(Updates with plea deal)

By Chris Prentice, Mike Spector and David Shepardson

July 8 (Reuters) - Boeing ( BA ) will plead guilty to

criminal fraud conspiracy to resolve a U.S. Justice Department

(DOJ) investigation linked to two 737 MAX fatal crashes, the

government said in a court filing late on Sunday.

The agreement in principle between the DOJ and Boeing ( BA ) allows

the company to escape a courtroom battle with federal

prosecutors but could complicate its efforts to overcome an

ongoing crisis sparked by the Jan. 5 mid-air panel blowout on an

Alaska Airlines-operated flight.

The deal follows a DOJ finding in May that Boeing ( BA ) breached a

2021 agreement that had shielded it from prosecution over the

crashes in Indonesia and Ethiopia in 2018 and 2019 that killed

346 people.

WHAT WAS BOEING'S ORIGINAL AGREEMENT?

The DOJ in 2021 agreed to hold off prosecuting Boeing ( BA ) and

asked a judge to dismiss a charge of conspiring to defraud the

U.S. Federal Aviation Administration so long as the company

abided by the deal's terms over a three-year period.

Boeing ( BA ) agreed to overhaul compliance practices to prevent

violation of U.S. fraud laws and submit regular reports. But the

January mid-air emergency occurred two days before the agreement

expired.

The planemaker had told prosecutors it disagrees with their

finding and said it "honored the terms" of the settlement.

WHAT HAPPENS NEXT TO BOEING?

A judge will need to sign off on the agreement, which DOJ

and Boeing ( BA ) hammered out in advance of a July 7 deadline for the

government to decide whether to prosecute the company. The DOJ

and Boeing ( BA ) are working to finalize it and file it to the court

by July 19, the filing said.

WHAT DOES A GUILTY PLEA MEAN FOR BOEING?

A felony conviction could disrupt Boeing's ( BA ) ability to secure

government contracts such as those with the U.S. military.

Boeing's ( BA ) government contracts in 2023 accounted for 37% of its

annual revenue including foreign military sales through the U.S.

government. Boeing ( BA ) had $14.8 billion in Defense Department

contracts in 2022, per a government report.

"In the world of government contracting, an indictment or

finding of criminal liability can have a significant impact on a

company," said Franklin Turner, a government contracts lawyer at

McCarter & English.

Boeing ( BA ) could seek waivers from government departments and

agencies to continue contracting with them. Some previous DOJ

settlements have provided details on how officials should

address the issue. It remains unclear to what extent the

proposed Boeing ( BA ) plea deal does.

Government officials at each department or agency would have

to decide whether Boeing ( BA ), as a convicted felon, is entitled to a

waiver, said Vikramaditya Khanna, a law professor at University

of Michigan.

WHAT ARE THE FINANCIAL PENALTIES FOR BOEING?

The agreement includes a $487.2 million financial penalty,

about half of which Boeing ( BA ) would need to pay as the government

would credit it for previous penalties.

Boeing ( BA ) would likely be forced to pay restitution, an amount

to be decided by a judge. The company already paid $2.5 billion

in penalties and restitution in 2021 in connection with the

original conspiracy charge, which included a criminal penalty

and compensation for customers and relatives of crash

victims.

The plea offer includes putting Boeing ( BA ) on probation for

three years.

WHAT OTHER COSTS ARE THERE?

A federal judge can still decide on whether the company

should pay any additional restitution for the victims' families.

Boeing ( BA ) has also agreed to spend at least $455 million over the

next three years to strengthen and integrate its compliance and

safety programs, the filing said.

WHO WILL BE BOEING'S THIRD-PARTY MONITOR?

The plea deal includes the appointment of an independent

monitor to audit Boeing's ( BA ) safety and compliance practices for

three years.

The Justice Department under President Joe Biden has renewed

the use of corporate monitors in its deals with companies to

resolve charges of misconduct. The practice had fallen out of

favor under the previous administration.

Companies typically fight against these terms. The outside

firms, which are selected by the DOJ, act as the government's

eyes and ears. The company foots the bill.

WHAT ABOUT THE FAMILIES OF THE CRASH VICTIMS?

Boeing's ( BA ) board of directors will meet with the families of

victims of the fatal crashes as part of the plea agreement.