Boeing reached a $2.5 billion settlement with the Justice Department to settle criminal charges that the company defrauded the FAA. Credit: Boeing.

The US Justice Department has nailed Boeing with a hefty US$2.5bn fine over charges of with fraud and conspiracy in connection with two deadly crashes of its troubled 737 Max airliner, but one aviation expert downplayed it, calling it “pocket change to Boeing.”

The settlement with the aircraft manufacturing giant, which includes $2.2bn in compensation to the families of the people killed in the two Max crashes and a $243m fine, does not affect ongoing litigation by the victim’s families.

Boeing’s employees chose “the path of profit over candor by concealing material information” from the Federal Aviation Administration (FAA), the US’s top airline regulator, David Burns, the acting assistant attorney general of the justice department’s criminal division, The Guardian reported.

Burns said the company had also engaged “in an effort to cover up their deception.”

The Max was grounded worldwide in March 2019 after crashes in Indonesia and Ethiopia that killed 346 people. 

A March 2020 congressional investigation concluded that Boeing promoted a “culture of concealment” and was “grossly inefficient” in its oversight of the Max’s development, The Guardian reported.

At a heated congressional hearing in October 2019, Senator Richard Blumenthal accused Boeing of selling “flying coffins” as a result of its decision to conceal issues with the planes from pilots.

“The tragic crashes of Lion Air flight 610 and Ethiopian Airlines flight 302 exposed fraudulent and deceptive conduct by employees of one of the world’s leading commercial airplane manufacturers,” said Burns.

Aviation expert Scott Hamilton told KIRO7 TV in Seattle the settlement will not hurt Boeing’s bottom line.

“That’s pocket change to Boeing,” Hamilton said, pointing out that only $243.6 million is an actual fine for criminal misconduct, which is less than 10% of the total amount.

About 70% will be paid to compensate airlines flying the 737 Max for the aircraft’s 20-month grounding. Hamilton says the crisis comes from a culture of Boeing valuing profits over engineering.

“It’s cutting costs, cutting costs, cutting costs, and I think that culture is really the root of what happened here, and that goes straight to Chicago and the board of directors.”

Hamilton believes a stronger message would be sent if executives were fired.

“Half of the board of directors who were there at the creation of the Max in 2009, they’re all still there,” he said. “Why aren’t they gone?”

Hamilton said he’s concerned fines instead of firings could mean the cost-cutting culture continues.

“Until they’re gone, this continues to be a good old boys club, and oh, by the way, the current CEO David Calhoun was there in 2009. He was named to the board in 2009. He should be gone.”

Boeing admitted that two of its technical pilots deceived regulators about the safety of the Max’s MCAS stall prevention software, implicated in both of the fatal crashes. In both cases, the planes crashed shortly after takeoff when their pilots were unable to regain control of the planes after they went into a nosedive, The Guardian reported.

But in a statement, Boeing once more blamed its former employees.

The “agreement is based on the conduct of two former Boeing employees and their intentional failure to inform the FAA Aircraft Evaluation Group (AEG), the group within the FAA responsible for making pilot training determinations, about changes to the maneuvering characteristics augmentation system (MCAS),” the company said.

Calhoun, Boeing’s president and chief executive officer, 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.”

Boeing has now addressed concerns about the Max and the plane returned to service in the US in December, but not everyone is happy about it.

“Not only is the dollar amount of the settlement a mere fraction of Boeing’s annual revenue, the settlement sidesteps any real accountability in terms of criminal charges,” Rep. Peter DeFazio, the Oregon Democrat who chairs the House committee on transportation and infrastructure, told CNN Business.

He said the agreement was “an insult to the 346 victims who died as a result of corporate greed.”

“My committee’s investigation revealed numerous opportunities for Boeing to correct course during the development of the 737 Max but each time the company failed to do so, instead choosing to take a gamble with the safety of the flying public in hopes it wouldn’t catch up with them in the end,” said DeFazio.

Several family members of the crash victims attacked the settlement, CNN reported.

“This is a Boeing protection agreement,” said Michael Stumo, father of Samya Rose Stumo, who died on the second crash in March of 2019.

He said that the families of crash victims had urged the Justice Department not to reach a settlement with Boeing.

“The Boeing persons who committed fraudulent acts will not be held accountable. The government continues to protect them despite recognizing their criminal acts. The settlement dollar amounts are merely rounding errors in Boeing corporate finances. This is fake justice agreed to by insiders while excluding victims’ families.”

“May this serve as a reminder that Boeing’s and the FAA’s current leadership are not fit to be entrusted with human life,” said Zipporah Kuria, a UK resident who lost her father on the second crash. “Their priority is corporate interest over human life.”

She said the settlement “doesn’t even scratch the surface of justice.”