For the embattled airplane maker, Boeing (NYSE: BA) hasn’t been able to rid itself of its ongoing MAX 737 problems. After the U.S. aviation authorities approved the planes to return to the skies once again, the company was hit by an unnerving piece of bad news when an Air Canada flight had to be grounded due to an engine failure. With all that being said, it seems that Boeing might finally be able to put this issue to rest, for the most part.
The U.S. Justice Department has had an ongoing lawsuit against the company over safety issues that led to two separate crashes back in 2019. As it turned out, Boeing had supposedly been cutting corners when it came to the initial software development of the plane, which ended up being a contributing cause to those crashes. Since then, a lengthy investigation has been ongoing between authorities and the company. Just recently, the Justice Department and Boeing came to an agreement on Thursday, with the company promising to pay around $2.6 billion in fines to the families of the crash victims.
As it turned out, case documents that were revealed mentioned that, for the first six months of the investigation, Boeing failed to cooperate with the grand jury probe, frustrating prosecutors involved in the case. As such, one of the charges brought against Boeing involved one count of conspiracy to defraud the U.S. However, the company made a deal that, besides paying $2.6 billion in fee, involved an agreement that would keep Boeing eligible to receive government contracts, on the condition that it avoid legal trouble for the next three years.
The Federal Aviation Authority (FAA), which is conducting a separate civil investigation into Boeing, could end up pressing further fines against the plane maker. Time will tell whether or not the agency will do so.
Shares of Boeing didn’t really move much in response to the news overall. The stock is up around 0.8% by the time the markets closed on Thursday but has since given back these small gains in pre-market trading. Given that Thursday was a pretty strong day overall for stocks, despite the political turmoil going on right now, it’s clear that Boeing still underperformed handily.
Since the start of the year, Boeing remains down around 33%, with most analysts saying that they don’t expect the plane maker to recover anytime soon.
Boeing Company Profile
Boeing is the world’s largest aerospace and defense firm. With headquarters in Chicago, the firm operates in four segments, commercial airplanes, defense, space & security, global services, and Boeing capital. Boeing’s commercial airplanes segment produces about 60% of sales and two-thirds of operating profit, and it competes with Airbus in the production of aircraft ranging from 130 seats upwards. Boeing’s defense, space & security segment competes with Lockheed, Northrop, and several other firms to create military aircraft and weaponry. The defense segment produces about 25% of sales and 13% of operating profit, respectively. Boeing’s global services segment provides aftermarket servicing to commercial and military aircraft and produces about 15% of sales and 21% of operating profit. – Warrior Trading News