Boeing given a week to admit fraud charges amid battle to contain safety crisis

An Ethiopian Airlines Boeing jet crash killed 157 people in 2019 - AP Photo/Mulugeta Ayene

Boeing has been given a week to admit fraud charges or face a public trial over two fatal crashes involving its 737 Max planes.

In a fresh blow to the crisis-hit aerospace giant, the US Department of Justice is said to have given the company until Friday to admit wrongdoing.

The company would have to pay a $244m (£192m) criminal fine and accept a three-year probation period, CBS and Bloomberg reported.

But pleading guilty to a criminal charge could also have implications for the company’s work with the US military, it is feared.

It came as Boeing and Airbus reached terms to divide up Spirit AeroSystems, the fuselage and wing supplier at the centre of its latest safety crisis.

The plea offer was made on Sunday and reopens a 2021 deferred prosecution agreement struck between American prosecutors and the company.

That previous agreement – which followed fatal crashes involving two 737 Max planes in 2018 and 2019, killing 346 people – also required Boeing to pay a $244m fine, to submit to monitoring and improve its safety processes.

But prosecutors have now accused Boeing of violating the deal amid a fresh safety scandal at the company, which was plunged into crisis again in January when one of its 737 Max 9 planes flown by Alaska Airlines suffered a mid-air blowout.

The incident, where a door plug blew out at 16,000 feet, has since been chalked up to botched paperwork and safety checks at Boeing’s factory near Seattle, prompting the company to pledge a series of changes.

However, the fresh plea bargain being offered to Boeing has angered families of people who died in the 737 Max crashes, with lawyers branding it a “sweetheart deal”.

Paul Cassell, an attorney representing the families, told Bloomberg: “The deal will not acknowledge, in any way, that Boeing’s crime killed 346 people.

“The families will strenuously object to this plea deal.”

In an attempt to draw a line under the crisis, Boeing has agreed to pay $4.7bn for Spirit AeroSystems, which made the door plug that blew out of the 737 Max plane in January.

Airbus will acquire assets involved predominantly in the production of its own planes for a nominal sum of $1, while receiving $559m in compensation from Spirit.

Among those parts of Spirit bound for Airbus is the former Short Brothers plant in Northern Ireland responsible for making wings for the A220 jet.

Taking Spirit in house is a key plank of Boeing’s bid to eliminate manufacturing defects and improve quality control as it battles to address the safety crisis around the Max and restore the reputation of its best-selling model.

Spirit was spun off from Boeing in 2005 as part of a cost-cutting drive which many in the industry blame for a loss of oversight over the production process and ultimately for January’s near-tragedy involving the door plug on an Alaska Airlines jet.

Passengers narrowly avoided being sucked out of the Alaska Airlines jet when the door blew out mid-flight - NTSB/Handout via REUTERS

Boing boss Dave Calhoun said that the deal was in the best interests of the flying public, his company’s airline customers, employees and “the country more broadly”.

He said: “By reintegrating Spirit we can fully align our commercial production systems and our workforce to the same priorities, incentives and outcome, centred on safety and quality.”

The Alaska Airlines incident occurred after Spirit supplied a Max fuselage including a door plug with improperly fitting bolts to Boeing’s 737 factory in Seattle.

Boeing workers detected the issue but failed to raise the required paperwork when the plug was removed for repairs, allowing the plane to continued around the assembly line and ultimately to be delivered to Alaska Air with the plug pushed back in but not secured.

The 737 remained intact for more than 100 flights before the plug blew out at 16,000 feet after it departed Portland, Oregon, with passengers’ seatbelts saving them from being ripped from the plane.

Max production was initially halted before being restarted at a reduced level on the instructions of the Federal Aviation Administration.

Boeing sent inspectors to Spirit, alongside officials from the FAA, revealing more manufacturing glitches, and announced that it would launch a takeover of the Wichita, Kansas-based firm in order to take full control of production.

The acquisition will be an all-stock transaction, Boeing said, and values Spirit at $37.25 per share.

The deal avoids a feared break-up of Spirit’s Belfast operations, with Airbus taking over both the site’s A220 wing and mid-fuselage production and “non-Airbus work”.

The European planemaker will acquire Spirit’s business in Prestwick, Scotland, on the same terms, and is also taking over the supplier’s A350 fuselage operations in North Carolina and St. Nazaire, France and A220 work in Morocco and Kansas.

Airbus said the agreement, expected to close next year, will guarantee the continued supply of components for its planes on a more sustainable financial basis.

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