Aerospace giant Boeing (BA) has reached an agreement with the U.S. Department of Justice. Under the deal, BA will plead guilty to criminal charges related to the two fatal 737 MAX crashes that killed about 346 people. This marks a major development in the ongoing legal saga involving the troubled aircraft.
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Boeing’s FAA Deception
The plea agreement revealed that Boeing employees purposely misled the Federal Aviation Administration (FAA) about the 737 Max’s flight-control system, known as MCAS. This resulted in incomplete and inaccurate information being provided to the FAA, which led to the certification of the aircraft.
The two fatal crashes, involving Lion Air Flight 610 in Indonesia and Ethiopian Airlines Flight 302, were directly linked to malfunctions in the MCAS system.
Terms of the Plea Deal
As per the agreement, Boeing will pay a $243.6 million fine, serve three years of probation, and appoint an independent compliance monitor. Additionally, the company will invest $455 million in safety and compliance programs.
However, the families of the crash victims have expressed dissatisfaction with the plea deal, arguing for a full trial and harsher penalties.
Importantly, the plea agreement is still subject to approval by U.S. District Judge Reed O’Connor. If accepted, it would resolve the criminal charges related to the 737 Max crashes but would not address other pending legal matters, such as the Alaska Airlines incident.
Is BA Stock a Good Buy?
Boeing stock is down about 31% year-to-date, reflecting ongoing quality concerns. It has a Moderate Buy consensus rating on TipRanks, based on 16 Buys, five Holds, and one Sell. The analysts’ average price target on BA stock is $215.84, implying a 19.86% upside potential from current levels.
