American Airlines agrees partial settlement with Boeing over 737 MAX grounding

As a result of a US$540 million shave off its pretax income since the grounding of the Boeing 737 Max in March 2019, American Airlines (American) has reached an undisclosed settlement figure with Boeing Co. to cover the carrier’s losses as a consequence.

The figure is not a complete settlement and does not include any compensation that will be due for 2020. Currently, American has removed all 737 MAX flights from its schedule until April 6. The carrier has confirmed that US$30 million of the compensation will be shared with staff to cover lost earnings through the 737 MAX grounding. American is following on from Southwest Airlines which has also negotiated a settlement figure with Boeing, while earlier on Monday this week, Groupo Aeromexico SAB announced it has also reached an agreement for compensation with Boeing.

Southwest Airlines has removed the 737 MAX from its schedule until April 13. According to Bloomberg, American Chief Executive Officer Doug Parker said: “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 before the end of the year.” The compensation payable will most likely take the form of reduced payments for 737 MAX jets American currently has on order and paid over a number of years.

Boeing announced back in July that it had taken a US$5.6 billion pretax charge to cover potential claims from clients as a result of the MAX grounding.  

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