraft Evaluation Group about an important aircraft part called the Maneuvering Characteristics Augmentation System (“MCAS”) that impacted the flight controlsystem of Boeing’s 737 MAX.”

You can read our overview of the 737 MAX crashes, and why they happened, in this article.

Boeing has entered into a ‘Deferred Prosecution Agreement’ with the Department of Justice that will see it pay out $2.5 billion. You can see the full text of the agreement here.

The money will be split three ways:

  • Approximately $500m will go to the families of the 346 individuals who died in the two 737 MAX crashes
  • $243m is being charged as a “criminal monetary penalty”
  • $1.7bn will go to airline customers as compensation

It’s not clear whether this $1.7bn takes into account the compensation Boeing has already paid out to airlines who ordered the 737 MAX. On the face of it, it seems odd that the court should order additional compensation for the airlines which have already made private settlements with Boeing.

Boeing CEO David Calhoun said:

“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.

“This resolution is a serious reminder to all of us of how critical our obligation of transparency to regulators is, and the consequences that our company can face if any one of us falls short of those expectations.”

It turns out those “consequences” only involve a monetary fine – met entirely by shareholders – with no criminal proceedings for the individuals involved in the fraudulent deception that lead to 346 deaths.

$2.5 billion is less than the $2.8 billion that the United States fined Volkswagen for the diesel emissions scandal which led to no direct deaths. It is far less than the $4 billion BP was fined for Deepwater Horizon oil spill and the associated deaths of 11 workers.

Comments (68)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • kitten says:

    could the headline be improved by moving ‘deaths” to right after the 346 and leaving 737 Max to the end. Right now it’s a jumble of numbers that looks like a plane reference code

    • Rob says:

      It did cross my mind but I thought I could live with it.

      • kitten says:

        Might get better attention on searches in connection with you getting another Article / Editor of the Year award for this article. This could happen outside of the travel sphere too. Jus’ sayin’

        • Alex Sm says:

          Oh, actually this reminded me of something: did HfP get any awards in November? The nominations were announced in an article here but no word on the actual results…

          • Rob says:

            No, unfortunately we didn’t win any of the categories we were shortlisted in.

            It is hard for us because you are comparing our fairly short form content with multi-page features in print magazines.

          • Alex Sm says:

            Oh, it’s a pity… but who reads these long-reads and watch these 1-hour videos these days? Yours are snappy and close to the point. Hope you will win many more in the future!

  • Alex W says:

    This is so wrong, negligent or reckless engineers, pilots and regulators must be personally held to account. This is Boeing almost endorsing their employees behaviour by bailing them out.

  • James says:

    The senior management who were involved in the criminal fraud should face jail time.

  • jil says:

    And 9bn BNP Paribas

  • Crafty says:

    Rhys – very well written.

  • BJ says:

    Echoes of Bhopal and so much more. One rule for Americans and American interests and another rule for everybody else. BP is a particularly interesting example as an overseas company paid the price for the failings of an American company. Wonder what will happen to that 2 5B figure when the first 737MAX operated by and American airline, packed with American pax comes down some place in the USA. I doubt this story is over, there have been too many questions about recertification too.

    • Bagoly says:

      And Deepwater Horizon then provided an excuse for an American to be appointed CEO!
      Lesson: Never buy an American company.

    • Doug M says:

      Let’s also not forget that the previous US President that has been regarded as a saint, continually referred inaccurately to BP as British Petroleum for political reasons. He was smart enough to know he was lying.

      • The real John says:

        Agreed, but companies like BP should really just choose a random word if they want to “rebrand” with a name that isn’t really their name.

    • kitten says:

      I worked for BP at the time and pretty much know what actually happened. BP stepped up and paid when actually there were other parties more at fault. Wasnt going to do the industry any good to enforce contract conditions for recovery of losses according to who did (or didn’t) do what so BP stepped up and paid all.

      I had to be dragged kicking and screaming to work for BP given public rep of the oil industry but came away with nothing but admiration and appreciation for them.

      • Doug M says:

        US Gov saw the opportunity to make someone big enough and rich enough to pay the compo and clean-up costs. The way the compo worked was little more than a money grab. Not excusing BP, but they found themselves in a fight with the US Gov and that’s one they were not going to win. When Obama was calling it British Petroleum and demanding accountability he was playing to the masses. What proportion of shareholders were US mutual funds and consequently US citizens pensions, but that didn’t matter, the optics made the company look bad and by misnaming it the blame could be dumped on ‘foreigners’.
        As usual a scapegoat was found, and it worked for most of those involved.
        The MAX is not that different. AA decided to abandon the 737 series and place a big order with Airbus for the 320NEO. That was when Boeing finally gave up on idea of new plane and went fully in on the MAX, despite the engine size/ground clearance issue, that made AA give half the order to Boeing. The pressure from airlines to make the MAX not have substantial retraining costs, the pressure from the US Gov to buy Boeing, all contributed to this, easy to blame Boeing, and they’re not the good guys, but there’s other bad guys in this. The level of compensation, how divided and where it goes, makes it clear how the US Gov see things.

      • Lyn says:

        Kitten, thank you for your interesting perspective on BP.

  • Matarredonda says:

    Capitalism at its worst.

  • ChrisBCN says:

    You’ve got the positioning and tone on this article absolutely right 👍. Unfortunately most of the rest of the media cannot produce an article of this quality.

This article is closed to new comments. Feel free to ask your question in the HfP forums.

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