The U.S. Justice Department (DOJ) said on Tuesday that Boeing (NYSE:BA) breached its obligations under a 2021 agreement that shielded the company from criminal prosecution related to fatal 737 MAX crashes in 2018 and 2019, which killed 346 people.
In a Texas court filing, the DOJ accused Boeing of failing to "design, implement, and enforce a compliance and ethics program to prevent and detect violations of the U.S. fraud laws throughout its operations."
The company’s shares fell 1.5% in premarket trading Wednesday.
“We think this was the base case, but also admit the range of potential outcomes is less clear with incremental fines and further extension of the period of review a likely outcome,” Wolfe Research analysts commented on DOJ’s decision in a Tuesday note.
“We don't presume to know all the liability the criminal prosecution Boeing could be opened up to, but we think that is a distant secondary/tertiary risk to the company's production challenges,” they added.
This DOJ’s finding followed a separate January incident where a panel blew off a new Boeing 737 MAX 9 jet during a Jan. 5 Alaska Airlines flight, exposing ongoing safety and quality issues at the jet maker, just days before the 2021 agreement expired.