- Boeing (NYSE:BA) has agreed to plead guilty to one charge of conspiracy to defraud the United States in connection with two fatal 737 Max crashes
- The agreement helps Boeing avoid more severe consequences but mandates significant penalties and oversight
- Boeing will pay up to US$487 million in fines and will operate under the supervision of an independent monitor, chosen by the government, for a period of three years.
- The Boeing Company last traded at US$184.83 per share
Boeing (NYSE:BA) has agreed to plead guilty to one charge of conspiracy to defraud the U.S. in connection with two fatal 737 Max crashes, the Justice Department announced in a Sunday evening court filing.
This plea represents a major setback for the aerospace giant, which has faced a series of safety controversies. The agreement helps Boeing avoid more severe consequences but mandates significant penalties and oversight.
Under the plea agreement, Boeing will pay up to US$487 million in fines. This amount is only a fraction of the US$24.8 billion sought by the families of the 346 crash victims. The Justice Department stated that the families of those who died in the two 737 Max crashes oppose the deal. Boeing will also operate under the supervision of an independent monitor, chosen by the government, for a period of three years. Despite these measures, the families of the victims expressed dissatisfaction with the outcome through their attorney.
This comes as Boeing already has other legal issues in its view, as it recently signed an agreement to acquire Spirit AeroSystems (NYSE:SPR). The merger is structured as an all-stock transaction valued around US$4.7 billion, or US$37.25 per share. Including Spirit AeroSystems’ last reported net debt, the total transaction value is approximately US$8.3 billion. However, this proposed acquisition has triggered an investigation by Rowley Law PLLC. The firm is looking into potential securities law violations by Spirit AeroSystems and its board of directors regarding the deal. According to the terms, Spirit stockholders will receive US$37.25 in Boeing common stock for each share they hold. The transaction is slated to close in mid-2025.
Investors will likely learn more when Boeing releases its Q2 2024 financial results on July 31. President and CEO David Calhoun, along with vice president and CFO Brian West, will discuss the results and provide a company outlook during a conference call at 10:30 am ET that day.
Boeing operates in three segments: commercial airplanes, defence, space and security, global services. Its commercial airplanes segment develops, produces and markets commercial jet aircraft to the commercial airline industry worldwide. Its family of commercial jet aircraft in production includes the 737 narrow-body model and the 767, 777 and 787 wide-body models. Its defence, space and security segment is engaged in the research, development, production and modification of manned and unmanned military aircraft and weapons systems strike, surveillance and mobility. Its global services segment provides services to its commercial and defence customers worldwide.
The Boeing Co. (NYSE:BA) last traded at US$184.83 per share. Boeing stock has fallen 13.07 per cent since this time last year, but was 0.28 per cent higher in premarket trading.
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(Top photo: Boeing Co.)