Boeing to pay £1.84 billion as part of its settlement with the U.S. Department of Justice
- Boeing to pay £1.84 billion as part of its settlement with the U.S. Department of Justice.
- The American multinational aeroplane manufacturer to book a £547.46 million charge in Q4.
- Boeing says investigations over the two plane crash have cost it £14.72 billion.
The Boeing Company (NYSE: BA) agreed to pay over £1.84 billion in penalties and compensation as part of its settlement with the United States Department of Justice over a plane crash in Indonesia and another in Ethiopia which took 346 lives combined. The two incidents only five months apart led to a ban on Boeing’s world-famous 737 MAX jetliner in March 2019.
Boeing shares slid more than 0.5% in extended trading on Thursday. Including the price action, the stock is now exchanging hands at £155.64 per share. In comparison, it had plummeted to as low as £69.95 per share in March when the COVID-19 restrictions brought the demand for air travel to a near halt.
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The settlement enables Boeing to sidestep prosecution and demand £179.34 million to be paid in fines and £1.3 billion in compensation to airlines. The aeroplane manufacturer will also pay £368.11 million for a crash-victim beneficiaries fund to settle charges of fraud and conspiracy related to the flawed design of the 737 MAX.
Boeing to book a £547.46 million charge in Q4
Boeing also said on Thursday that the agreement will result in a £547.46 million charge that it will book against its Q4 earnings. In a report published in the last week of October, the Chicago-based company had reported a narrower net loss of £358.59 million in the fiscal third quarter.
The American multinational also confirmed the closure of its Seattle Research and Development centre on Thursday. Following a 21-month investigation, acting Assistant Attorney General David Burns commented on the settlement late on Thursday and said:
“The crashes exposed fraudulent and deceptive conduct by employees of one of the world’s leading commercial aeroplane manufacturers. Boeing’s employees chose the path of profit over candour by concealing material information from the FAA concerning the operation of its 737 MAX aeroplane and engaging in an effort to cover up their deception.”
Investigations have cost Boeing roughly £14.72 billion
Multiple investigations in response to the two crashes have cost roughly £14.72 billion to Boeing since March 2019. The unfortunate incidents also pushed the United States Congress to pass legislation in December that reformed the way that the Federal Aviation Administration certifies new aeroplanes.
Boeing performed largely downbeat in the stock market last year with an annual decline of close to 35%. At the time of writing, the world’s second-largest aeroplane manufacturer has a market cap of £88.41 billion.