Southwest to Share Funds from MAX Deal with Employees
By Scott Reeves, China Daily | Dec. 14, 2019
Southwest Airlines will share with employees a portion of a monetary settlement it reached with Boeing stemming from the worldwide grounding of the 737 MAX, the carrier said Thursday.
Terms of the confidential settlement weren't announced, but Southwest said Thursday it will contribute about US$125 million as part of the airline's regular profit- sharing in 2020. Flights using the MAX have been canceled since the worldwide grounding of the aircraft last spring and, as a result, employees have lost wages.
"Our people have done an incredible job managing through the MAX groundings, while providing the highest levels of customer service and one of the best operational performances in our history," Southwest CEO Gary Kelly said in a statement.
"On behalf of the Southwest Board of Directors, we are grateful to our employees for their extraordinary efforts throughout the year and are pleased to share proceeds from our recent agreement with Boeing."
Dallas-based Southwest, a discount carrier, has an all-Boeing fleet of about 750 planes, including 34 MAX jets, with another 380 on order.
The carrier said additional settlement talks with Boeing continue. Last October, Kelly said he was "impatient" and wanted the issue to be "wrapped up quickly".
In a separate action, Southwest's pilots have sued Boeing and seek an estimated US$115 million in compensation. It's unclear how, or if, Thursday's announcement will affect the case.
Previously, Boeing announced that it had set aside US$5 billion to compensate its customers for lost revenue stemming from the MAX's grounding. However, some compensation may not be in cash. The manufacturer could discount the price of new planes or include upgrades at no additional cost, analysts said.
In the US, United and American also fly MAX jets.
Air China, China Eastern Airlines and China Southern Airlines have filed claims seeking compensation from Boeing. In Europe, Norwegian Air and Ryanair have filed claims against Boeing for lost revenue.
In addition, Boeing has set aside US$50 billion to settle lawsuits filed by family members of those killed in crashes in Indonesia and Ethiopia.
In October 2018, a MAX jet crashed in Indonesia and March 2019 another MAX crashed in Ethiopia. The two crashes killed all 346 passengers and crew onboard. All MAX aircraft have been grounded since March 2019.
The US Federal Aviation Administration has said there is no deadline for returning the MAX to service. Boeing hoped the plane would be cleared to return to service this month, but it now appears the MAX won't return to the sky until 2020, perhaps March at the earliest.