Boeing to pay $2.5 billion to settle fraud and conspiracy lawsuit over 737 Max Jet crashes

Boeing has agreed to pay $2.5 billion to settle a lawsuit that accused the company of fraud and conspiracy after two crashes of 737 Max jets in 2018 and 2019, the Associated Press reported. The settlement deal was filed by the company in a Delaware court on Friday, which now awaits the judge's approval. Boeing's directors, however, did not admit wrongdoing in the settlement.

Under the settlement, Boeing will pay a $243.6 million fine, $1.77 billion in compensation to airlines that were unable to use the company's Max jets while they were grounded, and $500 million into a fund for families of passengers who were killed in crashes in 2018 and 2019, AP reported.

Boeing sued after two crashes of Boeing Max jets killed 346 people in 2018 & 2019

As per documents filed on Friday, as cited by AP, the insurer for the current and former directors have to pay the settlement fund, which is minus fees and expenses. The document clearly stated that none of the directors will have to bear the settlement cost directly. Boeing has also agreed to add a board member with experience in aviation and aerospace engineering for a term of five years to ensure the safety of the Boeing Max flights.

The shareholder lawsuit against Boeing was filed by administrators of New York State employees' retirement funds and a Colorado pension fund for firefighters, in support of police officers. They sued the company after two consecutive crashes of Boeing Max jets that killed 346 people in 2018 and 2019, AP reported. The lawsuit accused Boeing's directors of failing to look out for the interests of shareholders. It also held the company responsible for being unable to address safety warning signs before both jetliners crashed.

At least eight directors from the 13 who were on board at the time of the crashes left by January 2019. Boeing also fired then- CEO Dennis Muilenburg and replaced him with David Calhoun, shortly after the crashes occurred.

Settlement to include money for crash victims' families, airline customers, and fine

In January 2021, Boeing agreed to pay a $2.5 billion settlement with US Justice Department to settle a criminal prosecution for misleading safety regulators of the Federal Aviation Administration (FAA) and reportedly feeding them half-truths and cover-up actions. The payment would include money for the crash victims' families, airline customers, and a fine, AP mentioned.

Following the announcement of this settlement deal, Acting Attorney General for the Justice Department's criminal division, David Burns said, "Boeing's employees chose the path of profit over candor." The settlement was said to remove any uncertainty over criminal charges against the US aircraft maker, which was already struggling to douse the Max crisis behind.

It should be mentioned that Boeing faces dozens of lawsuits from families who lost relatives in the crashes. Three lawyers pressing cases in the Ethiopian crash said the settlement would not affect their pursuit of compensation, AP reported.

(With inputs from AP, Image: AP/Representative)