Boeing will pay $2.5 billion as settlement charge
What's the story
Boeing has agreed to pay $2.5 billion to settle a Justice Department investigation. It admitted that its employees misled regulators about the safety of its 737 MAX aircraft, which suffered two deadly crashes shortly after entering airline service. The company said on Thursday that the settlement includes money for the crash victims' families, airline customers, and a fine.
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What does the settlement money include?
Boeing will pay a $243.6 million fine, $1.77 billion in compensation to the airlines that were unable to use their MAX jets while they were grounded, and $500 million to a fund for the families of passengers who were killed in the crashes.
Details
Boeing's employees chose the path of profit: Assistant Attorney General
Prosecutors said Boeing employees gave misleading statements about safety issues with the plane to the Federal Aviation Administration (FAA). "Boeing's employees chose the path of profit over candor," said David Burns, acting Assistant Attorney General for the Justice Department's criminal division. The government will drop the criminal charge of conspiracy to defraud the US after three years if Boeing follows the terms of settlement.
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Entering into this resolution is the right thing: Boeing CEO
CEO David Calhoun said, "This is a substantial settlement of a very serious matter, and 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."
Background
Boeing admitted that two of their pilots deceived FAA
Boeing began flying 737 MAX in 2017, which has a Maneuvering Characteristics Augmentation System (MCAS). The flight-control system could point a plane's nose down if sensors indicated the plane might be in danger of an aerodynamic stall and that it might fall from the sky. Boeing admitted in court filings that two of its technical pilot experts deceived the FAA about MCAS.
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346 people died in two Boeing plane crashes
To recall, on October 29, 2018, a MAX operated by Indonesia's Lion Air plunged into the Java Sea. On March 10, 2019, another MAX operated by Ethiopian Airlines crashed nearly straight down into a field. In all, 346 people were killed.
FAA orders
FAA ordered changes in Boeing aircraft earlier
After the planes were grounded worldwide, Boeing changed MCAS so that it always uses two sensors for pilots to override. The FAA ordered other changes, including the rerouting of some wiring to avoid potential dangerous short-circuiting. In November, the FAA approved Boeing's changes, and several carriers including American Airlines have resumed using the planes.