Tag: boeing 737 max

Boeing will plead guilty to a criminal fraud charge stemming from two crashes of 737 Max jetliners that killed 346 people after the government determined the company violated an agreement that had protected it from prosecution for more than three years, the Justice Department said late Sunday night. The aerospace giant confirmed that it had agreed to the deal.

Federal prosecutors gave Boeing the choice last week of entering a guilty plea and paying a fine as part of its sentence or facing a trial on the felony criminal charge of conspiracy to defraud the United States.

Prosecutors accused the American aerospace giant of deceiving regulators who approved the airplane and pilot-training requirements for it.

The plea deal, which still must receive the approval of a federal judge to take effect, calls for Boeing to pay an additional $243.6 million fine. That was the same amount it paid under the 2021 settlement that the Justice Department said the company breached. An independent monitor would be named to oversee Boeing’s safety and quality procedures for three years. The deal also requires Boeing to invest at least $455 million in its compliance and safety programs.

A Justice Department official told CBS News that, under terms of the deal, Boeing will be subject to three years of court-supervised probation, which means it could face additional penalties if it violates the terms of probation.

In addition, the department official told CBS News, the deal has Boeing’s board of directors agreeing to meet with victims’ families — a meeting previously sought by counsel to the families.

The plea deal only covers wrongdoing by Boeing involving the crashes, which killed all 346 passengers and crew members aboard two new Max jets. It does not give Boeing immunity for other incidents, including a panel that blew off a Max jetliner during an Alaska Airlines flight in January, a Justice Department official said.

The deal also does not cover any current or former Boeing officials, only the corporation.

Behind the prosecutors’ decision

CBS News has learned federal prosecutors secured the tentative guilty plea for the most serious charge they felt they could prove at trial. Based on the evidence and laws at their disposal, prosecutors determined they couldn’t be sure they could prove that the crime they charged Boeing with caused the MAX crashes.

Boeing said in a statement that, “We can confirm that we have reached an agreement in principle on terms of a resolution with the Justice Department, subject to the memorialization and approval of specific terms.”

Coming court actions

In a court filing Sunday night, the Justice Department said it expected to file the written plea agreement with the court by July 19.

The company’s guilty plea will be entered in U.S. District Court in Texas. The judge overseeing the case, who has criticized what he called “Boeing’s egregious criminal conduct,” could accept the plea and the sentence that prosecutors offered with it or he could reject the agreement, likely leading to new negotiations between the Justice Department and Boeing.

The Justice Department official told CBS News that, before deciding whether to accept plea agreement, the court will hold a public hearing at which victims’ families can express support for or object to the deal.

The official also said that, before extending any plea offer to Boeing, the department hosted several hours-long meetings with victims’ families and incorporated their feedback into its proposed resolution.

Families’ lawyers react

Lawyers for some of the relatives of those who died in the two crashes have said they will ask the judge to reject the agreement.

“This sweetheart deal fails to recognize that because of Boeing’s conspiracy, 346 people died. Through crafty lawyering between Boeing and DOJ, the deadly consequences of Boeing’s crime are being hidden,” said Paul Cassell, a lawyer for some of the families.

Mark Lindquist, an attorney who says his firm has represented the families of dozens of people who died in the two 737 crashes, said in a statement that, “Victim families will be asking the judge to not accept the plea deal in its current form. More than five years after 346 people died in two preventable crashes, it’s high time for Boeing to accept full responsibility, resolve pending cases, reform its culture and rebuild. Justice and accountability are important, but it’s also important to victim families – and the nation – that Boeing no longer sacrifice safety for profits.”

Details on the 737 Max crashes

Federal prosecutors alleged Boeing committed conspiracy to defraud the government by misleading regulators about a flight-control system that was implicated in the crashes, which occurred in Indonesia in October 2018 and in Ethiopia less five months later.

As part of the January 2021 settlement, the Justice Department said it would not prosecute Boeing on the charge if the company complied with certain conditions for three years. Prosecutors last month alleged Boeing had breached the terms of that agreement.

The case goes back to the crashes in Indonesia and in Ethiopia. The Lion Air pilots in the first crash did not know about flight-control software that could push the nose of the plane down without their input. The pilots for Ethiopian Airlines knew about it but were unable to control the plane when the software activated based on information from a faulty sensor.

The Justice Department charged Boeing in 2021 with deceiving FAA regulators about the software, which did not exist in older 737s, and about how much training pilots would need to fly the plane safely. The department agreed not to prosecute Boeing at the time, however, if the company paid a $2.5 billion settlement, including the $243.6 million fine, and took steps to comply with anti-fraud laws for three years.

Boeing, which blamed two low-level employees for misleading the regulators, tried to put the crashes behind it. After grounding Max jets for 20 months, regulators let them fly again after the Boeing reduced the power of the flight software. Max jets logged thousands of safe flights and orders from airlines picked up, increasing to about 750 in 2021, about 700 more in 2022 and nearly 1,000 in 2023.

The company, based in Arlington, Virginia, has dozens of airline customers spanning the globe. The best customers for the 737 Max include Southwest, United, American, Alaska, Ryanair and flydubai.

That changed in January, when a panel covering an unused emergency exit blew off a Max during the Alaska Airlines flight over Oregon.

Pilots landed the 737 Max safely and no one was seriously injured, but the incident led to closer scrutiny of the company. The Justice Department opened a new investigation, the FBI told passengers on the Alaska plane that they might be victims of a crime and the FAA said it was stepping up oversight of Boeing.

Boeing as federal contractor and space program participant  

A criminal conviction could jeopardize Boeing’s status as a federal contractor, according to some legal experts. The plea announced Sunday does not address that question, leaving it to each government agency whether to bar Boeing.

The Air Force cited “compelling national interest” in letting Boeing continue competing for contracts after the company paid a $615 million fine in 2006 to settle criminal and civil charges, including that it used information stolen from a rival to win a space-launch contract.

The company has 170,000 employees, and 37% of its revenue last year came from U.S. government contracts. Most of it was defense work, including military sales that Washington arranged for other countries.

Boeing also makes a capsule for NASA. Two astronauts will remain at the International Space Station longer than expected while Boeing and NASA engineers troubleshoot problems with the propulsion system used to maneuver the capsule.

Even some Boeing critics have worried about crippling a key defense contractor.

“We want Boeing to succeed,” Sen. Richard Blumenthal, a Connecticut Democrat, said during a Senate hearing last month on what he termed the company’s broken safety culture. “Boeing needs to succeed for the sake of the jobs it provides, for the sake of local economies it supports, for the sake of the American traveling public, for the sake of our military.”

Relatives of the Max crash victims have pushed for a criminal trial that might illuminate what people inside Boeing knew about deceiving the FAA. They also want the Justice Department to prosecute top Boeing officials, not just the company.

“Boeing has paid fines many a time, and it doesn’t seem to make any change,” said Ike Riffel of Redding, California, whose sons Melvin and Bennett died in the Ethiopian Airlines crash. “When people start going to prison, that’s when you are going to see a change.”

At a recent Senate hearing, Boeing CEO David Calhoun defended the company’s safety record after turning and apologizing to Max crash victims’ relatives seated in the rows behind him “for the grief that we have caused.”

Hours before the hearing, the Senate investigations subcommittee released a 204-page report with new allegations from a whistleblower who said he worried that defective parts could be going into 737s. The whistleblower was the latest in a string of current and former Boeing employees who have raised safety concerns about the company and claimed they faced retaliation as a result.

Every two seconds a Boeing 737 takes off or lands somewhere around the world. For over a century Boeing airplanes have embodied American engineering prowess – a confidence colloquially expressed in the saying, “If it ain’t Boeing, I ain’t going.”

“It was pride in our country’s iconic manufacturer; there were no boundaries on it for what great it could do,” said Dennis Tajer, a 737 captain. He’s flown for American Airlines for over 30 years. To him, Boeing was more than just the gold standard: “It was the only standard,” he said.

Yet he speaks of Boeing in the past tense. “Yeah, these are the stories of Boeing past,” Tajer said. “Boeing had our trust because they earned it. Boeing was a great company. But it’s no longer a great company.”

For Tajer, who has become an outspoken critic of Boeing’s leadership, things changed in the aftermath of the 737 Max crashes in 2018 in Indonesia and 2019 in Ethiopia, resulting in 346 deaths. Boeing apologized and said they’d do better. But then, this January a door panel on a 737 Max blew out mid-flight. There were no serious injuries, but Boeing’s reputation was wounded again.

It’s a stark contrast for the storied company known for putting engineering and quality first, one that started in 1916, building seaplanes in Seattle, Washington. Boeing became a symbol of national pride during World War II, churning out 16 B-17s every day.

Boeing then introduced Americans to the jet age, launching four new successful airplanes in just over a decade – the 707, 727, 737 and 747, the world’s first jumbo jet – all while building the rockets that helped put a man on the moon.

Gallery: Boeing’s 747, the “queen of the skies”

So, how did we get here, to Boeing facing a potential criminal trial and dealing with a loss of public confidence?

Investigative reporter and author Peter Robison wrote the 2021 book “Flying Blind: The 737 Max Tragedy and the Fall of Boeing,” in which he describes how the crashes exposed “the rotted culture of an iconic American company.” “That’s pretty much directly from the words of Boeing’s employees,” said Robison. “It’s systemic. It’s culture. Senior leadership had its eye on stock price, had its eye on share buybacks, and weren’t listening to the people on the ground.”

Robison started covering the company shortly after the 1997 merger between Boeing and McDonnell Douglas. “One person at Boeing described the people from McDonnell Douglas as hunter-killer assassins,” said Robison. “They came into this collegial environment at Boeing and just went through them like a knife through butter.”

Since that 1997 merger, Boeing has become a corporate behemoth in defense, space and commercial aviation. By 2019 It had spent more than $60 billion on stock buybacks, helping boost its stock price by over 1,000 percent.

Robison said, “Boeing lost control of its production system. It spun off parts of it that were essential. These aren’t just interchangeable commodities; it’s a complex product that needs to have a different level of scrutiny every step of the way.”

“And it’s ultimately people’s lives at stake,” said Van Cleave.

“Exactly. This is a business where one miss is too many,” said Robison.

After its third “miss” this January, when a door panel blew out on an Alaska Airlines 737 at 16,000 feet, Boeing said more of the same – eerily similar to its statements after the 737 Max crashes: We’re sorry, and we’re fixing it.

Boeing now says it’s investing heavily in engineering to “enable safe and sustainable flight in the years ahead.”

CBS News had hoped to sit down and talk with someone from Boeing about how the company got here, and where it’s going in the future. Instead, we were invited to what amounted to a media field trip, and a tour of the 737 Max production line. 

As a part of that tightly-controlled tour late last month, senior vice president of quality Elizabeth Lund took some reporter questions.

Van Cleave asked, “After the Max crashes, we heard very similar things, and we’re back here again talking about fixing problems that sound a lot like the problems that should have gotten fixed before. Why should anyone believe anyone from Boeing that you’re actually fixing anything?”

“We are a company that is deeply committed to the flying public’s safety,” Lund replied. “We are deeply committed to our employees. We are deeply committed to doing the right thing.”

Just this past week, in an effort to clean up persistent quality control problems, Boeing announced it would buy back Spirit Aerosystems, a Kansas-based contractor building the 737 fuselage. Boeing had spun off Spirit in 2005 in an attempt to reduce manufacturing costs.

Captain Tajer said, “Boeing seems to do the right thing only after they do the wrong thing; that’s the problem. They react to bad things instead of being proactive.”

In Tajer’s mind, Boeing has much more work to do. But when asked how he feels getting into the cockpit of his plane today, Tajer replied, “More ready than I’ve ever been. I have absolutely no hesitation in flying the aircraft based on what I know about it. The unnerving part, particularly on the Max, is I don’t know what you put on it that you decided not to tell me.”

On the 737 Max Tajer now uses a rather analog tool in an otherwise digital cockpit: a Post-It Note, to help remind him of another potential problem, a design issue in the engine. “The FAA sent us this airworthiness directive saying, ‘Hey, you gotta be aware of this. And then it can get so bad that it may cause you to have to do an off-airport landing’ – their words: ‘Off-airport.’ What the heck does that mean? That’s a cornfield, or the Hudson River.”

Boeing expects to have a fix by next year.

Tajer said, “I have a book of Post-It Notes. Now I look at these and think, ‘How many of these am I gonna have to fill out because Boeing didn’t tell me about something or they learned something new about a faulty design?’”

Still, Tajer (and every 737 pilot we spoke to) says the plane is safe, but that change at Boeing is desperately needed now.

“It’s not the airplane that I don’t trust,” Tajer said. “It’s the people who delivered it to me.”

     
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Story produced by John Goodwin. Editor: Ed Givnish. 

Kris Van Cleave

Emmy Award-winning journalist Kris Van Cleave is the senior transportation correspondent for CBS News based in Phoenix, Arizona, where he also serves as a national correspondent reporting for all CBS News broadcasts and platforms.