New York:

Boeing said Monday it had reached a deal with the US Department of Justice over two fatal 737 MAX crashes, which court papers show would see the aviation giant plead guilty to fraud.

The agreement comes after prosecutors concluded Boeing flouted an earlier settlement addressing the disasters, in which 346 people were killed in Ethiopia and Indonesia more than five years ago.

“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,” Boeing told AFP in a statement.

Court papers filed in Texas on Sunday said the company had agreed to plead guilty to “conspiracy to defraud the United States” during the certification of MAX airplanes.

Boeing will be fined under the deal and must invest a minimum of $455 million in “compliance and safety programs”, while compensation for families will be determined by the court.

Boeing’s latest legal predicament was triggered by a DoJ determination in mid-May that the company ignored a 2021 deferred prosecution agreement (DPA) by not meeting requirements to improve its compliance and ethics program after the MAX crashes.

Families of MAX victims were “highly disappointed” by the deal reached between Boeing and the DoJ, an attorney at Clifford Law representing them said.

“Much more evidence has been presented over the last five years that demonstrates that the culture of Boeing putting profits over safety hasn’t changed. This plea agreement only furthers that skewed corporate objective,” senior partner Robert A. Clifford said in a statement.

The families will ask the court to reject the plea deal at an upcoming hearing, according to an opposition filed by their legal team.

The original DPA was announced in January 2021, over charges that Boeing knowingly defrauded the Federal Aviation Administration during the certification of the MAX.

The agreement required Boeing to pay $2.5 billion in fines and restitution in exchange for immunity from criminal prosecution.

A three-year probationary period was set to expire this year. But in January, Boeing was plunged back into crisis mode when a 737 MAX flown by Alaska Airlines was forced to make an emergency landing after a fuselage panel blew out mid-flight.

In a May 14 letter to the US court, DoJ officials said that Boeing breached its obligations under the DPA by “failing to design, implement, and enforce a compliance and ethics program to prevent and detect violations of the US fraud laws throughout its operations.”

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Washington:

US aircraft manufacturer Boeing said Monday it had reached a “definitive deal” to buy its subcontractor Spirit, which has faced scrutiny over production quality control in recent months.

“The merger is an all-stock transaction at an equity value of approximately $4.7 billion, or $37.25 per share,” the company said in a statement.

Boeing disclosed in March that it was in talks to potentially reacquire Spirit, which it spun off in 2005 to lower costs.

“We believe this deal is in the best interest of the flying public, our airline customers, the employees of Spirit and Boeing, our shareholders and the country more broadly,” said Boeing president and CEO Dave Calhoun.

He said by reintegrating Spirit, “we can fully align our commercial production systems”, including safety and quality management systems, and “our workforce to the same priorities, incentives and outcomes — centered on safety and quality”.

Spirit AeroSystems builds fuselages and other significant parts for both Airbus and Boeing.

Boeing is by far Spirit’s biggest customer, with around 70 per cent of its revenue coming from the American plane maker in 2023.

The two companies have faced intense scrutiny since a near-catastrophic incident in January when a fuselage panel blew off a 737 MAX mid-flight.

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Washington:

The US Justice Department is offering Boeing a plea deal that will allow it to avoid a trial related to two deadly 737 MAX crashes, a lawyer for the victims’ families said Sunday, expressing outrage.

Details of the deal, which requires Boeing to pay a fine and submit to an outside supervisor, were given to the families in a two-hour presentation by the Department of Justice (DOJ) on Sunday, said Paul Cassell, a University of Utah law professor who represents the families.

He said the families “will strenuously object” to the agreement if Boeing ultimately accepts and it is presented to a judge.

Contacted by AFP, Boeing declined to comment.

The New York Times reported over a week ago that prosecutors were eying such an alternative settlement, known as a deferred prosecution agreement, or DPA, but the DOJ said it had not yet made a decision.

In May, the DOJ concluded that Boeing could be prosecuted for violating a previous DPA reached following the two fatal 737 MAX crashes in 2018 and 2019, which claimed 346 lives.

Under that three-year deal, Boeing agreed to pay $2.5 billion to settle fraud charges related to the certification of the 737 MAX.

But the aviation giant came under renewed scrutiny early this year after a 737 MAX operated by Alaska Airlines was forced to make an emergency landing after a fuselage panel blew out mid-flight.

The January 5 incident brought Boeing’s manufacturing processes back into the spotlight, prompting regulator scrutiny and congressional investigations.

Meanwhile, the victims’ families have repeatedly urged federal prosecutors to bring Boeing to court versus reaching another settlement.

But prosecutors also faced pressure not to further damage Boeing, a company seen as critical to the US aviation industry as well as national security.

In his presentation on Sunday, the lead US prosecutor “admitted there is ‘a strong interest’ by the families to go to trial, but he repeatedly said that the DOJ couldn’t prove charges by a reasonable doubt,” Cassell said.

“Families argued over and over for a trial and to allow a jury to make that decision,” he said.

Boeing contested the DOJ’s conclusions in mid-June but has recognized the gravity of the safety crisis.

CEO Dave Calhoun, who has agreed to step down later in the year, told a recent congressional hearing that the company is “taking action and making progress.”

Ultimately, it will be up to the federal judge in Texas who is overseeing the case to decide if the new DPA goes through.

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New York:

Another whistleblower stepped forward Wednesday alleging he was retaliated against after flagging potentially dangerous manufacturing problems on the Boeing 787 Dreamliner.

Richard Cuevas filed complaints with two US agencies alleging he was dismissed suddenly in March 2024 after raising concerns over manufacturing deviations in the forward pressure bulkhead, which is critical to managing pressure during flights, according to attorneys Katz Banks Kumin.

Cuevas is the latest whistleblower to come forward from Boeing’s operations, adding to scrutiny of the plane maker following a January inflight incident on a 737 MAX operated by Alaska Airlines that required an emergency landing.

Cuevas worked as a contractor for Strom, who assigned him to Spirit AeroSystems, which builds fuselages for the Dreamliner.

In October 2023, Cuevas filed an ethics complaint with Boeing, alleging Spirit had made unauthorized changes to fastener hole dimensions in the forward pressure bulkhead on 787 aircraft without notifying Boeing.

“Our client witnessed critical issues with the forward pressure bulkhead assembly on multiple planes that deviated from Boeing’s specifications,” said a statement from Katz Banks Kumin.

“He recognized the substandard work and expressed concern about his safety concerns, but Spirit and Boeing failed to stop the faulty manufacturing processes. Mr. Cuevas was fired when his manager found out that an employee complained about these issues, and suspected that employee was Mr. Cuevas.”

The attorneys filed complaints with the Federal Aviation Administration and the Occupational Health and Safety Administration, saying in the latter submission that Cuevas believes that “based on his direct observations of glaring safety issues, that Boeing’s and Spirit’s statements to the public and investors about the safety of 787 Dreamliners are fraudulent.”

The attorneys also represent Sam Salehpour, a Boeing engineer who testified in April in the Senate about concerns over 787 manufacturing practices and that he was retaliated against for speaking.

Boeing said it is not involved in personnel decisions of subcontracts.

“A subcontractor’s employee previously reported concerns to us that we thoroughly investigated as we take seriously any safety-related matter. Engineering analysis determined that the issues raised did not present a safety concern and were addressed,” Boeing said. “We are reviewing the documents released today and will thoroughly investigate any new claim.”

Spirit “leadership is aware of the allegations and looking into the matter,” said company spokesperson Joe Buccino. “We encourage all Spirit employees with concerns to come forward, safe in knowing they will be protected.”

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U.S. lawmakers pressed Boeing’s chief executive on June 18 about the company’s plans to fix its manufacturing problems and its willingness to heed whistleblowers’ warnings, while relatives of people who died in two crashes of Boeing 737 Max jetliners were in the room to remind him of what was at stake.

CEO David Calhoun appeared before the Senate investigations subcommittee, which is chaired by Sen. Richard Blumenthal, D-Conn., a Boeing critic. Blumenthal opened the hearing by recognizing the relatives of the crash victims and the family of a Boeing whistleblower who died by suicide earlier this year.

Also read: The controversy over Boeing’s bestselling 737 MAX and its impact in India | Data

“This hearing is a moment of reckoning,” the senator said. “It’s about a company, a once iconic company, that somehow lost its way.”

Mr. Calhoun’s appearance before Congress was the first by a high-ranking Boeing official since a panel blew out of a 737 Max during an Alaska Airlines flight in January. No one was seriously injured in the incident, but it raised fresh concerns about the company’s best-selling commercial aircraft.

Mr. Calhoun sat at the witness table and fidgeted with his eyeglasses as Blumenthal spoke. Sen. Ron Johnson, R-Wisc., thanked the CEO for coming to face “tough questions.” Before giving his prepared opening statement, Calhoun stood and faced the people in the audience holding poster-sized photos of some of the 346 people who died in the 2018 and 2019 crashes.

“I apologize for the grief that we have caused,” he said.

Hours before Mr. Calhoun arrived on Capitol Hill, the Senate panel released a 204-page report with new allegations from a whistleblower who said he worries that “nonconforming” parts — ones that could be defective or aren’t properly documented — are going into 737 Max jets.

Sam Mohawk, a quality assurance investigator at the 737 assembly plant near Seattle, claims Boeing hid evidence of the situation after the Federal Aviation Administration informed the company a year ago that it would inspect the plant.

“Once Boeing received such a notice, it ordered the majority of the (nonconfirming) parts that were being stored outside to be moved to another location,” Mohawk said, according to the report. “Approximately 80% of the parts were moved to avoid the watchful eyes of the FAA inspectors.”

The parts were later moved back or lost, Mohawk said. They included rudders, wing flaps and tail fins — all crucial in controlling a plane.

A Boeing spokesperson said the company got the subcommittee report late Monday night and was reviewing the claims. “We continuously encourage employees to report all concerns as our priority is to ensure the safety of our airplanes and the flying public,” the spokesperson said.

The FAA said it would “thoroughly investigate” claims raised in the Senate report.

The Senate subcommittee said that newly uncovered documents and whistleblower accounts “paint a troubling picture of a company that prioritizes speed of manufacturing and cutting costs over ensuring the quality and safety of aircraft.”

The 737 Max has a troubled history. The Justice Department is considering whether to prosecute Boeing for violating terms of a settlement it reached with the company over allegations it misled regulators who approved the plane. Max jets crashed in 2018 in Indonesia and 2019 in Ethiopia. The FAA subsequently grounded the aircraft for more than a year and a half.

Mohawk told the Senate subcommittee that the number of unacceptable parts has exploded since production of the Max resumed following the crashes. He said the increase led supervisors to tell him and other workers to “cancel” records that indicated the parts were not suitable to be installed on planes.

The FAA briefly grounded some Max planes again after January’s mid-air blowout of a plug covering an emergency exit on the Alaska Airlines plane. The agency and the National Transportation Safety Board opened separate investigations of Boeing that are continuing.

The company says it has gotten the message. Boeing says it has slowed production, encouraged employees to report safety concerns, stopped assembly lines for a day to let workers talk about safety, and appointed a retired Navy admiral to lead a quality review. Late last month, it delivered an improvement plan ordered by the FAA.

“From the beginning, we took responsibility and cooperated transparently with the NTSB and the FAA,” Calhoun said in remarks prepared for the hearing. He defended the company’s safety culture.

“Our culture is far from perfect, but we are taking action and making progress,” Mr. Calhoun said in the prepared remarks. “We are taking comprehensive action today to strengthen safety and quality.”

The drumbeat of bad news for Boeing goes on, however.

In the past week, the FAA said it was investigating how falsely documented titanium parts got into Boeing’s supply chain, and federal officials examined “substantial” damage to a Southwest Airlines 737 Max after an unusual mid-flight control issue.

Boeing disclosed that it hasn’t received a single order for a new Max — previously its best-selling plane — in two months.

Blumenthal first asked Mr. Calhoun to appear before the Senate subcommittee after a whistleblower, a Boeing quality engineer, claimed that manufacturing mistakes were raising safety risks on two of the biggest Boeing planes, the 787 Dreamliner and the 777. He said the company needed to explain why the public should be confident about Boeing’s work.

Boeing pushed back against the whistleblower’s claims, saying that extensive testing and inspections showed none of the problems that the engineer had predicted.

Mr. Calhoun announced in late March that he would retire at the end of the year. The head of the company’s commercial-airplanes unit resigned the day of Calhoun’s announcement.

Families of people who died in the Boeing Max crash in Ethiopia plan to attend Tuesday’s hearing on Capitol Hill. They have pressed the Justice Department repeatedly to prosecute Boeing.

“We will not rest until we see justice.,” said Zipporah Kuria, whose father died in the crash. She said the U.S. government should “hold Boeing and its corporate executives criminally responsible for the deaths of 346 people.”

The Justice Department determined last month that Boeing violated a 2021 settlement that shielded the company from prosecution for fraud for allegedly misleading regulators who approved the 737 Max. A top department official said Boeing failed to make changes to detect and prevent future violations of anti-fraud laws.

Prosecutors have until July 7 to decide what to do next. Blumenthal said at the start of Tuesday’s hearing that he thinks the Justice Department should prosecute the company.

San Francisco, United States:

The US Justice Department on Tuesday said Boeing can be prosecuted for two subsequent 737 Max crashes that killed 346 people approximately five years ago.

Boeing breached obligations under an agreement that had shielded it against legal proceedings for the accidents, department officials said in a letter to a federal court in Texas.

Boeing told AFP “we believe that we have honored the terms of that agreement” and said that it plans to defend itself.

US officials said in their letter that Boeing breached its obligations under a deferred prosecution agreement (DFA) by “failing to design, implement, and enforce a compliance and ethics program to prevent and detect violations of the US fraud laws throughout its operations.”

Such a breach would mean Boeing can be prosecuted for any violation of federal law related to the crashes, according to US justice officials.

The government is evaluating how to proceed in the matter and has directed Boeing to respond by June 13.

US officials also plan to confer with families of people who died in the Lion Air Flight 610 and Ethiopian Airlines Flight 302 crashes.

“This is a positive first step, and for the families, a long time coming,” said attorney Paul Cassell, who represents crash victim families.

Cassell called for further action from the Department of Justice and added he would seek details regarding a “satisfactory remedy” to Boeing’s wrongdoing.

In March of 2019, a Boeing 737 MAX 8 operated by Ethiopian Airlines crashed southeast of Addis Ababa, killing the 157 people on board.

It was the second accident in five months for a 737 MAX aircraft, a product line meant to replace the 737 NG.

The first crash, involving a MAX 8 operated by Lion Air, occurred in October of the prior year in Indonesia’s Java Sea and left 189 people dead.

Both aircraft crashed shortly after takeoff, with investigations later pointing to trouble with the automated flight system.

The aircraft were temporarily grounded or banned from airspace around the world.

“We will engage with the Department with the utmost transparency, as we have throughout the entire term of the agreement,” Boeing said in a statement to AFP.

It said this also included “response to their questions following the Alaska Airlines 1282 accident.” 

The dramatic mid-flight blowout on January 5 of a fuselage panel on an Alaska Airlines plane precipitated the departures of a series of top Boeing officials — including CEO Dave Calhoun, who is set to step down at year’s end.

It also resulted in reduced production of the 737 MAX. 

Multiple inquiries, audits

The US Federal Aviation Administration was sharply criticized after the crashes of two Boeing 737 MAX planes in 2018 and 2019. 

But as Boeing faces multiple inquiries and audits in the United States and abroad, it has repeatedly assured critics that it is working “with full transparency and under the oversight” of FAA regulators.

The DPA required Boeing to pay $2.5 billion in fines and restitution in exchange for immunity from criminal prosecution for charges it defrauded the government during the certification of the MAX.

A federal judge in Texas early last year rejected a challenge by relatives of Boeing 737 MAX crash victims to the aviation giant’s US criminal settlement, ruling against ordering changes to the controversial January 2021 DPA.

The families have argued that Boeing’s role in what they have called the “deadliest corporate crime” in US history merits criminal conviction of the company and top brass. 

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New York:

Boeing announced Wednesday that the head of its 737 MAX program is departing the aviation giant less than two months after a major safety incident temporarily grounded 171 planes.

Ed Clark, an 18-year Boeing veteran is “leaving the program,” Boeing Commercial Aviation (BCA) chief Stan Deal said in a memo released by the company. Katie Ringgold has been named as his replacement.

The move comes after a 737 MAX operated by Alaska Airlines suffered a mid-flight blowout of an air panel on the fuselage on January 5, triggering an emergency landing with the plane left with a gaping hole in the cabin.

While there were no serious injuries, safety inspectors said the incident could have been catastrophic.

“Ed departs with my, and our, deepest gratitude for his many significant contributions over nearly 18 years of dedicated service to Boeing,” the memo said.

Clark had ascended to the role in March 2021, shortly after a 20-month grounding of the MAX program following two fatal crashes in 2018 and 2019.

In her new post, Ringgold’s responsibilities include management of the Renton factory where the MAX is assembled, in the western US state of Washington.

The January 5 episode has led to enhanced scrutiny of Boeing by the Federal Aviation Administration regulatory body and lawmakers on Capitol Hill, who plan hearings on the matter.

A preliminary investigation found that four bolts which help secure the panel were missing, the National Transportation Safety Board said February 6, describing the probe as “ongoing.”

The FAA has said it is midway through its own six-week safety audit into Boeing. The agency in January 2023 also appointed a panel to undertake a “safety culture” review of Boeing that is expected to be released in the coming weeks.

Boeing’s response to the latest difficulty has included operational pauses at Renton and other sites to review safety and quality control procedures. It promised enhancements of efforts to bolster inspections of new planes prior to delivery.

Boeing Chief Executive Dave Calhoun has accepted responsibility for the incident and promised transparency. 

In addition to Ringgold’s appointment, Boeing named Elizabeth Lund to the newly created post of senior vice president for quality in the commercial division.

The company also named Mike Flemming to succeed Lund as general manager for airplane programs, and Don Ruhmann to replace Flemming as vice president of development programs.

The leadership changes were needed “as we continue driving BCA’s enhanced focus on ensuring that every airplane we deliver meets or exceeds all quality and safety requirements,” Deal said in the memo.

“Our customers demand, and deserve, nothing less.”

Michel Merluzeau, an aeronautics specialist with consulting firm AIR, said the newly-named executives were well regarded but that the company had experienced important departures during the pandemic.

“They’ve lost a lot of people,” Merluzeau said. “The next level of leadership needs to mature.”

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