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Boeing drama: Southwest to get $125 million, FAA grounds 737 MAX until April

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Christian Fernsby ▼ | December 12, 2019
Southwest Airlines announced that it has reached a compensation agreement with Boeing.
Boeing 737 MAX
Air industry   Boeing 737 MAX
Thiw will cover some of the projected financial damages related to the grounding of the Boeing 737 MAX.

Topics: Boeing Southwest FAA

Along with the rest of the MAX fleet, Southwest’s 34 MAX aircraft have been out of service since March 2019 following the fatal crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302.

The terms of the company’s agreement with Boeing have not been made public, but the airline’s board has authorized an incremental profit-sharing accrual for Southwest employees estimated at around $125 million.

Southwest said it will add $125 million to its profit sharing pool with money it gets from Boeing.

"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," said Southwest CEO Gary Kelly.

"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."

Boeing abandoned its goal of getting approval this month from the Federal Aviation Administration to unground the 737 MAX after chief executive Dennis Muilenburg met with senior U.S. aviation officials.

FAA Administrator Steve Dickson said he would not clear the plane to fly before 2020 and disclosed the agency has an ongoing investigation into 737 production issues in Renton, Washington.

He added there are nearly a dozen milestones that must be completed before the MAX returns to service.

American said that it based the decision on the latest guidance from the Federal Aviation Administration, the Transportation Department and Boeing.

The airline said that if the FAA certifies the plane, it could operate flights with only employees and invited guests before April 7.