WASHINGTON, July 8 (Reuters) - Boeing ( BA ) is in talks with

the U.S. Defense Department over how the planemaker's planned

guilty plea could affect its extensive government contracts, a

person briefed on the matter said.

Late on Sunday, the Justice Department said in a court

filing that Boeing ( BA ) had agreed to plead guilty to a criminal

fraud conspiracy charge to resolve an investigation linked to

two 737 MAX fatal crashes.

Boeing ( BA ) and the Defense Department did not immediately

comment on Monday.

Boeing ( BA ) shares were up 3.4% on Monday to $190.68 in morning

trading.

A guilty plea potentially threatens the company's ability to

secure lucrative government contracts with the likes of the U.S.

Defense Department and NASA.

Boeing's ( BA ) defense and space unit is vital to its business,

with $7 billion in first quarter sales, up 6% from a year ago.

Boeing ( BA ) in its annual report said U.S. government contracts

represented 37% of its revenue last year including foreign

military sales.

Still, the financial costs tied to the plea appeared

"manageable relative to the company's scale and overall

obligations," said Ben Tsocanos, airlines director at S&P Global

Ratings.

"We expect that Boeing ( BA ) will likely continue to be a key

supplier of defense and space products following the guilty

plea," he said.

As part of the plea deal, Boeing ( BA ) will pay a criminal

fine of $243.6 million. Boeing ( BA ) has also agreed to invest at

least $455 million over the next three years to strengthen its

safety and compliance programs, have the Justice Department

appoint a third party monitor to oversee the firm's compliance,

and to make annual reports to the Department of Justice.

The prices of Boeing's ( BA ) bonds were little changed in morning

trading in New York on Monday, LSEG data shows.

Bankers said Wall Street's appetite to finance Boeing ( BA ) could

sour if the guilty plea had a material impact on its business -

through missing out on major contracts, for example.