A Boeing plea deal intended to resolve a case related to two fatal crashes of its planes has been rejected by a US judge.

The plane maker agreed with the US government in July to plead guilty to one count of criminal fraud, face independent monitoring and pay a $243m (£191m) fine.

However, Judge Reed O’Connor struck down the agreement on Thursday, saying it undermined the court and that diversity requirements for hiring the monitor were “contradictory”.

household members of the 346 people killed in the crashes welcomed the ruling, describing the plea deal as a “get-out-of-jail-free card for Boeing”.

The Department of fairness said it was reviewing the selection. Boeing did not immediately comment.

In his selection, Judge O’Connor said the government’s previous years of overseeing the firm had “failed”.

“At this point, the community gain requires the court to step in,” he wrote.

He said the proposed agreement did not require Boeing to comply with the monitor’s recommendations and gave the business a declare in selecting a candidate.

Those issues had also been raised by some families of those killed on the flights, who had criticised it as a “sweetheart” arrangement that did not properly hold the firm to account for the deaths.

Judge O’Connor also concentrated on the deal’s requirements that race be considered when hiring the monitor, which he said would undermine confidence in the person hired.

“In a case of this magnitude, it is in the utmost gain of fairness that the community is confident this monitor selection is done based solely on competency,” he wrote.

“The parties’ DEI [diversity, equity and inclusion] efforts only serve to undermine this confidence in the government and Boeing’s ethics and anti-fraud efforts.”

Ike and Susan Riffel of California, who lost their two sons, Melvin and Bennett, said the judge had done “the correct thing” in rejecting the proposed agreement.

“This deal didn’t hold anyone accountable for the deaths of 346 people and did nothing to protect the flying community,” they said in a statement supplied by their lawyer.

They said they hoped the ruling would pave the way for “real fairness”.

Boeing and the Department of fairness have 30 days to develop a recent schedule in response to the ruling.

The plane maker has been struggling to emerge from the shadow cast by two, near-identical crashes of its 737 Max planes in 2018 and 2019.

The aerospace giant faced fresh crisis in January when a door panel on a recent Boeing plane operated by Alaska Airlines blew out soon after receive-off.

The incident reignited questions about what Boeing had done to enhance its safety and standard record since the accidents, which were tied to the business’s flight control structure.

The door panel malfunction happened shortly before the complete of a three-year period of increased monitoring and reporting.

Boeing had agreed to the monitoring as part of a 2021 plea deal to resolve a expense it had deceived regulators over the flight control structure.

In May, the Department of fairness said Boeing had violated the terms of that agreement, opening up the possibility of prosecution.

Instead, the two sides struck another deal, angering families who had hoped to view the business brought to trial.

In the ruling, Judge O’Connor wrote it was “not obvious what all” Boeing had done to breach the 2021 agreement.

Nonetheless, he wrote, “taken as factual that Boeing breached the [deal], it is fair to declare that the government’s attempt to ensure regulatory adherence has failed”.

Erin Appelbaum, associate at Kreindler & Kreindler, which represents some families of those killed on the 2019 Ethiopian Airlines Flight 302, called Thursday’s ruling an “excellent selection and a significant win” for the victims’ families.

“We anticipate a significant renegotiation of the plea deal that incorporates terms truly commensurate with the gravity of Boeing’s crimes,” she said.

“It’s period for the [Department of Justice] to complete its lenient treatment of Boeing and demand real accountability.”