The U.S. government has decided that recent safety incidents involving Boeing’s planes mean the company violated a deal it reached with the feds back in 2021, which required it to maintain an adequate safety program. The U.S. said it would therefore move forward with prosecuting the company. This week, Boeing wisely decided to plead guilty.

It was widely reported Monday that Boeing, the world’s largest aerospace company, had agreed to plead guilty to one count of conspiring to defraud the United States related to two crashes of its 737 Max, which killed a total of 346 people. The accusation is that the company misled air-safety regulators about design flaws.

Boeing has agreed to pay an additional $243.6 million in fines; as part of its January 2021 deferred-prosecution agreement it had already given the nod to forking over $2.5 billion in fines and compensation. The plea deal would impose an independent monitor for three years and other strictures. As a felon, Boeing would need to seek a Pentagon waiver to continue to keep its lucrative defense contracts, which is obviously a major concern.

Reputational Terms

It typically doesn’t warm the cockles of a company’s heart to become a felon. But it would have been even worse, in reputational terms, for Boeing to go to trial — even though it earlier contended it didn’t violate the 2021 deal. The 737 Max situation has been a crisis of its own making, and we’re confident details revealed during a trial would only hurt, not help, its reputation.

And, as pointed out in a Wall Street Journal article on July 3, before the plea announcement, the government could have brought other criminal charges as part of that prosecution, including the more recent (and more minor) incidents. Most notably, in January a door plug blew out of an Alaska Airlines plane during a flight, leaving a gaping hole.

These further safety occurrences are what caused the U.S. Justice Department to say the company had violated the deferred-prosecution agreement. The DOJ has defended the plea deal and said it pertains only to the company, not individual employees, and only to its behavior before the two fatal crashes, not the more recent incidents.

Former Prestige

Boeing still has a lot of work to do to win back its former prestige. One reason its reputation issues aren’t going away is that many of the victims’ families are angry about the plea deal, calling it a slap on the wrist. They think Boeing should pay nearly $25 billion. Paul Cassell, a lawyer who represents several families, has already filed his intention to object to the plea deal.

The families’ fury would have also kept a heavy spotlight on any trial.

Photo Credit: Michael Vi/Shutterstock

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