American Airlines Reaches Deal With Boeing Over MAX Grounding Costs
January 06 2020 - 5:29PM
Dow Jones News
By Alison Sider
American Airlines Group Inc. said Monday that it has reached a
deal with Boeing Co. to be compensated for damage from the
grounding of the 737 MAX last year.
The carrier didn't disclose the terms of its deal, but said it
would receive compensation over several years. American said it
would share $30 million of the settlement with employees through
its 2019 profit-sharing program, which it expects to distribute in
March.
The MAX has been grounded since March following two fatal plane
crashes within five months, and the costs to airlines have been
climbing. Boeing has so far earmarked $6.1 billion to pay customers
through a mix of cash, discounts and in-kind benefits.
The grounding has crimped airlines' growth plans and cost them
hundreds of millions of dollars in lost earnings. American had 24
MAX jets in its fleet at the time of the grounding and was supposed
to have 40 by the end of last year. It has said the grounding would
decrease its 2019 earnings by $540 million.
The costs from the grounding are set to bleed into this year.
American has struck the MAX from its schedules until early April,
and the airline said it plans to continue its conversations with
Boeing regarding compensation for damages beyond 2019.
A handful of other airlines also have reached settlements with
Boeing, including Southwest Airlines Co. and Grupo Aeromexico SA,
while others are still in talks.
Write to Alison Sider at alison.sider@wsj.com
(END) Dow Jones Newswires
January 06, 2020 17:14 ET (22:14 GMT)
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