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The disaster surrounding construction errors in the short-haul 737 Max is costing US aviation giant Boeing dearly. The aircraft manufacturer has agreed to fines of more than $ 2.5 billion to resolve criminal charges for fraud and conspiracy allegations in connection with the scandal, the US Justice Department said in Washington on Thursday.
After two accidents with a total of 346 fatalities, Boeing was suspected of having brought its best-selling 737 Max model series to market in a hurry and neglecting safety. US judicial authorities now accuse Boeing, among other things, of having used misleading information to prevent the government from ensuring the safety of public air travel.
“The tragic accidents on Lion Air Flight 610 and Ethiopian Air Flight 302 revealed fraudulent and deceptive behavior by employees of one of the world’s leading aircraft manufacturers,” said David P. Burns of the Justice Department. Criminal Justice Department. Boeing employees put profit before honesty and withheld information from the US aeronautical authority FAA.
Reminder from CEO Calhoun
Boeing said in a statement that the Justice Department sanctions involve the behavior of two former employees. This would have deliberately misled an FAA committee responsible for pilot training on changes to the 737 Max’s control system called MCAS. The now-closed deal shows how important Boeing’s obligations to supervisory authorities are, CEO Dave Calhoun wrote in a memo to the workforce.
Both Boeing and the FAA came under heavy criticism in the wake of the October 2018 and March 2019 accidents. The main cause of the accident is faulty Boeing control software, which should have been quickly repaired. Instead, it took the FAA more than a year and a half to re-admit the unfortunate pilot, who was banned from taking off due to accidents, in November.
The high penalty should hurt the Boeing Group, which was badly affected by the 737 Max scandal and the crown crisis. But compared to the huge costs already caused by the debacle over Airbus’ rival’s most important aircraft type, the sum is still relatively manageable. Investors reacted calmly, Boeing shares initially only fell slightly after trading hours.
500 million for the afflicted
The 737-Max crisis has already put Boeing under enormous financial pressure. Numerous orders were canceled and Boeing incurred billions in additional costs. The fourth consecutive quarterly loss occurred in the three months to the end of September. The group is reacting to the difficult financial situation with drastic cost-cutting measures and wants to reduce its workforce to around 130,000 by the end of 2021. For comparison: at the beginning of 2020, Boeing still had around 160,000 employees.
Before the punishment by the Department of Justice, a commission of inquiry of the United States Congress had already voiced severe criticism of Boeing. “Max’s accidents were not the result of a single failure, technical error or mishandled event,” the final report said. “They were the terrible culmination of a series of false technical assumptions by Boeing engineers, a lack of transparency by management and grossly inadequate oversight by the FAA.” Boeing had also been accused of a “culture of hiding” in the report.
Most of the fines are said to go to airlines with $ 1.77 billion that were damaged as Boeing customers. According to the Justice Department, $ 500 million will go to a compensation fund for the families of the accident victims. On top of that, law enforcement agencies imposed $ 234.6 million on the company as an additional fine. It remains to be seen whether Boeing is free from liability. There are also a number of lawsuits against the company due to the 737 Max accidents.
