Boeing’s path out of its 737 controversy is going to be bumpy
Boeing has reached a critical juncture with a guilty plea deal, which has sparked outrage among the families of victims who lost their lives due to the company's actions, and has been criticized for being excessively lenient and failing to hold Boeing adequately accountable.
The Boeing case, marked by tragedy and controversy, has reached a critical juncture. Monday’s guilty plea deal has sparked outrage among the families of victims who lost their lives due to the company’s actions.
The saga began with two catastrophic crashes of Boeing's 737 Max aircraft: Lion Air Flight 610 in October 2018 and Ethiopian Airlines Flight 302 in March 2019. These accidents, occurring just five months apart, resulted in the deaths of 346 people and led to a global grounding of the 737 Max fleet.
Investigations revealed that the crashes were caused by a malfunction of the Maneuvering Characteristics Augmentation System, an automated flight control system. Designed to counteract the aircraft’s tendency to pitch up, the system activated erroneously, forcing both planes into unrecoverable dives. Subsequent investigations revealed that Boeing had not adequately disclosed information about this flight control system to airlines and pilots, and there were significant lapses in the Federal Aviation Administration’s oversight and certification process.
Boeing’s response to the tragedies and its handling of the aftermath justifiably drew widespread criticism. Internal documents revealed a culture that prioritized cost-cutting and speed over safety, leading to a loss of trust in the company. The situation culminated in January 2021, when Boeing agreed to a deferred prosecution agreement with the Department of Justice, which included a $2.5 billion settlement. Comprised of a $243.6 million criminal penalty, $1.77 billion in compensation to airlines and a $500 million fund for the victims’ families, the settlement allowed Boeing to avoid prosecution for fraud conspiracy charges — a point of contention for many.
That gets us to where we are today, with a plea deal characterized by some of the plaintiff families as a "sweetheart deal." I think it’s a very fair characterization and agree with their position that the deal is excessively lenient and fails to hold Boeing adequately accountable for its role in the deaths of their loved ones.
Their objection centers on the notion that the settlement was negotiated without their consultation and that it disproportionately benefits Boeing by allowing it to avoid a full trial and the accompanying scrutiny.
From a legal perspective, the families' success in filing their objection to the plea deal is uncertain. The Justice Department has considerable discretion in negotiating such affairs, and courts typically defer to prosecutorial judgment unless there is clear evidence of misconduct or a gross miscarriage of justice. But this needs to be — and I expect will be — balanced against the reality that the families have substantial public sympathy and support. If the court finds that the plea deal undermines the principles of justice or fails to consider the victims' rights adequately, it might compel the Justice Department to renegotiate the terms.
Yes, this is a high bar to meet. Historically, courts have rarely overturned such agreements, but I think it’s going to happen here.
Even if this happens, looking ahead, the legal landscape will remain complex. If the families’ objection is successful, it could lead to a reopening of negotiations and potentially a more stringent agreement that includes greater oversight and accountability measures for Boeing. This would likely involve revisiting the terms of compensation and possibly imposing additional penalties. Conversely, if the objection is unsuccessful, Boeing will continue to operate under the terms of the current deal, albeit with heightened scrutiny from the public and regulatory bodies.
A question being asked now is what the future holds for Boeing as a "felon corporation.” The relatively short answer is that it’s going to be challenging. The designation itself, although symbolic, carries significant reputational damage. Boeing will have to navigate a landscape of increased regulatory oversight, stringent compliance requirements, and a skeptical public. This status may also impact its business operations, potentially leading to a loss of contracts, higher insurance premiums and a more rigorous scrutiny of its safety practices.
If Boeing has any realistic chance of restoring its reputation — a tough question to answer in the summer of '24 — it will need to demonstrate an actual commitment to safety, transparency and ethical business practices. This includes overhauling its corporate culture, investing in safety innovations and engaging in meaningful dialogue with all stakeholders, including the victims’ families.
Our key takeaway from the Boeing case is going to be a very poignant reminder of the devastating consequences of corporate negligence and the supremely delicate balance between justice and accountability. The history of the 737 Max crashes, the controversy surrounding the plea deal, and the uncertain legal road ahead underscore the profound impact on the victims' families and the entire aviation industry, at a moment in history where the industry is just hitting its stride after a massive global pandemic.
For Boeing, the next few weeks are a lose-lose. With public sympathy so strongly with the families, Boeing loses if these plaintiffs succeed in their objection. They truly also lose if they don’t. For Boeing, the path forward is going to be a bumpy ride, particularly for a "felon corporation" perceived as devoid of any real commitment to rebuilding public trust and prioritizing our safety.
Aron Solomon is the chief strategy officer for Amplify. He has taught entrepreneurship at McGill University and the University of Pennsylvania.