American Airlines reaches deal with Boeing over 737 Max grounding, will share $30 million with employees

Business

Maintenance workers cover the engine of an American Airlines Group Inc. Boeing Co. 737 Max plane outside of a maintenance hangar at Tulsa International Airport (TUL) in Tulsa, Oklahoma, U.S., on Tuesday, May 14, 2019.

Patrick T. Fallon | Bloomberg | Getty Images

American Airlines said Monday that it reached an agreement with Boeing to reimburse the airline for financial damages last year stemming from the grounding of the 737 Max, which is now in its 10th month.

Airlines have lost more than $1 billion in revenue because of the grounding after two fatal crashes. Boeing and Southwest Airlines ⁠— the largest U.S. operator of the 737 Max ⁠— disclosed they had reached an agreement last month.

American didn’t disclose the terms of the agreement, but as CNBC reported last week it plans to share a portion of the compensation with employees. American said the compensation would add $30 million to an employee profit-sharing program, payable in March. Southwest had taken a similar step, saying it would share $125 million with its workers.

Boeing took a nearly $5 billion after-tax charge in the second quarter of last year to compensate airlines for the grounding of the 737 Max.

Federal regulators have repeatedly said they have no firm timeline to allow the jetliners to fly again, so the financial toll due to the grounding is set to continue into 2020.

There were close to 400 of the planes in operation at the time of the grounding last March, and airlines haven’t received the additional planes they were expecting, causing the financial impact to snowball.

Regulators worldwide grounded the jets after an Ethiopian Airlines 737 Max crashed less than five months after a nearly new 737 Max in Indonesia went down, killing all 346 people on the two flights.

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