DOJ to offer Boeing plea agreement amid potential fraud charges — crash victims' families slam 'sweetheart' deal



The Department of Justice is preparing to offer Boeing a plea deal that would require the company to plead guilty to conspiring to defraud the Federal Aviation Administration in connection with two fatal 737 MAX crashes in 2018 and 2019 that killed 346 people, Reuters reported.

The DOJ claims that Boeing violated a 2021 deferred prosecution agreement with the department, a source told the news outlet. As part of the agreement, a criminal charge against Boeing was dropped, and the company was asked to revise its compliance practices and submit to routine reporting. The aerospace company also agreed to pay $2.5 billion to end the investigation.

In May, the DOJ accused Boeing of violating the terms of the agreement, stating that it failed to "design, implement, and enforce a compliance and ethics program to prevent and detect violations of the U.S. fraud laws throughout its operations."

Boeing disagreed with the DOJ's findings, claiming it has "honored the terms" of the agreement.

The relatives of those killed in the two crashes were briefed on the proposed settlement on Sunday. According to their attorney, they are urging U.S. District Judge Reed O'Connor to reject what they have called a "sweetheart" deal for Boeing.

Paul Cassell, a lawyer representing the relatives, said, "The Justice Department is preparing to offer Boeing another sweetheart plea deal."

"The families will strenuously object to this plea deal," Cassell noted.

The plea deal would require the company to plead guilty to conspiring to defraud the FAA. Boeing would have to pay half of a $487.2 million penalty, with prosecutors allowing the company to receive credit for previous settlement payments. Additionally, Boeing would have to meet with the relatives and submit to third-party audits for three years.

Boeing and the DOJ declined a request for comment, Reuters reported.

Anything else?

Boeing faced further scrutiny in January after one of its aircraft experienced a mid-flight door panel blowout. A preliminary U.S. National Transportation Safety Board report found that the Alaska Airlines plane may have left the Boeing factory without the key bolts needed to secure the panels in place. The NTSB's investigation discovered that Spirit AeroSystems, a fuselage maker, had performed maintenance work on the aircraft before delivering it to the airline. The maintenance required the door panel to be removed and reinstalled.

On Monday, Boeing announced that it plans to buy back Spirit AeroSystems, its former subsidiary. The company aims to improve safety and quality control at the struggling company. Boeing agreed to pay $37.25 per share for a value of $4.7 billion.

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Alaska Airlines receives ‘initial’ $160M from Boeing after mid-flight panel blowout — additional compensation ‘expected’



Boeing paid Alaska Airlines $160 million following the mid-flight door panel blowout incident that occurred earlier this year, the airline stated on Thursday.

In a recent United States Securities and Exchange Commission filing, Alaska Airlines reported that Boeing provided the "initial compensation ... to address the financial damages incurred as a result of Flight 1282 and the 737-9 MAX groundings."

In January, Flight 1282 experienced a mid-air door panel blowout that forced the plane to make an emergency landing. Multiple investigations were launched as a result of the incident. The Federal Aviation Administration briefly grounded 171 Max 9 airplanes while inspections were underway, causing thousands of flight cancelations.

A preliminary report from the National Transportation Safety Board found that all four bolts designed to secure the panel in place were missing from the aircraft. Records revealed that before the plane was delivered to Alaska Airlines, it underwent rivet repairs that required the panel to be temporarily removed and reinstalled upon completion. The repair work was completed by Spirit AeroSystems, a former Boeing subsidiary, before the aircraft was returned to Boeing's Renton, Washington, facility.

The NTSB continues to investigate the incident. The Department of Justice also launched its own investigation.

Alaska Airlines' SEC filing stated that the company lost approximately $160 million in the first quarter of 2024 due to the mandatory grounding of some of its Boeing planes.

"As a result of the Flight 1282 accident and the Boeing 737-9 MAX grounding, we lost approximately $160 million in Q1 pretax profit, primarily comprising lost revenues, costs due to irregular operations, and costs to restore our fleet to operating service," the airline wrote.

Boeing paid Alaska Airlines the compensation in cash during the first quarter.

"This cash payment is equivalent to the lost profits resulting from the accident and grounding in Q1 2024. Additional compensation is expected to be provided beyond Q1, the complete terms of which are confidential," it added.

Boeing referred to statements made last month by CFO Brian West when contacted for comment, ABC News reported. During the Bank of America Industrials Conference, West remarked that there will be "customer consideration that is going to manifest itself in the quarter."

"We've got to take care of that and we're well down the road to do that. And we continue to stand behind our customers with that responsibility," West added.

The mid-flight panel blowout ignited a safety scandal for Boeing, prompting a management shake-up. In February, Boeing removed Ed Clark, the head of its 737 Max program. In March, it announced that CEO Dave Calhoun would leave the company at the end of the year. Boeing Commercial Airplanes CEO Stan Deal announced his immediate retirement last month. Larry Kellner, board chairman, is set to resign and not seek re-election in May.

Last week, Calhoun stated, "The eyes of the world are on us, and I know that we will come through this moment a better company."

"We will remain squarely focused on completing the work we have done together to return our company to stability after the extraordinary challenges of the past five years, with safety and quality at the forefront of everything that we do," he said.

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Texas AG Paxton demands info on DEI practices as part of new probe into Boeing parts supplier



Texas Attorney General Ken Paxton (R) launched an investigation into Spirit AeroSystems, a Boeing parts supplier, over “reoccurring issues with certain airplane parts,” according to a Sunday press release from the AG’s office.

Spirit AeroSystems, a former Boeing subsidiary, manufactures the fuselages for Boeing’s 737 airplanes, the same aircraft that experienced a mid-flight door panel blowout earlier this year that led to a massive safety scandal.

“On certain models of the 737, apparent manufacturing defects have led to numerous concerning or dangerous incidents, some of which occurred in-air,” the office’s press release read.

As a part of the newly launched investigation, Paxton is requesting “a variety of documents relevant to manufacturing defects” from Spirit.

“The company must release documents related to its diversity, equity, and inclusion (‘DEI’) commitments and whether those commitments are unlawful or are compromising the company’s manufacturing processes,” the AG’s office stated.

The AG’s Request to Examine letter demands that Spirit produce various documents, including the company’s communications with investors and Boeing regarding the “Mis-Drilled Aft Pressure Bulkhead Holes Defect in Spirit’s products.”

The company also must turn over meeting notes concerning its “Global Diversity & Inclusion Council(s)” and documents it uses to “substantiate its claim that a diverse workplace improves product quality and/or ‘enhance[s] performance’ and/or ‘helps [Spirit] … make better decisions.’

Paxton also requested the personnel file for Joshua Dean, the first whistleblower to sound the alarm on Spirit’s alleged quality control issues. Dean was fired last year for allegedly failing to conduct inspections, the Seattle Times reported. The AG is seeking information and documents concerning Dean’s termination.

Paxton said, “The potential risks associated with certain airplane models are deeply concerning and potentially life-threatening to Texans.”

“I will hold any company responsible if they fail to maintain the standards required by the law and will do everything in my power to ensure manufacturers take passenger safety seriously,” he noted.

As a result of Boeing’s safety scandal following the Alaska Airlines Flight 1282 incident in January, the company announced a management shake-up. In February, Boeing removed Ed Clark, the head of its 737 Max program. CEO Dave Calhoun will leave the company at the end of the year, Boeing announced in March. At the same time, Boeing Commercial Airplanes CEO Stan Deal announced his immediate retirement. Larry Kellner, board chairman, is set to resign and not seek re-election in May.

The National Transportation Safety Board told the Senate Commerce Committee in March that Boeing was “unable to find records” for repairs made to the airplane that experienced the mid-flight panel blowout. The aircraft underwent rivet repairs before it was delivered to Alaska Airlines. Spirit reportedly conducted the repairs, which required the door panel to be temporarily removed and reinstalled upon completion. The agency’s preliminary report found that the door panel was missing all four bolts designed to hold it in place.

Spirit did not respond to a request for comment from Fox Business.

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Boeing fails 33 FAA product audits following mid-flight panel blowout: Report



Boeing failed 33 of the Federal Aviation Administration’s 89 product audits that were recently conducted as a result of a mid-flight panel blowout on an Alaska Airlines flight in January, according to the New York Times.

An FAA slide presentation obtained by the Times reportedly revealed that a six-week audit conducted by the federal agency found several problems with Boeing’s production of its 737 Max airplanes. The FAA stated that it discovered “multiple instances” in which Boeing and its former subsidiary, Spirit AeroSystems, failed to comply with quality-control standards.

The presentation indicated that of the 89 product audits, Boeing passed 56 and failed 33. The FAA reportedly found 97 instances of alleged noncompliance.

Spirit AeroSystems also underwent 13 product audits concerning its production of the 737 Max fuselage. According to the Times’ review of the FAA’s presentation, the company failed seven audits and passed six. Additionally, Spirit reportedly failed an audit that dealt with the installation of the door plug, the component that blew off mid-air during an Alaska Airlines flight earlier this year. Additionally, the agency found that Boeing failed to check the aircraft’s door plug.

The federal agency stated that it observed one Spirit mechanic using a hotel key card to inspect a door seal and another applying liquid dish soap “as a lubricant” to a door seal. The FAA noted that the methods were “not identified/documented/called-out in the production order.” The agency added that instructions provided to the workers were “vague and unclear on what specifications/actions are to be followed or recorded by the mechanic.”

Many of the issues the FAA’s 20 auditors discovered were related to a failure to follow an “approved manufacturing process, procedure or instruction,” the presentation stated.

The FAA interviewed six Boeing engineers to assess their understanding of the company’s quality-control process. According to the presentation, the engineers received an average score of just 58%.

A spokesperson for Spirit told the Times that the company was “reviewing all identified nonconformities for corrective action.”

“Meanwhile, we continue multiple efforts undertaken to improve our safety and quality programs,” Joe Buccino, a spokesperson for Spirit, said. “These improvements focus on human factors and other steps to minimize nonconformities.”

In a statement to the news outlet, Boeing spokesperson Jessica Kowal said the airplane manufacturer continued “to implement immediate changes and develop a comprehensive action plan to strengthen safety and quality, and build the confidence of our customers and their passengers.”

The FAA told the Times it could not release additional details while its investigation into Boeing remained ongoing. The National Transportation Safety Board and the Department of Justice are also investigating the airplane manufacturer.

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