The Ministry of Justice announced this Boeing (BA) that it will charge him with fraud, and urge the Dow aerospace giant to plead guilty to the criminal charges or risk a lawsuit, according to multiple reports. Meanwhile, Boeing is said to have agreed to buy supplier Spirit AeroSystems (SPR).
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The settlement would include both a fine and an independent oversight body for Boeing’s safety and compliance practices. Boeing has until the end of the week to respond.
A guilty plea could complicate Boeing’s government contracts.
Specifically, the DOJ is accusing Boeing of violating a 2021 settlement following the fatal 737 Max crashes in 2018-2019 that killed 346 people. The deferred prosecution agreement, reached in the final days of the Trump administration, allowed Boeing to avoid criminal charges if it met certain conditions.
In May, Justice Department officials concluded that Boeing had breached the 2021 settlement because the company had failed to implement an effective compliance program to detect and prevent fraud.
That followed renewed concerns about Boeing’s safety after part of the fuselage of a 737 Max 9 jet blew off during a Alaska Airlines (ALK) flight. Safety investigators determined that key bolts were missing, leading to the discovery of other deficiencies at Boeing and key supplier Spirit AeroSystems.
Boeing agrees to purchase Spirit AeroSystems
Boeing has agreed to buy Spirit AeroSystems for $37.25 per share, or $4.7 billion, in an all-stock deal, according to multiple reports. It will also assume $3.5 billion in debt as the Dow giant seeks to gain greater control over its supply chain amid recent safety shortfalls.
Boeing shares
Boeing shares rose 3.1% last week to 102.01, a rally from a 52-week low in late April. But BA shares are still down 30.2% through 2024, among the worst performers on the Dow Jones and S&P 500.
Spirit AeroSystems fell 2.1% last week to 32.87, but after rising 14.3% the week before. SPR shares are up 3.4% for 2024.
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