Boeing 737 Max plea agreement: What to know and next steps

Boeing announced on Sunday Pleaded guilty to federal criminal charges The deal is the culmination of a multi-year crisis for the company’s 737 Max aircraft, reached as part of an agreement with the Justice Department.

The agreement could help Boeing settle a federal case stemming from two fatal 737 Max crashes in 2018 and 2019. But the deal is not the final word on that matter and may have little impact on other issues, including questions about the company’s production quality that came to light when a panel blew off a Max jet during a flight in January.

Here’s additional information about Boeing’s dealings with federal prosecutors and other challenges facing the company.

What is expected to happen next?

Boeing and the Justice Department first reached a deal in 2021 over the two crashes that allowed the company to avoid criminal charges. But federal prosecutors said this year the company violated the terms of that agreement and proposed a new deal, which was agreed in principle on Sunday.

Under the latest agreement, Boeing will admit to conspiracy to defraud the federal government. The company also agreed to independent supervision, three years of probation and additional financial penalties. This includes a $487.2 million fine, half of which can be forgiven because Boeing has already paid the fine.

But the arrangement has not yet been officially announced.

“Sometimes people hear that a plea deal has been reached and think that the matter is settled, but that’s not necessarily true,” said Kya M. Henley, a former public defender and co-founder of Saint Park, a law firm specializing in white-collar crime.

The formal agreement is expected to be filed in federal court in the coming days, where the judge hearing the case will review it, but many of the families of the victims of the two accidents strongly oppose the agreement.

If the judge sides with the victims’ families, Boeing and the Justice Department will have to reach a new agreement.

Otherwise, the ombudsman will be chosen by an independent committee, with the final decision made by Deputy Attorney General Lisa Monaco. The Justice Department said it will solicit a list of candidates for the position from the public and consider Boeing’s feedback.

Why are these families unhappy and what can they do about it?

Families of the victims said they were deeply disappointed with the Justice Department’s handling of the Boeing case. Lawyers for the families said that while prosecutors forced Boeing to admit criminal charges, they did not hold the company or its executives accountable for the 346 deaths in the two crashes.

“We believe this agreement is inadequate,” said Erin Applebaum, a lawyer representing 34 families who lost loved ones in the second Ethiopian crash. “We believe this agreement does not adequately address the root causes of Boeing’s problems.”

Applebaum said the only way Boeing can implement meaningful change is by taking actions that affect its bottom line, which means imposing larger fines and more severe consequences. She also criticized the decision to consider the independent monitor’s public proposal as “just talk,” noting the Justice Department will still allow Boeing to comment on the decision.

The families are now hoping to persuade a judge to reject the deal, saying it would not improve public safety. Separately, several civil lawsuits filed by the families against Boeing are set to go to trial later this year.

Who will serve as the monitor and what will the monitor do?

As part of the terms of Boeing’s three-year probation, the Justice Department will appoint an independent compliance monitor who will have the powers of a probation officer and will be responsible for submitting annual reports to the government to ensure the company is following safety measures.

Reports from the monitors, which other companies such as Apple and Deutsche Bank have installed as part of settlements with federal prosecutors, could suggest changes to a company’s production process or quality controls.

It is not yet clear who the government will nominate for the position, but the ombudsman is likely to be an aviation expert.

“No one wants someone snooping around in their files,” said John C. Coffee, a Columbia University law professor who focuses on corporate governance. “So people are very sensitive about who this person is.”

The scope of the ombudsman’s powers will depend on the fine print of the final agreement. Some important questions remain unresolved, such as whether the ombudsman can report his or her findings directly to a judge and whether the judge can impose a fine for doing so. Mr. Coffey said those issues should be resolved in the final terms.

Because the monitor’s duties stem from the guilty plea and the report is publicly filed in the court’s docket, it will almost certainly be subject to court oversight, said Veronica Root Martinez, a Duke University law professor who studies corporate misconduct and compliance. The monitor may have relationships with company insiders to draft recommendations and ensure compliance with plea agreements.

“It doesn’t have to be just someone passively watching,” Ms. Martinez said.

Will Boeing face other consequences if it pleads guilty?

The guilty plea puts Boeing’s lucrative government contracts at risk. Companies convicted of certain felonies are barred from receiving government contracts without immunity. Boeing is in talks with the Pentagon over the fate of those government contracts, according to people familiar with the matter.

Veteran aerospace analyst Loren Thompson said disruption to Boeing’s defense and space business could be catastrophic for the company. Government contracts generate more than a third of Boeing’s revenue.

Thompson said Boeing’s defense business has been declining over the past few decades while other manufacturers have been making profits. “Anything that prevents Boeing from getting new defense business is going to be very damaging to the company’s portfolio,” he said.

It was unclear whether the plea agreement would have an impact on a separate investigation into a January brawl at Alaska Airlines in which a group blew up a Max jet. The FBI, which is investigating that incident, declined to comment.