Summary
Boeing Company (BA) has entered into a Deferred Prosecution Agreement (DPA) with the U.S. Department of Justice (DOJ) on January 6, 2021, to resolve an investigation into the company's conduct related to the 737 MAX airplane's Federal Aviation Administration evaluation. This DPA involves a criminal charge of conspiracy to defraud the United States, stemming from the actions of two former 737 MAX program technical pilots. The agreement mandates significant financial settlements, including a $2.51 billion payment. This amount comprises a $243.6 million criminal penalty, $500 million for heirs of crash victims, and $1.77 billion to airline customers for losses due to the 737 MAX grounding. The company expects to record earnings charges of $743.6 million in the fourth quarter of 2020, with $1.77 billion already reserved. The DPA is contingent on Boeing's compliance over three years, after which the criminal information will be dismissed.
Key Highlights
- 1Boeing entered into a Deferred Prosecution Agreement (DPA) with the DOJ on January 6, 2021.
- 2The DPA resolves the investigation into Boeing's conduct concerning the 737 MAX evaluation by the FAA.
- 3The company will pay a total of $2.51 billion to settle the matter.
- 4This total payment includes a $243.6 million criminal monetary penalty.
- 5$500 million is allocated as compensation to the heirs of victims of the Lion Air Flight 610 and Ethiopian Airlines Flight 302 accidents.
- 6$1.77 billion will be paid to airline customers to compensate for harm caused by the 737 MAX grounding.
- 7Boeing expects to incur earnings charges of $743.6 million in Q4 2020 related to the DPA.