Boeing agreed to a guilty plea stemming from a criminal fraud charge, the US Justice Department said on July 7. The aviation giant had violated an agreement that protected it from prosecution when it misled inspectors into approving the 737 Max jetliners that crashed in 2018 and 2019, leaving 346 people dead.
Then, with classically poor timing, a Boeing jet lost a wheel during takeoff from Los Angeles on July 9, further jeopardizing the 108-year-old company and its client relationships. The Defense Department will “make a determination as to what steps are necessary and appropriate to protect the federal government,” a Pentagon spokesperson stated afterward.
US government contracts account for 37% of Boeing’s revenue. In 2022, the Arlington, Virginia-based company secured $14.8 billion working for the Pentagon; its defense and space division drew $7 billion in sales for the first quarter of 2024.
The reverberations from Boeing’s malfeasance are being felt worldwide. The Canadian government, for example, is reportedly reassessing its dealings with the manufacturer. Meanwhile in Europe and the UK, regulations restrict contractors with criminal convictions from bidding on public contracts for specified periods.
As part of its plea agreement, Boeing is to pay a $243.6 million fine and commit some $455 million to enhance safety. Arguably, the company needs to do the latter anyway; this year’s mishaps started on January 5, when the door of a Boeing 737 Max 9 aircraft fell off just after takeoff from Portland International Airport in Oregon.
The crisis has taken a toll on Boeing’s financial health, with its stock plummeting over 12% in the past year. Still, the manufacturer has deals in the works; it hopes to acquire Spirit AeroSystems for $4.7 billion: a transaction that it insists will bolster plane quality. Already, a chorus of voices, including many of the families of people who died in the 2018-19 disasters, are criticizing the Justice Department settlement. Former Labor Secretary Robert Reich lambasted Boeing as a “sh—y company.” Reich’s scathing remarks on social media encapsulate the widespread disillusionment with one of the America’s storied enterprises: “Boeing’s descent reveals everything wrong with American capitalism today.”
