Boeing Co. agreed to a $2.5 billion payout to settle charges the company defrauded U.S. regulators by concealing information about the 737 MAX.
The MAX is the Boeing model involved in the crashes of Lion Air and Ethiopian Airlines flights that together killed 346 people.
The U.S. Justice Department announced the settlement on Thursday.
In exchange for the fine, the Justice Department will dismiss the charge against Boeing after three years if the company cooperates with the government. Boeing must make current and former officials available to testify before a federal grand jury or in trials.
Under the settlement, Boeing will pay a $243.6 million fine, $1.77 billion in compensation to airlines that were unable to use their Max jets while they were grounded, and $500 million into a fund for the families of passengers who were killed in the crashes
The company will also take a $743.6 million charge against earnings because of the settlement.
Boeing CEO Dave Calhoun said in a statement that the agreement was ” the right thing for us to do” and that the resolution was a serious reminder of how critical the company’s obligation of transparency to regulators is.
Robert Clifford, a lawyer representing relatives of the crash victims, said family members were insulted by the pact.
“The settlement will have no bearing on pending civil litigation”, he said.
Both Boeing and the U.S.-based Federal Aviation Administration were criticized for not grounding the 737 MAX after the Lion Air crash and for what critics called the lax oversight when the plane was rolled out.
The Justice Department said the size of the penalty reflected Boeing’s conduct, including the company’s initial reluctance to cooperate in the probe.
Boeing’s cooperation “was delayed and only began after the first six months of the Fraud Section’s investigation, during which time Boeing’s response frustrated the Fraud Section’s investigation,” the DOJ said.