WASHINGTON (AP) — The Justice Department has reached a deal with Boeing that will allow the company to avoid criminal prosecution for allegedly misleading U.S. regulators about the 737 Max jetliner before two of the planes crashed and killed 346 people, according to court papers filed Friday.

Boeing is set to enter into a non-prosecution agreement in the fatal crashes of two 737 Max aircraft that killed hundreds, the US Department of Justice said. As part of the deal, Boeing will avoid an upcoming fraud trial that could have resulted in the US aviation giant and defence contractor being labelled a felon.

Under an "agreement in principle," Boeing will pay US$1.1 billion, and the Department of Justice (DOJ) would dismiss a criminal charge against Boeing over its conduct in the certification of the MAX, DOJ said in a federal filing.