According to CCTV News on July 8th, on July 7th local time, according to Reuters citing US government officials, Boeing has accepted a plea agreement previously filed by the Department of Justice, admitting to criminal fraud in two fatal air crashes in 2018 and 2019.
According to Xinhua News Agency on June 24, citing Reuters on June 23, citing two sources familiar with the matter, the US federal prosecutor has suggested that the Department of Justice file criminal charges against Boeing for two fatal air accidents in 2018 and 2019. The US Department of Justice submitted a document to a federal court in Texas on May 14th, stating that Boeing has been found to have violated the 2021 suspension of prosecution agreement reached with the Department of Justice regarding two fatal air disasters, and will decide whether to sue Boeing before July 7th. Boeing informed the Department of Justice earlier in June that it does not agree with the "breach" conclusion.
Boeing agrees to reach a plea agreement with the US Department of Justice
According to CCTV International News, insiders from the US Department of Justice have revealed that Boeing has accepted a plea agreement previously filed by the Department of Justice, admitting to "conspiring to defraud the Federal Aviation Administration" in two fatal air disasters in 2018 and 2019, in order to avoid trial. It is reported that if brought to court, it may expose Boeing's decisions related to the two fatal air disasters to broader public scrutiny. At present, Boeing has also confirmed that it has reached a principle agreement with the US Department of Justice on the terms of an agreement.
This plea agreement includes a total fine of $487.2 million (approximately RMB 3.542 billion). It is reported that Boeing needs to pay about half of the amount. Boeing may also be required to pay compensation to the families of the victims, and the specific amount will be determined by the judge at their discretion.
According to the plea agreement, Boeing needs to invest at least $455 million (approximately RMB 3.31 billion) in the next three years to strengthen safety and compliance behavior. The US Department of Justice will require an independent supervisory agency to conduct a three-year audit of this matter.
Analysis suggests that pleading guilty will further deepen Boeing's crisis, putting it under heavier economic pressure and stricter government regulation, and affecting its chances of obtaining government contracts in the future.
In October 2018 and March 2019, there were air accidents on flights of Lion Air Indonesia and Ethiopian Airlines, resulting in a total of 346 deaths on both planes. The crashed planes were all Boeing 737 MAX 8 passenger planes.
In January 2021, the US Department of Justice filed a criminal lawsuit against Boeing and reached a three-year suspension of prosecution agreement with it. Boeing agrees to pay fines and compensation exceeding $2.5 billion, and promises to cooperate fully to implement compliance and improvement plans as required. The suspension of prosecution agreement is valid until January 7th of this year. But on January 5th this year, two days before the suspension of prosecution agreement expired, a Boeing 737 MAX 9 passenger plane of Alaska Airlines experienced a "door stopper (embedded emergency door)" falling off during flight. Although it did not cause any casualties, it exposed Boeing's ongoing quality control issues, which led to the involvement of the National Transportation Safety Commission and the Federal Aviation Administration in the investigation. It was also listed by the Department of Justice as the basis for investigating whether Boeing violated the agreement.
Boeing finds it difficult to overcome difficulties overnight
According to Economic Reference News on June 21, Dave Calhoun, CEO of Boeing, recently apologized to the relatives of the two fatal air crash victims associated with the Boeing 737 MAX aircraft in 2018 and 2019 during his first hearing in the US Senate on frequent safety issues related to Boeing aircraft. He acknowledged that the root cause of the Boeing 737 MAX 9 aircraft falling off door plug (embedded emergency door) accident in early January this year was a "manufacturing defect" and will take responsibility for it. He also acknowledged that Boeing's safety culture has flaws.
At this congressional hearing in the United States, Calhoun was bombarded by federal senators. According to Reuters, Calhoun has been repeatedly asked about Boeing's safety culture, his salary, and why he did not resign immediately after safety issues were repeatedly exposed.
Calhoun has stated that despite facing numerous difficulties, Boeing is taking advantage of this period to slow down, stabilize the supply chain, and strengthen factory operations, enabling the company to deliver high-quality products to customers. He insists that the company is improving.
But solving Boeing's problem cannot be achieved overnight.
In fact, since the 2018 Boeing 737 MAX crash, Boeing has been facing various troubles and increasing challenges.
Various safety incidents related to Boeing aircraft models are also frequently reported. At the beginning of this year, there was an incident of "cabin door detachment"; Recently, Reuters reported, citing sources familiar with the matter, that hundreds of fasteners on the fuselage of some undelivered Boeing 787 Dreamliner aircraft were found to have been incorrectly twisted at the Boeing 787 factory in South Carolina. Boeing responded to Reuters saying that this has "limited or no impact" on aircraft delivery.
Several whistleblowers have been exposed for retaliation, which has plunged Boeing into a crisis of public opinion and trust. A whistleblower who emerged from this hearing once again exposed witnessing the "systematic neglect" of safety issues by companies. The direct management even demanded that they hide substandard components and other issues before regulatory agencies came to inspect, which further impressed Boeing, a giant that has accumulated a lot of trouble.
One wave has not yet subsided, and another wave has risen again. The Federal Aviation Administration of the United States recently stated that according to information provided by suppliers, Boeing and Airbus may have used titanium components sold through forged documents in their aircraft, and the Federal Aviation Administration is investigating it.
Boeing achieved a total revenue of 77.794 billion US dollars in 2023, a year-on-year increase of 16.79%. The net loss attributable to the parent company was 2.222 billion US dollars, a year-on-year decrease of 54.97%, still a continuous loss. However, as the CEO of the company, Calhoun's total salary in 2023 remained as high as $32.8 million despite not turning losses into profits.
On the premise of re proving the safety performance of Boeing products, with limited production and delivery, it will take time for Boeing to turn losses into profits. In 2023, Boeing's revenue still lags behind its peak in 2018 by about 20%. In order to strengthen its quality and safety management system, Boeing had to slow down production. In the first quarter of 2024, Boeing's revenue continued to decline year-on-year, with a significant outflow of cash flow, but its net loss narrowed year-on-year. It is worth noting that Boeing's commercial aircraft business saw a year-on-year decrease of 31% in revenue in the first quarter of this year, accounting for nearly 30% of total revenue, down from nearly 50% last year. The delivery volume of the previously popular 737 aircraft model in the first quarter dropped by 40%, and Boeing's commercial aircraft delivery volume lagged behind Airbus by nearly 60. At present, Boeing's 2024 financial guidance or delivery forecast is still in a state of suspension.
As of last Friday's close, Boeing (BA) closed up $184.830, a slight increase of 0.28%, with a total market value of $113.5 billion.
Daily Economic News Comprehensive Economic Reference, CCTV International News, CCTV News, Xinhua News Agency