How Boeing's plea deal could affect planemaker: All you need to know

Boeing will plead guilty to criminal fraud conspiracy to resolve a US Justice Department (DOJ) investigation linked to two 737 MAX fatal crashes, the government said in a court filing late on Sunday.
 

The agreement in principle between the DOJ and Boeing allows the company to escape a courtroom battle with federal prosecutors but could complicate its efforts to overcome an ongoing crisis sparked by the Jan. 5 mid-air panel blowout on an Alaska Airlines-operated flight.
 

The deal follows a DOJ finding in May that Boeing breached a 2021 agreement that had shielded it from prosecution over the crashes in Indonesia and Ethiopia in 2018 and 2019 that killed 346 people.

What was Boeing's original agreement?

 

The DOJ in 2021 agreed to hold off prosecuting Boeing and asked a judge to dismiss a charge of conspiring to defraud the US Federal Aviation Administration so long as the company abided by the deal's terms over a three-year period.
 

Boeing agreed to overhaul compliance practices to prevent violation of US fraud laws and submit regular reports. But the January mid-air emergency occurred two days before the agreement expired.

The planemaker had told prosecutors it disagrees with their finding and said it "honored the terms" of the settlement.
 

What happens next to Boeing?
 

A judge will need to sign off on the agreement, which DOJ and Boeing hammered out in advance of a July 7 deadline for the government to decide whether to prosecute the company. The DOJ and Boeing are working to finalize it and file it to the court by July 19, the filing said.
 

What does a guilty plea mean for boeing?

A felony conviction could disrupt Boeing's ability to secure government contracts such as those with the US military.

Boeing's government contracts in 2023 accounted for 37% of its annual revenue including foreign military sales through the US government. Boeing had $14.8 billion in Defense Department contracts in 2022, per a government report.
 

"In the world of government contracting, an indictment or finding of criminal liability can have a significant impact on a company," said Franklin Turner, a government contracts lawyer at McCarter & English.
 

Boeing could seek waivers from government departments and agencies to continue contracting with them. Some previous DOJ settlements have provided details on how officials should address the issue. It remains unclear to what extent the proposed Boeing plea deal does.
 

Government officials at each department or agency would have to decide whether Boeing, as a convicted felon, is entitled to a waiver, said Vikramaditya Khanna, a law professor at University of Michigan.

What are the financial penalties for Boeing?

The agreement includes a $487.2 million financial penalty, about half of which Boeing would need to pay as the government would credit it for previous penalties.
 

Boeing would likely be forced to pay restitution, an amount to be decided by a judge. The company already paid $2.5 billion in penalties and restitution in 2021 in connection with the original conspiracy charge, which included a criminal penalty and compensation for customers and relatives of crash victims.
 

The plea offer includes putting Boeing on probation for three years.
 

What other costs are there?
 

A federal judge can still decide on whether the company should pay any additional restitution for the victims' families.

Boeing has also agreed to spend at least $455 million over the next three years to strengthen and integrate its compliance and safety programs, the filing said.
 

Who will be Boeing's thir-party monitor?

The plea deal includes the appointment of an independent monitor to audit Boeing's safety and compliance practices for three years.
 

The Justice Department under President Joe Biden has renewed the use of corporate monitors in its deals with companies to resolve charges of misconduct.

The practice had fallen out of favor under the previous administration.

Companies typically fight against these terms. The outside firms, which are selected by the DOJ, act as the government’s eyes and ears. The company foots the bill.
 

 What about the families of the crash victims?

Boeing's board of directors will meet with the families of victims of the fatal crashes as part of the plea agreement.

Here is a timeline of recent issues surrounding the MAX since the crashes in 2018 and 2019:
 

OCTOBER 2018: A Lion Air MAX plane crashes in Indonesia, killing all 189 people on board.
 

NOVEMBER 2018: The U.S. Federal Aviation Administration (FAA) and Boeing begin evaluating the need for software or design changes to 737 MAX jets following the Lion Air crash.
 

MARCH 2019: An Ethiopian Airlines MAX crashes, killing all 157 people on board. China becomes the first country to ground the MAX, followed by others including the U.S. FAA.
 

APRIL 2019: The FAA forms an international team to review the safety of 737 MAX. Boeing cuts monthly production by nearly 20%.
 

SEPTEMBER 2019: Boeing's board creates a permanent safety committee to oversee development, manufacturing and operation of its aircraft.
 

OCTOBER 2019: Boeing fires Kevin McAllister, the top executive of its commercial airplanes division.
 

DECEMBER 2020: The company fires CEO Dennis Muilenburg in the wake of the twin crashes.
 

JANUARY 2020: Boeing suspends 737 production, its biggest assembly-line halt in more than 20 years.
 

MAY 2020: Boeing resumes 737 MAX production at a "low rate".
 

JUNE 2020: Boeing begins a series of long-delayed flight tests of its redesigned 737 MAX with regulators at the controls.

NOVEMBER 2020: The U.S. FAA lifts the grounding order, allowing the 737 MAX to fly again.
 

DECEMBER 2020: U.S. Congress passes legislation to reform how the FAA certifies new airplanes, including requiring manufacturers to disclose certain safety-critical information to the regulator.
 

JANUARY 2021: The European Union Aviation Safety Agency approves the MAX's return to service in Europe.
 

MARCH 2021: China's aviation regulator says major safety concerns with the MAX needed to be "properly addressed" before conducting flight tests.
 

APRIL 2021: Boeing halts 737 MAX deliveries after electrical problems re-ground part of the fleet.
 

NOVEMBER 2021: Current and former Boeing directors reach a $237.5 million settlement with shareholders to settle lawsuits over safety oversight of the 737 MAX.
 

OCTOBER 2022: The FAA tells Boeing that some key documents submitted as part of the certification review of the 737 MAX 7 are incomplete and others need a reassessment.
 

DECEMBER 2022: U.S. Congress agrees to extend a deadline for new standards for modern cockpit alerts stemming from the 2020 legislation after intense lobbying from Boeing.
 

APRIL 2023: Boeing pauses deliveries of some 737 MAXs to deal with a new supplier quality problem involving non-compliant fittings.
 

JULY 2023: Boeing's first delivery of the 737 MAX 7 is delayed to 2024.
 

AUGUST 2023: Boeing identifies a new 737 MAX supplier quality problem involving improperly drilled holes on the aft pressure bulkhead.
 

SEPTEMBER 2023: Boeing 737 MAX deliveries fall to their lowest levels since August 2021.
 

DECEMBER 2023: Boeing makes its first direct delivery of a 787 Dreamliner to China since 2019, seen as a precursor to the country potentially unfreezing deliveries of the 737 MAX.
 

JANUARY 2024: A mid-air cabin blowout compels Alaska Air to perform an emergency landing of its recently acquired 737 MAX 9 aircraft, prompting the FAA to ground 171 of these jets and initiate an investigation. The FAA bars Boeing from increasing MAX output, but lifts the grounding of MAX-9s once inspections were completed.
 

FEBRUARY 2024: The U.S. National Transportation Safety Board published its preliminary report on the Alaska Air incident.

According to the investigation, the door panel that flew off the jet mid-flight appeared to be missing four key bolts.
 

MARCH 2024: The FAA's 737 MAX production audit found multiple instances where Boeing and supplier Spirit AeroSystems allegedly failed to comply with manufacturing quality control requirements. This came days after Boeing said it was in preliminary talks to buy Spirit.
 

The planemaker also said top boss Dave Calhoun would step down at the end of the year.
 

APRIL 2024: 737 MAX production falls as U.S. regulators step up factory checks and workers slow the assembly line outside Seattle to complete outstanding work.
 

May 2024: The U.S. Department of Justice says Boeing breached its obligations in a 2021 agreement that shielded it from criminal prosecution over 737 MAX crashes in 2018 and 2019.
 

The FAA head says he does not expect the agency will quickly give Boeing the authority to boost 737 MAX production.
 

July 1, 2024: Boeing acquires Spirit AeroSystems back in an all-stock deal for $4.7 billion in equity value. The deal comes as Boeing, which had sold Spirit in 2005 to cut costs, attempts to solve its quality hurdles and accelerate jet deliveries.
 

July 7, 2024: Boeing agrees to plead guilty to a criminal fraud conspiracy charge and pay a fine of $243.6 million to resolve the U.S. Justice Department investigation into the two 737 MAX fatal crashes in 2018 and 2019.