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Boeing Co (NYSE:BA) was trading lower in premarket Thursday, opening at $179.76 per share.
The air carrier has agreed to finalize a guilty plea to a criminal fraud conspiracy charge and pay at least $243.6 million for breaching a 2021 agreement with the U.S. Justice Department.
Under the plea agreement, Boeing will invest at least $455 million over three years to enhance safety and compliance programs, a 75% increase from its previous plans.
An independent monitor will oversee Boeing's compliance, with annual progress reports and a three-year probation period that could extend if terms are not met, reported Reuters.
The plane maker acknowledged allowing potentially risky work at its factories and failing to ensure complete and accurate airplane record keeping.
This admission came in response to the Justice Department’s accusation that Boeing violated its deferred prosecution agreement from 2021,
As part of the plea deal, Boeing will pay the maximum fine of $487.2 million, with a recommendation to credit its previous $243.6 million payment.
Also Read: Boeing Resumes 737 MAX Deliveries To China After Regulatory Delay: Report
On July 7, Boeing agreed in principle to plead guilty to conspiring to defraud the Federal Aviation Administration (FAA) by knowingly making false statements about key software for the 737 MAX.
The Justice Department highlighted ongoing safety and quality issues, including a January incident with an Alaska Air Group Inc (NYSE:ALK) 737 MAX that revealed continuing concerns. Boeing also failed to ensure proper documentation and accurate completion of work during airplane manufacturing.
In April, Boeing disclosed false stamping by employees at its South Carolina 787 plant, which is under FAA investigation. Additionally, out-of-sequence work prioritized by senior executives increased the risk of manufacturing defects.
Families of the 737 MAX crash victims have one week to file objections before Judge Reed O’Connor, who will decide on the deal and potential restitution. Boeing’s board must meet with the relatives within four months of sentencing.
Boeing stock has lost more than 15% in the last 12 months. Investors can gain exposure to the stock via IShares U.S. Aerospace & Defense ETF (BATS:ITA) and Invesco Aerospace & Defense ETF (NYSE:PPA).
Price Action: BA shares are trading higher by 0.18% at $180.42 at last check Thursday.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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