Boeing has violated a settlement that allowed the company to avoid criminal prosecution after two deadly crashes involving its 737 Max aircraft more than five years ago, the Justice Department told a federal judge on Tuesday.

It is now up to the Justice Department to decide whether to file charges against Boeing. Prosecutors will tell the court no later than July 7 how they plan to proceed, department said.

New 737 Max jets crashed in 2018 in Indonesia and 2019 in Ethiopia, killing 346 people. In the latter crash just minutes after takeoff in Addis Ababa, 18 Canadian citizens were killed.

Boeing reached a $2.5 billion US settlement with the Justice Department in January 2021 to avoid prosecution on a single charge of fraud — misleading federal regulators who approved the plane. Boeing blamed the deception on two relatively low-level employees.

In a letter filed Tuesday in federal court in Texas, Glenn Leon, head of the Justice Department criminal division’s fraud section, said Boeing violated terms of the settlement by failing to make promised changes to detect and prevent violations of federal anti-fraud laws.

The determination means that Boeing could be prosecuted “for any federal criminal violation of which the United States has knowledge,” including the charge of fraud that the company hoped to avoid with the settlement, the Justice Department said.

However, it is not clear whether the government will actually prosecute Boeing.

“The Government is determining how it will proceed in this matter,” the Justice Department said in the court filing.

‘Positive first step’: rep for families

Prosecutors said they will meet on May 31 with families of passengers who died in the two Max crashes. Family members were angry and disappointed after a similar meeting last month.

Paul Cassell, a lawyer who represents families of passengers in the Ethiopia crash, said the Justice Department’s determination that Boeing breached the settlement terms is “a positive first step, and for the families, a long time coming.”

“But we need to see further action from DOJ to hold Boeing accountable, and plan to use our meeting on May 31 to explain in more details what we believe would be a satisfactory remedy to Boeing’s ongoing criminal conduct,” Cassell said.

Investigations into the fatal crashes pointed to a flight-control system that Boeing added to the Max without telling pilots or airlines. Boeing downplayed the significance of the system, then didn’t overhaul it until after the second crash.

After secret negotiations, the government agreed not to prosecute Boeing on a charge of defrauding the United States by deceiving regulators about the flight system. The settlement included a $243.6 million fine, a $500 million fund for victim compensation and nearly $1.8 billion to airlines whose Max jets were grounded for nearly two years.

Boeing has also faced civil lawsuits since the crashes in Indonesia and Ethiopia.

Boeing will have until June 13 to respond the government’s allegation, and department said it will consider the company’s explanation “in determining whether to pursue prosecution.”

The company, based in Arlington, Va., disputed the Justice Department’s finding.

“We believe that we have honoured the terms of that agreement, and look forward to the opportunity to respond to the Department on this issue,” a Boeing spokesperson said in a statement. “As we do so, we will engage with the Department with the utmost transparency, as we have throughout the entire term of the agreement, including in response to their questions following the Alaska Airlines 1282 accident.”

That Alaska Airlines flight incident in January on a 737 Max saw a door plug blow open while in flight.

Current and former Boeing employees have accused the company of taking safety shortcuts, and the allegations are being probed by the Federal Aviation Administration (FAA) and the National Transportation Safety Board, in addition to the Justice Department.

Just 7 plane deliveries last month

The FAA is limiting production of new Boeing 737 Max jets in the wake of the January incident while the company tries to improve its manufacturing quality.

Boeing’s market share against its European rival Airbus is estimated at 43 per cent, compared with 50 per cent before the 2019 grounding of MAX jets following the fatal crashes in Asia and Africa.

Overall, Boeing has lagged behind its main rival Airbus for five consecutive years with respect to aircraft orders and deliveries.

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That is unlikely to change for 2024. Through the first four months of the year, Airbus has delivered 203 commercial planes, compared with 107 for Boeing.

Boeing said Tuesday that it received orders for seven planes last month, an unusually small number. There were 33 cancelled sales, 29 related to the February shutdown of Canada’s Lynx Air.