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Boeing Agrees To Pay $2.51 Bln To Settle Criminal Charge Over 737 Max Conspiracy

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Boeing agreed to pay $2.51 billion to settle a U.S. criminal charge related to a conspiracy to defraud the U.S. Federal Aviation Administration in connection with the development of the 737 Max aircraft, which suffered two deadly crashes in 2018 and 2019 that claimed 346 lives aboard the aircraft.

The U.S. Justice department said Boeing admitted in court documents that two of its 737 Max Flight Technical pilots deceived the FAA about how an important aircraft part "the Maneuvering Characteristics Augmentation System (MCAS)" impacted the aircraft's flight control system.

As a result, a key document from the FAA as well as airplane manual and training materials for U.S. based airlines lacked vital information about the MCAS.

As part of the settlement, the Justice department has agreed to defer prosecution of Boeing, provided that the company abides by the obligations set forth in a three-year deferred prosecution agreement, after which time the charge will be dismissed.

Under the settlement, Boeing will pay a penalty of $243.6 million and provide $500 million in additional compensation to the families of those lost in the Lion Air and Ethiopian Airlines accidents.

The settlement also includes a commitment to provide $1.77 billion to Boeing's airline customers as part of the company's ongoing efforts to compensate those customers for financial losses resulting from the grounding of the 737 MAX.

Of the $2.51 billion settlement, $1.77 billion was already included in reserved amounts in prior quarters for 737 MAX customer considerations. Therefore, the company expects to incur earnings charges equal to the remaining $743.6 million in the fourth quarter of 2020, Boeing said in a statement.

The FAA in mid November lifted its 20-month safety ban on the 737 Max aircraft, and on November 30, 2020, it issued first airworthiness certificate for one of the new Boeing 737 Max jets.

Boeing's best-selling aircraft was grounded worldwide in March 2019 after two crashes killed all people aboard Lion Air Flight 610 and Ethiopian Airlines Flight 302.

In late December, American Airlines became the first U.S. airline to return the 737 Max to commercial service from Miami to New York City.

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