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Boeing will pay $2.5B to resolve 737 MAX criminal case

Boeing says it’s entered into a $2.51 billion agreement with the U.S. Justice Department to resolve a criminal charge related to the Federal Aviation Administration’s evaluation of Boeing’s 737 MAX airplanes.

The deferred-prosecution agreement addresses a single charge of conspiracy to defraud FAA inspectors about the safety of the 737 MAX’s automated flight control system. Investigators say changes to a component known as the Maneuvering Characteristics Augmentation System, or MCAS, were to blame in a pair of catastrophically fatal 737 MAX crashes that occurred in Indonesia in October 2018 and in Ethiopia in March 2019.

Those crashes led the FAA and other regulators to ground hundreds of 737 MAX planes operated by airlines around the world. After more than a year of investigations, software fixes and revisions to pilot training requirements, the FAA cleared the planes to return to service last November.

The agreement calls for Boeing to pay a penalty of $243.6 million, provide $1.77 billion in compensation to the airlines that purchased 737 MAX jets, and establish a $500 million fund to compensate the families of the 346 people who were killed in the two crashes. Boeing also agreed to cooperate with investigators and strengthen its anti-fraud compliance program.

If Boeing complies with the requirements of the agreement, filed today with a federal court in Texas, the criminal charge will be dismissed after three years.

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The year in aerospace: Comebacks in the skies above

Boeing’s rebuilding year drew to a close today with a milestone capping a momentous year in aerospace: the first U.S. passenger flight for a 737 MAX jet since the worldwide fleet was grounded.

American Airlines Flight 718 carried 87 passengers from Miami to New York’s LaGuardia Airport, more than 21 months after two catastrophic crashes in Indonesia and Ethiopia brought a halt to 737 MAX flights.

The incidents led to months of investigation, focusing on an automated flight control system that was found to be vulnerable to software glitches. Boeing had to revamp the system and rework pilot training routines in cooperation with airlines. The Federal Aviation Administration gave the go-ahead for the return to commercial operations just last month.

Brazil’s Gol Airlines and Aeromexico resumed flying 737 MAX jets earlier this month, but Flight 718 was the first time since the grounding that a MAX carried paying passengers on a regularly scheduled U.S. flight.

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737 MAX cleared for flight — after software upgrades

Two years after the catastrophic crash of a Boeing 737 MAX jet in Indonesia touched off an aviation crisis, the Federal Aviation Administration today laid out the path for hundreds of 737s to return to flight.

But that can’t happen immediately: It’ll take months for the FAA to check the implementation of changes in pilot training procedures, and verify all the fixes that will be made. All 737 MAX planes have been grounded worldwide in the aftermath of a second crash that occurred in Ethiopia in March 2019.

“This is not the end of this safety journey,” FAA Administrator Steve Dickson told CNBC. “There’s a lot of work that the airlines and the FAA and Boeing will have to do in the coming weeks and months.”

Stan Deal, president and CEO of Boeing Commercial Airplanes, said in a news release that today’s FAA directive was an “important milestone” but agreed that there’s a lot of work to be done. “We will continue to work with regulators around the world and our customers to return the airplane back into service worldwide,” Deal said.

The key fixes involve software rather than hardware — and that part of the job is more like installing a Windows update than installing an actuator.

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FAA and Boeing complete 737 MAX flight tests

The Federal Aviation Administration and Boeing today completed three days’ worth of certification flight tests on the Boeing 737 MAX, but it’ll take weeks longer for the FAA to review the fixes that Boeing made and decide whether to end the yearlong grounding of the planes.

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FAA and Boeing begin flight tests for 737 MAX

Boeing and the Federal Aviation Administration took a major step toward returning the troubled 737 MAX to full operation today with the first of a series of flights aimed at recertifying the jet in the wake of two catastrophic crashes.

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Boeing resumes 737 MAX jet production

737 MAX assembly
The first 737 MAX 8 plane undergoes final assembly at Boeing’s Renton plant in 2015. (Boeing Photo)

Boeing says it has resumed 737 MAX production at its factory in Renton, Wash., with more than a dozen initiatives implemented to enhance product quality and workplace safety amid the coronavirus pandemic.

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Former U.N. envoy breaks with Boeing over aid

Nikki Haley
During her term as South Carolina’s governor, Nikki Haley paid tribute to the expansion of Boeing’s operations in the state. (South Carolina Governor’s Office Photo / Sam Holland)

Nikki Haley, the former South Carolina governor and U.N. ambassador who has been touted as a future presidential candidate, says she’s resigning from Boeing’s board of directors to protest the company’s request for $60 billion in federal aid.

Boeing has been hit hard by the impact of the coronavirus outbreak on the aviation industry, as well as the continued grounding of the 737 MAX fleet in the wake of two fatal crashes. This week the company said it supports a minimum of $60 billion in access to private and public liquidity for the aerospace manufacturing industry.

In a letter sent to Boeing CEO David Calhoun and the board, Haley said she couldn’t go along with Boeing’s request.

“I cannot support a move to lean on the federal government for a stimulus or bailout that prioritizes our company over others and relies on taxpayers to guarantee our financial position,” she wrote. “I have long held strong convictions that this is not the role of government.”

For that reason, she said she was resigning from the board position that she’s held since last year.

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737 MAX supplier announces 72 layoffs

Senior Aerospace AMT, an Arlington, Wash.-based supplier for the troubled 737 MAX and other Boeing airplanes, says it will lay off 72 employees starting in April.

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737 MAX crisis throws Boeing for a loss

737 MAX assembly
The first 737 MAX 8 plane undergoes final assembly at Boeing’s Renton plant in 2015. (Boeing Photo)

Boeing doubled its estimate for the financial effect of the 737 MAX crisis today and recorded a net annual loss for the first time since 1997 — but the company’s stock price rose nevertheless, reflecting market sentiment that the worst may be over.

An additional $9.2 billion was set aside to cover projected costs associated with the aftermath of two catastrophic crashes involving a 737 MAX 8 jet in Indonesia in 2018 and the same model in Ethiopia in 2019. That brought the total projected cost to $18.4 billion.

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Boeing moves 737 MAX timetable to mid-2020

Boeing 737 MAX 9
A photographer takes a picture of the first Boeing 737 MAX 9 jet during its assembly at the company’s Renton plant in 2017. (GeekWire Photo / Alan Boyle)

Boeing today acknowledged that it doesn’t expect 737 MAX airplanes to be back in service until mid-2020, months later than previously projected.

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