US judge rejects Boeing plea deal over fatal 737 Max crashes

Embattled plane maker and Justice Department have 30 days to update court on how they plan to proceed with case

A US federal judge on Thursday rejected a plea deal between Boeing and the Justice Department. AFP

A US federal judge in Texas on Thursday rejected a plea deal Boeing reached with the Justice Department over two fatal 737 Max crashes, dealing a major blow to embattled plane maker.

US District Judge Reed O’Connor said he was concerned about the government appointing a monitor – a condition of the plea deal – that would be based on diversity, equity and inclusion policies. Mr O'Connor said the selection of the monitor should be solely based on the person's competence.

“These provisions are inappropriate and against the public interest,” he wrote in his ruling.

US media previously reported that by pleading guilty to breaching a 2021 agreement after two crashes in 2018 and 2019 resulted in 346 deaths, Boeing would have avoided a criminal trial. The company would also have been required to pay a fine and spend at least $455 million on its compliance and safety programmes.

Families of the victims had asked the US to fine Boeing $24.8 billion.

Paul Cassell, a lawyer representing the victims' families, had previously condemned the proposal as a “sweetheart plea deal”. The victims' families had also urged Mr O'Connor to reject the deal.

“Judge O’Connor has recognised that this was a cozy deal between the government and Boeing that failed to focus on the overriding concerns – holding Boeing accountable for its deadly crime and ensuring that nothing like this happens again in the future,” Mr Cassell said in a statement on Thursday.

“This order should lead to a significant renegotiation of the plea deal to reflect the deaths Boeing caused and put in place proper remedies for the future.”

Mr O'Connor also said the department failed in its previous efforts to provide oversight of Boeing's conduct.

Boeing and the Justice department have 30 days to update the court on how they plan to proceed in the case.

Boeing had agreed to a deferred prosecution agreement with the Justice Department in 2021 that was set to expire this year, but the company was thrown back into crisis after a door panel blew off mid-air during an Alaska Airlines flight on January 5. Boeing's probationary period as part of that agreement was due to expire days after the incident.

Instead, the plane maker was thrust into a year of investigations culminating in the Justice Department's decision to prosecute it.

Whistle-blowers alleged that Boeing ignored safety concerns raised. The FAA said in April it was investigating allegations raised by one of the whistle-blowers, Sam Salehpour, who alleged the company overlooked safety standards during the production of its 787 Dreamliner jets.

In June, then-chief executive Dave Calhoun apologised to relatives of the victims of the 2018 and 2019 crashes during testimony before a US Senate committee, in which he received criticisms from a bipartisan group of politicians.

Mr Calhoun was appointed chief executive in 2020 to demonstrate the company's commitment to safety.

“But then this past January, the facade faded, literally blew off the hollow shell that had been Boeing's promises to the world,” Richard Blumenthal, chairman of the Senate permanent investigations committee, said during the June 18 hearing.

Its newest chief executive, Kelly Ortberg, outlined a four-point turnaround plan for the company in October after its losses totalled $6 billion in the third quarter this year. Mr Ortberg said Boeing needed to implement a fundamental change in its culture, stabilise its business, improve executive discipline and “build a new future”.

Boeing has slowed production of its planes after the January 5 incident, and is not allowed by the Federal Aviation Administration to produce more than 38 jets a month until the agency is convinced quality controls are in place. That has led to the company notifying 737 Max customers that aircraft deliveries could be delayed by up to six months in 2025 and 2026.