Boeing: Fine, Criminal Plea Reduce Uncertainty About MAX 8 Crash Case; Immaterial to Our $221 FVE
Boeing and the US Department of Justice have entered a plea agreement related to the 2018 and 2019 crashes of 737 MAX 8 jets, which caused the deaths of 346 passengers and crew. Boeing will plead guilty to defrauding the FAA by providing misleading information about the new airplane's guidance software. It will also pay $244 million in legal fines, spend $455 million beefing up its safety protocols, and hire an independent monitor to oversee them. Neither the fines nor further civil legal settlements are material to our $221 fair value estimate, and we believe Boeing will have spent $455 million on its upgraded safety protocols anyway. A judge will have to accept or reject the agreement.