U.S. airplane maker, Boeing Co. has reached an agreement with the U.S. Department of Justice to pay more than $2.5 billion in fines and compensation 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 $243.6 million, compensation to airlines of $1.77 billion and a $500 million crash-victim fund over fraud conspiracy charges related to the plane’s flawed design.
According to a Reuters report sited by Investogist, Boeing said it would take a $743.6 million charge against its fourth-quarter 2020 earnings to reflect the deferred prosecution agreement, a form of corporate plea bargain. Boeing had put aside reserves of $1.77 billion in prior quarters to provide for compensation to airlines.
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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 accompanying the agreement.
“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,” Burns said, referring to the Federal Aviation Administration.
Plaintiffs lawyers representing families of victims of the Ethiopian Airlines crash said the settlement strengthens civil litigation against Boeing in Chicago, where the company is headquartered. Boeing has already settled most lawsuits related to the Lion Air disaster in Indonesia.
The U.S. Federal Aviation Administration (FAA) approved the Boeing 737 Max to return to commercial service in November 2020.
Several regulators across the world has since approved for the plane to return to service. Brazil’s Gol Airlines was the first to bring the jetliner back to service on 9 December, 2020.
The worldwide fleet of 737 Max planes has been grounded since March 2019, after the two deadly crashes raised concerns over the aircraft’s safety and airworthiness.
By; Nnamdi M.