Boeing’s announcement on Sunday that it had agreed to plead guilty to a federal criminal charge as part of a deal with the Justice Department was the culmination of a yearslong crisis involving the company’s 737 Max plane.
The agreement may help Boeing put to rest a federal case stemming from two fatal crashes of the 737 Max in 2018 and 2019. But the deal is not the final word on that saga and may have little impact on other problems, including questions about the company’s production quality that were brought to light when a panel blew out of a Max jet during a January flight.
Here’s what else to know about Boeing’s deal with federal prosecutors and other challenges the company is dealing with.
What is expected to happen next?
Boeing and the Justice Department first reached an agreement in 2021 about the two crashes that allowed the company to avoid criminal charges. But federal prosecutors this year said that the company had violated the terms of that agreement and came up with a new one, which was agreed to in principle on Sunday.
Under the latest agreement, Boeing would plead guilty to conspiring to defraud the federal government. The company would also agree to an independent monitor, three years of probation and additional financial penalties. That includes a $487.2 million fine, half of which could be forgiven because of Boeing’s earlier fine payments.
But the arrangement is not yet official.
“Sometimes people hear that there’s been a plea agreement and think that things are finalized, but that’s not necessarily true,” said Kya M. Henley, a lawyer specializing in white collar crime and former public defender.
A formal agreement is expected to be filed in a federal court in the coming days and the judge overseeing the case will then review the deal, which many of the families of the people who died on the two crashes strongly oppose.
If the judge sides with the families, Boeing and the Justice Department will have to come up with a new deal.
Otherwise, a monitor will be chosen by an independent committee, with the final decision made by the deputy attorney general, Lisa Monaco. The Justice Department has said it would solicit the names of candidates for the job from the public and consider feedback from Boeing.
Why are the families unhappy and what can they do?
The families have said they remain deeply disappointed with the way the Justice Department handled the case against Boeing. Despite getting the company to plead guilty to a criminal charge, prosecutors failed to hold the company or executives accountable for the deaths of the 346 people in the two crashes, lawyers for the families said.
“We don’t think the deal is adequate,” said Erin Applebaum, a lawyer who represents 34 of the families who lost loved ones in the second crash, in Ethiopia. “We don’t think that it properly addresses the root cause of the problems at Boeing.”
Ms. Applebaum said that the only way to enact meaningful change at Boeing would be to take action that affects its bottom line, which would mean imposing larger fines and more severe consequences. She also criticized the decision to consider public proposals for the independent monitor as “nothing but lip service,” noting that the Justice Department would have final say in the decision.
For now, the families hope to convince the judge to reject the deal, arguing that it would not enhance public safety. Separately, trials in a handful of civil cases filed against Boeing by some of the families are scheduled to begin later this year.
Who will be the monitor and what will they do?
The Justice Department will appoint an independent compliance monitor as part of the terms of Boeing’s three-year probation. That person, who will be vested with the powers of a probation officer, will submit annual reports to the government and ensure that the company complies with safety measures.
The monitor’s reports might suggest changes to the company’s production process or quality control. Similar monitors have been placed at other companies like Apple and Deutsche Bank as part of settlements with federal prosecutors.
It’s still unclear who the government will nominate for the role. The monitor in this case is likely to be an aviation expert.
“Nobody wants a free-roving monitor looking at their files,” said John C. Coffee, a law professor at Columbia University focused on corporate governance. “That’s why there’s likely to be a great deal of sensitivity to who the person is.”
The scope of the monitor’s authority will come down to the fine print of the final agreement. A few important questions remain unresolved, such as whether the monitor can go directly to the judge with his or her findings and whether the judge can impose a penalty in response. Those should be addressed in the final terms, Mr. Coffee said.
Veronica Root Martinez, a law professor at Duke University who studies corporate misconduct and compliance, said there would almost certainly be court oversight of the monitorship since it stemmed from a guilty plea, with reports publicly filed on the court’s docket. The monitor is likely to have a relationship with insiders at the company to draft recommendations and ensure compliance with the plea deal.
“It’s not necessarily just someone passively watching,” Ms. Martinez said.
Are there other consequences to Boeing for pleading guilty?
The guilty plea puts Boeing’s lucrative government contracts at risk. A company convicted of certain felonies can’t get government contracts without obtaining a waiver. Boeing is in talks with the Pentagon about the fate of those government contracts, according to a person familiar with the matter.
A disruption in Boeing’s defense and space business could be catastrophic to the company’s business, said Loren Thompson, a longtime aerospace analyst. Contracts with the government bring in more than a third of the company’s revenue.
Mr. Thompson said Boeing’s defense business has declined over the decades as other manufacturers made gains. “Any further impediment to booking new defense business will be very detrimental to the company’s portfolio of products,” he said.
It was not immediately clear whether the plea deal would have any impact on a separate investigation into the January fight, operated by Alaska Airlines, in which a panel blew off a Max jet. The F.B.I., which is investigating the incident, declined to comment.
Be the first to comment