Boeing’s Billion-Dollar Troubles Are Not Over Yet

Already facing sanctions, the company’s possible plea deal has now angered families of the 346 victims who died in the 2018- and 2019 crashes. 

The NTSB Steps In 

Last Thursday, the National Transportation Safety Board (NTSB) revealed that Boeing will be subject to sanctions. This is for disclosing non-public information regarding an ongoing federal investigation into how a door plug blew out of one of Boeing’s 737 Max 9 planes in January.  

Violating Legal Agreements 

The NTSB has accused Boeing of “blatantly” violating a signed agreement that stipulates the company has party status to investigate information that hasn’t been released to the public. 

Said Too Much? 

In a press release, the NTSB stated, “During a media briefing Tuesday about quality improvements at Boeing Commercial Airplanes, a Boeing executive provided investigative information and gave an analysis of factual information previously released”. 

“Both of these actions are prohibited by the party agreement that Boeing signed when it was offered party status by the NTSB at the start of the investigation”, the release continued. 

A Possible Plea Deal? 

Now, the US Department of Justice, which is set to charge the aerospace company with fraud, plans on offering a plea deal, as per sources close to the matter. This has angered the loved ones of the 346 passengers who died in Boeing’s 2018- and 2019 plane crashes.  

Clear Conscience? 

Attorneys representing the relatives pointed the finger at the federal government, accusing them of conjuring up “another sweetheart plea deal” with Boeing. During a conference call on Sunday, a family member supposedly asked one official how he managed to sleep at night.  

That’s It? 

Two sources state that, during the call, relatives were briefed on the proposed deal’s terms, which say that Boeing would be subject to a fine, and then face a three-year term of probation before working under a corporate monitor. 

Not Good Enough 

This has significantly angered the relatives of the victims, with one representative of the families, Paul Cassell, saying: “The memory of 346 innocents killed by Boeing demands more justice than this”.  

The Previous Agreement 

In 2021, the justice department reached a controversial agreement with Boeing that protected the brand from a criminal conspiracy charge to commit fraud that resulted from the two crashes. 

New Year, New Headaches 

But thanks to this year’s incident where a cabin panel blew off mid-flight, forcing a brand-new 737 Max jet into an emergency landing, the justice department now claims Boeing has breached said agreement. 

No Comment… Yet 

Neither the justice department nor Boeing immediately responded to requests for comments. 

Boeing has until the end of this week to decide whether it will plead guilty to the charge to avoid trial.

More Trouble for Boeing? 

Although the criminal charges could deal another serious blow to Boeing’s already damaged financial situation and reputation, it wouldn’t necessarily send any past- or current executives to prison. 

Because although nearly all illegal actions on behalf of a company are committed by individuals, top executives, especially at bigger brands, rarely face personal punishment. 

No Names 

According to Jennifer Arlen, law professor and director of the program on corporate compliance and enforcement at New York University, the guilty person doesn’t have to be convicted: “Sometimes you don’t need to name them”.

Size Matters 

Arlen continued saying that at smaller companies where the owner is the only employee who would face criminal charges, the owner might be inclined to have the company take the blame, even if it means going out of business due to a substantial fine.

Delegating Guilt 

But when it comes to major public companies with a workforce of thousands, the top executives could agree to a settlement that only charges the lower-level employees. 

Arlen states that even without any prison sentences, criminal charges could still have severe implications that no publicly traded company wants to be associated with. 

Past Penalties Paid 

To settle criminal charges, oil company BP had to pay $4 billion in penalties (which included felony manslaughter charges) resulting from its Deepwater Horizon oil platform’s explosion and oil spill in 2010. Over $60 billion in additional legal settlements were also paid. 

Boeing’s Bill 

Boeing agreed to pay $2.5 billion as part of its January 2021 settlement, yet $1.8 billion of that had already been agreed to be paid to its airline customers for compensation for the 20-month grounding of its planes. 

The full total of the criminal fine paid to the government totaled only $244 million, with an added $500 million reserved as compensation for the victims’ families.  

Recalculating

Now, with these new criminal charges looming, Boeing could face significantly heftier fines than the ones it already agreed to pay – fines that could reach billions (if not tens of billions) if the victims’ relatives get their way. 

A Tough Time 

This could push Boeing’s debt rating into junk bond status for the first time ever, raising its borrowing costs and worsening its financial status – at the first quarter’s end, the company had just under $7 billion in cash on hand, with almost $47 billion in long-term debt. 

Monitors, Maybe? 

But according to Arlen and other experts, Boeing could also just end up having a federal monitor oversee its business conducts. “Firms don’t like a monitor,” Arlen said. “But Boeing has some pretty significant quality control problems”. 

To Plead Guilty or Not 

Should Boeing plead guilty to criminal charges instead of again deferring prosecution, according to Arlen, the result could be restrictions on doing business with certain countries that have prohibitions on companies found guilty of a felony. 

End in Sight? 

Whilst theoretically possible, such a prohibition would mean the end of a company that obtains 37% of its revenue from US government contracts. 

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