Boeing settles with American Airlines to compensate for 737 Max losses

Boeing settles with American Airlines to compensate for 737 Max losses
© Greg Nash

Boeing has settled with American Airlines in a confidential agreement to compensate for the losses the airline experienced without the 737 Max last year, the airline announced Monday.

American Airlines has designated a “discretionary portion” of the settlement to the 2019 profit-sharing program, with an additional $30 million that will be distributed to American Airlines employees starting in March.

The airline estimated its losses from the grounding of the 737 Max at $540 million in September, Forbes reported. The news outlet noted that the profit-sharing program usually consists of 5 percent of the carrier’s profits, which would amount to about $600 million. 

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“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,” American Airlines CEO Doug Parker said in a statement. 

The carrier did not address 2020 losses from the grounded plan as the Boeing 737 Max is expected to fly again in early April.

Unions, like the Allied Pilots Association (APA) and the Association of Professional Flight Attendants, have been involved in the process to ensure pilots and flight attendants get a fair share of compensation. APA spokesman Dennis Tajer described the agreement to Forbes as a good first step but “one of several steps we need to see happen.”

Southwest Airlines also reached a confidential compensation agreement with Boeing last month, adding that it would provide $125 million to its profit-sharing plan, according to Forbes. During the plane’s grounding, Southwest had 34 Max aircraft and American had 24, but they were supposed to be flying 68 and 40 respectively by the end of 2019.

The Boeing 737 Max was grounded last year after the aircraft was involved in two fatal crashes. So far, the company has designated $6.1 billion in compensation to customers of the aircraft, The Wall Street Journal reported.

Boeing told The Hill that it does not comment on “private discussions with customers.”