Airlines say the grounding of the 737 Max will cost them hundreds of millions of dollars, and they’re ready to pursue Boeing for the money

Southwest Airlines

Airlines in the US and Europe are warning that they will lose hundreds of millions of dollars between them after the grounding of the Boeing 737 Max.
Airlines have cancelled thousands of flights as the plane remains grounded around the world after two fatal crashes.
American Airlines estimated that the grounding will cost it $350 million, while Southwest Airlines says it has already lost $200 million.
Budget carrier Norwegian said "uncertainty" over when the plane will fly again could cost it up to $58 million.
Analysts say different airlines will want different forms of compensation from Boeing, which has already taken a financial and reputational hit from the crashes.
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US and European airlines say the grounding of the 737 Max has already cost them hundreds of millions of dollars, and they’re ready to take on Boeing to get compensation.

Southwest Airlines, which operates the world’s largest fleet of 737 Max planes, said it has already lost $200 million in the first quarter from cancelled flights due to the grounding of the plane as well as the government shutdown.

American Airlines estimated that the grounding will cost it $350 million, the BBC reported, as it cancelled more than 15,000 flights until August. American has 24 Boeing 737 MAX 8s in its fleet, compared to Southwest’s 34.

Joe Raedle/Getty Images

Norwegian estimated that the "uncertainty" over the plane and when it will return to the sky will cost it up to 500 million Norwegian kroner ($58 million.) Norwegian was operating 18 737 Max planes before they were grounded, and had ordered a total of 110.

Germany’s TUI Airways told the Financial Times that the grounding of the plane would cost it around €3 million ($3.4 million) a week. The airline, which operates 15 737 Max planes, also said in March that it could also take a hit of €300 million ($335 million) if the planes are still grounded by September.

REUTERS/Baz Ratner/File Photo

The 737 Max has been grounded all over the world since a fatal Ethiopian Airlines crash in March — just five months after a fatal Lion Air crash also involving in the plane in October 2018. Almost 350 people were killed in the crashes.

The plane will stay grounded until the US Federal Aviation Administration and its equivalent regulators around the world approve Boeing’s updated software systems for the plane.

The crashes and subsequent grounding has already had a major financial impact on Boeing. The company has lost $1 billion so far, and said it can’t estimate how much worse the effects on its profits might get this year.

REUTERS/Baz Ratner/File Photo

Boeing also faces a number of lawsuits and questions into its certification processes, as well as federal investigations and reports of poor factory processes.

Boeing has promised to "earn and re-earn" the trust of the flying public and has vowed to make the plane "one of the safest airplanes ever to fly" when it is certified to fly again.

Airlines are looking for compensation from Boeing

A person briefed on the compensation process told the Financial Times that Boeing is unlikely to give airlines "a pile of cash" to make up for the effects of the plane’s grounding.

The person said that in the past Boeing has offered compensation in forms like discounts on future orders or agreeing to defer orders when they have needed to compensate airlines.

REUTERS/Lindsey Wasson

Gerald Khoo, a transport analyst at investment bank Liberum, told the FT that different airlines would want different forms of compensation and said Boeing would want "to keep things as confidential as possible."

Bjorn Kjos, Norwegian’s chief executive said the airline has had "some productive meetings" with Boeing. He said they discussed "how we can maneuver through the difficulties the Max situation is causing Norwegian."

Norwegian told Reuters in the days after the Ethiopian Airlines crash that it would seek compensation from Boeing, saying in an emailed statement: "We expect Boeing to take this bill."

Gary Kelly, Southwest’s chief executive, said the airline would talk to Boeing "privately" about "business arrangements or our contract arrangements," according to the FT.

Doug Parker, chief executive of American Airlines, told analysts on Friday that he hadn’t yet talked to Boeing about compensation as he was focused on getting "the airplane back and recertified," the FT reported.

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