Boeing Faces Possible $25 Billion Fine and Criminal Proceedings Over Fatal 737 MAX Crashes, Say Victims’ Relatives
In a letter to the US Department of Justice (DoJ), the relatives of the 346 victims of the fatal 737 MAX 8 crashes have called for Boeing to be fined almost $25 billion (£19.7 billion) and face criminal proceedings. The families argue that the company is guilty of the “deadliest corporate crime in US history.”
This plea comes a month after the DoJ filed a case against Boeing, accusing the planemaker of breaching its obligations in a 2021 deferred prosecution agreement. As part of this agreement, Boeing had agreed to pay $2.5 billion to resolve an investigation into its conduct, compensate victims’ relatives, and overhaul its compliance practices following the crashes in 2018 and 2019.
The terms of the deferred prosecution agreement were set to expire in January of this year. However, just two days before, an Alaska Airlines-operated Boeing 737 MAX 9 aircraft suffered a mid-air panel blowout. This incident is currently under investigation by multiple agencies, including the DoJ.
Boeing has denied any violation of the terms of the agreement through its production practices prior to the Alaska Airlines accident. The 737 MAX 8 fleet had been grounded for 20 months after the Ethiopian Airlines Flight 302 disaster in March 2019, which claimed the lives of all 157 people on board. In October 2018, a Lion Air 737 MAX 8 crashed in Indonesia, killing all 189 passengers and crew. Poorly designed flight control software was ultimately found to be the cause of both accidents.
The DoJ is currently in talks with the families of the victims before making a formal decision on the case by July 7th. In their letter to the DoJ, lawyer Paul Cassel, who represents 15 families, argues that “a maximum fine of more than $24 billion is legally justified and clearly appropriate” due to Boeing’s “deadliest corporate crime in US history.” He also suggests that part of the financial penalty could be suspended if Boeing makes multiple commitments regarding safety and scrutiny.
The court filing in May also exposes Boeing to the possibility of a new criminal prosecution. This news has further fueled the corporate crisis that has plagued the company this year, leading to a management shake-up with both the CEO and chairman stepping down. This has also resulted in regulatory action and production limits placed on Boeing’s factories, affecting both its earnings and its customers’ expansion plans. Airlines like Ryanair have reported delays and financial losses due to these production limits.
Boeing’s share price has seen a significant decrease of 33% in the year to date. During a Senate hearing on Tuesday, CEO Dave Calhoun, who is set to leave at the end of the year, defended the company’s safety record and repeatedly denied claims that Boeing prioritized profits over safety. He also offered apologies to the relatives of the victims in attendance, saying “I’m sorry for the grief that we caused.”
The hearing coincided with the release of a report by a whistleblower containing allegations that defective parts may be used in 737 variant aircraft. The whistleblower, Sam Mohawk, a quality assurance investigator at an assembly plant near Seattle, also claimed that Boeing hid evidence after being notified by the Federal Aviation Administration (FAA) that they planned to inspect the plant in June 2023. According to the report, Boeing ordered the majority of the nonconforming parts to be moved to another location to avoid inspection. These parts allegedly included rudders and wing flaps. Boeing has stated that they are reviewing these allegations.
