FAA Plants $5.4 Million Fine on Boeing

Direct fines over the 737 Max certification issues now total nearly $20 million.

The 737 Max issue alone had cause significant financial and reputational harm to the aircraft builder.John McArthur/Unsplash

The FAA last week announced in a news release a $5.4 million dollar fine against the Chicago-based Boeing Company, the aerospace manufacturer whose reputation was severely crippled following the grounding of its 737 Max in March 2019. Over the past two years, the company has continued absorbing both financial and reputational hits against the Max and other aircraft models despite the ungrounding of the Max last fall.

In an agency admonishment, FAA administrator Steve Dickson said, “Boeing failed to meet all of its obligations under a 2015 settlement agreement, and the FAA is holding Boeing accountable by imposing additional penalties. I have reiterated to Boeing’s leadership time and again that the company must prioritize safety and regulatory compliance, and that the FAA will always put safety first in all its decisions.”

Under the 2015 agreement, Boeing pledged to change its internal processes to improve and prioritize regulatory compliance. because Boeing missed some of its improvement targets, and because some company managers did not sufficiently prioritize compliance with FAA regulations. Boeing previously paid $12 million in civil penalties as an initial condition of the 2015 agreement. The terms of this new settlement were reached at the end of December 2020 and required Boeing to meet specific performance targets, and authorized the FAA to assess deferred penalties if it failed to do so. That 2015 agreement also prevents Boeing from appealing the FAA’s penalty assessment once the agreement’s five-year term has ended.

Additionally Boeing agreed to pay $1.21 million to settle two pending FAA enforcement actions. In one case the company implemented an improper structure of its FAA-approved Organization Designation Authorization (ODA) program and exerted undue pressure or interfered with ODA unit members. In the other Boeing allegedly failed to follow its quality-control processes and subjected ODA members to undue pressure or interference in relation to an aircraft airworthiness inspection.

The rhetoric used in this announcement against Boeing also indicates the level of embarrassment suffered by the FAA, which took a significant number of reputational hits from the Max chaos. The agency reiterated its intent to remain vigilant in its oversight of Boeing’s engineering and production activities, and is, according to an agency spokesperson, “actively implementing the certification reform and oversight provisions of the 2020 Aircraft Certification, Safety, and Accountability Act. This legislation will allow FAA to assess even greater civil penalties against manufacturers that exert undue pressure on ODA unit members.”