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:

“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.

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This article is closed to new posts. Discussion continues in the HfP Forums.

ChrisBCN says:

10 Jan10 January 11:01

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.
- marcw says:
  
  10 Jan10 January 11:18
  
  +1
Doug M says:

10 Jan10 January 11:04

Also not seeking to excuse Boeing, but don’t some US airlines have a degree of responsibility here. Was it not their insistence that pilots should need minimal retraining that enabled this situation. Seem to remember Southwest were a big part of that. The Seattle Times reported that Boeing would pay Southwest $1 million per Max if the pilots needed retraining.
- ADS says:
  
  10 Jan10 January 15:43
  
  If I ask you to jump into the river – you are perfectly within your rights to refuse!
  - Doug M says:
    
    10 Jan10 January 23:18
    
    But if you coerced me to jump in the river you’d be be partly responsible for me getting wet.
Novice says:

10 Jan10 January 11:17

Another boeing crashed or went down. In near future I might be looking more carefully at which plane is being used tbh. Never paid attention before this debacle. Although this is shocking; can’t say I’m surprised. Majority of humans have become the worst animal to ever evolve on this planet 🌎
- Charlieface says:
  
  10 Jan10 January 14:26
  
  That particular one is an entirely different plane with a similar moniker.
  Given Indonesia’s track record of air safety, we can probably assume at this stage that it’s down to either poor maintenance or pilot error
  - Novice says:
    
    10 Jan10 January 15:10
    
    Yes I read it was an older model but my point was that I assume a lot of us don’t pay attention to models etc. other than what the interiors will be like but we should. We shouldn’t expect others to give a toss about our life especially when money is involved.
    
    It’s just sad really to see how low humans can get. I watched “I am Greta” the other day and it was disheartening to see that an arena full of adults who must have kids and grandkids just nodding/clapping etc. but then completely dismissing what she had said by saying they will make sure all toilets are efficient in so many years.
    
    And then you get the US wackos. So there are many examples of why people like me think humans can’t be saved. We are the only animal causing our own extinction and at this rate we deserve (not me but I’m included unfortunately) extinction…
  - Chrisasaurus says:
    
    10 Jan10 January 16:44
    
    Well no, the whole issue was that it’s almost the same damn plane from the sixties and hence the deadly half-baked hack to crowbar new engines onto it!
Alan says:

10 Jan10 January 11:32

Good article, shocking how little Boeing have had to pay. They also seem to be scapegoating some employees when there was clearly a corporate culture issue. Note the execs still left with nice hefty payouts.
Vistaro says:

10 Jan10 January 11:54

It appears the value of a life can be measured – it’s about $1.4m – in my view there must be negligence and it’s unacceptable that those that made the decisions get away with it and suffer no personal consequence
- Charlieface says:
  
  10 Jan10 January 12:12
  
  Incidentally, the UK government actually have a value on someone’s life. See for instance costings for new roads to save lives
  - Mr(s) Entitled says:
    
    10 Jan10 January 13:04
    
    Or new drugs to save lives.
    
    Or the shutting down of the economy.
    
    Or…..
    - Charlieface says:
      
      10 Jan10 January 14:28
      
      Clearly the economy shutdown valued lives far higher than building new roads would have, or new drugs, or any other costing ever done to date.
    - Bonglim says:
      
      10 Jan10 January 16:41
      
      For the NHS the traditional figure (form 10 years ago) was £30000 for one year of 100% healthy life – for an expensive drug to be approved by NICE.
- Ryan says:
  
  10 Jan10 January 13:11
  
  More than the $1200 the US paid per life for those killed in drone strikes in Afghanistan.
- The real John says:
  
  10 Jan10 January 13:54
  
  Insurers have been putting a monetary value on life for a long time.
  - David D says:
    
    10 Jan10 January 14:36
    
    The Montreal Convention 1999 placed a value on the life of a person who dies due to an airplane crash at 100,000 Special Drawing Rights which is the equivalent of US$58,252 per the IMF on the 8th January 2021 source https://www.imf.org/external/np/fin/data/rms_sdrv.aspx.
    - David D says:
      
      10 Jan10 January 14:39
      
      Edit to the above, that was based only on the line in the basket of currencies for US$, including the remaining basket of currencies it is US$144,517 for 100,000 Special Drawing Rights.
David D says:

10 Jan10 January 13:22

From the paragraph above ,”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.”

It is covered in Paragraph 12 on page 15 under Payment of Airline Compensation Amount where it states “The Company agrees to pay a total Airline Compensation Amount of $1,770,000,000 to its airline customers for the direct pecuniary harm that its airline customers incurred as a result of the grounding of the Company’s 737 MAX. The Airline Compensation Amount shall be offset by any payments already made by the Company, as of the date this Agreement is fully executed, to any of its airline customers for the direct pecuniary harm that its airline customers incurred as a result of the grounding of the Company’s 737 MAX. The Company shall pay any remaining amounts due under the Airline Compensation Amount to its airline customers by the end of the Term and shall provide documentation to the Fraud Section evidencing the amounts paid.

So if they have already paid airlines a total of US$1.7bn then they need pay no more. If there are any airlines yet to receive compensation or not negotiated their terms then they may make their request based on the judgement provided.

The DPA will see the FAA (technical regulations) and SEC (for financial regulations) involved for at least the next three years, as if any further issues arise in the term of the DPA it can be extended, the fines increased, and/or the criminal charges activated. Having worked for a company under a DPA it makes no difference barring reports being sent by each department each month to confirm compliance.
M Williams says:

10 Jan10 January 16:32

The same thing happened when the Union Carbide accident happened in India. An event that the United States as a whole conveniently forgot.
Simon S says:

10 Jan10 January 20:44

For a little additional context here is the link to a 2014 Al Jazeera investigation into Boeing, produced by extraordinarily capable journalists based in London: https://www.google.com/amp/s/www.aljazeera.com/amp/program/investigations/2014/7/20/the-boeing-787-broken-dreams
- TGLoyalty says:
  
  10 Jan10 January 21:24
  
  Never seen this before. Looks interesting
  
  Thanks.