American Airlines and Boeing Reach a Settlement for 737 Max-Related Losses

American Airlines said Monday that it has reached a confidential settlement with Boeing for financial losses related to the worldwide grounding of the 737 Max jet after two deadly crashes that killed 346 people.

While the terms are confidential, Doug Parker, American’s CEO, said a portion — $30 million — will be shared with employees through the company’s profit-sharing plan. American is the second U.S. carrier to reach a settlement with the company; Southwest Airlines announced it had reached a settlement with Boeing in December.

“Despite the ongoing challenges the grounding has brought, American Airlines team members continue to do an incredible job caring for our customers,” Parker said in a news release. “Our ability as an airline to weather these unprecedented times is thanks to our phenomenal team, and it was important to us that we get a deal done this year.”AD

The newest version of Boeing’s best-selling jet has been grounded worldwide since March, after the fatal crash of an Ethiopian Airlines jetliner. The March 10 crash was the second involving a Max jet in less than five months. In October 2018, a Lion Air jet crashed shortly after takeoff in Indonesia.

The tragedies have led to intense scrutiny of the Chicago-based company and of the Federal Aviation Administration, which oversaw the process for determining the 737 Max jet was safe to fly.

Boeing has been working on software fixes to an automated flight control system that was implicated in both tragedies. The company had hoped that the jets would resume flying by the end of 2019, but regulators at the FAA have not given their approval. Adding to Boeing’s woes, international regulators are also scrutinizing the company’s proposed fixes.

American has removed the jet from its schedule through April 6.

American’s Parker said the settlement covers losses the airline incurred in 2019. In October, the airline announced a loss of $540 million in pretax revenue for 2019. Parker said American will continue discussions with Boeing for damages related to the Max grounding beyond 2019.

American has 24 737 Max jets in its fleet.

The money is expected to be paid out to employees in March.

“As the union for American Airlines’ 28,000 flight attendants, we worked hard to make sure that our members received a portion of the settlement,” said Lori Bassani, national president of the Association of Professional Flight Attendants, which represents those who fly for American. “We welcome the announcement that American will share $30 million with its employees and are still evaluating the details. We vow to make sure our members are fairly compensated in any other upcoming settlements and will continue to ensure the 737 Max is 100% safe before re-entry.”

In December, Southwest Airlines announced that it had reached a settlement and would share a portion of that — $125 million — with its employees. The terms of Southwest’s settlement were confidential, but the amount is probably greater given that it has the most 737 Max jets of any U.S. carrier. The airline has 34 in its fleet — all of which have been grounded since March 13.

In October, Southwest reported that the grounding of the 737 Max had cost the airline $435 million through the end of September.

SOURCE: Washington Post