Airplane manufacturer Boeing Co. (NYSE:BA) has agreed to pay $2.5 billion U.S. to settle criminal charges that it defrauded the U.S. government by concealing information about its 737 Max aircraft, which was involved in two fatal crashes.
Boeing has entered into a deferred prosecution agreement in the Northern District of Texas, the Justice Department said in a press release. Boeing shares fell less than 1% to $211.26 U.S. after the close of trading in New York Thursday.
A design flaw in the 737 Max led to the two crashes within about five months of each other in 2018 and 2019, killing 346 people. Several investigative reports have found that the company altered a flight control system but didn’t fully explain the changes to Federal Aviation Administration (FAA) inspectors.
The legal settlement is the latest issue to impact Boeing’s bottom line. The company’s inability to deliver airplanes during the COVID-19 pandemic has cost the company billions of dollars.
Of the $2.5 billion U.S., Boeing has already set aside $1.77 billion U.S. to reimburse airlines and other 737 Max customers. The company said it expected to incur an additional $743.6 million U.S. charge for the fourth quarter of 2020, as it pays a $243.6 million U.S. penalty and $500 million U.S. in additional compensation for the families of crash victims.
Boeing is scheduled to report its latest quarterly earnings on January 27.