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American Airlines Employees WILL Be Getting a Payout from Boeing Because of the 737MAX Grounding

American Airlines Employees WILL Be Getting a Payout from Boeing Because of the 737MAX Grounding

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Story Highlights
  • American Airlines will share compensation settlement with employees
  • Boeing expected to pay out millions of dollars in damages for 737MAX grounding
  • American is currently cancelling 140 flights per day because of the debacle
  • Flights unlikely to resume until April at the earliest

American Airlines is expected to share a significant compensation payout it receives from aircraft manufacturer Boeing over the 737MAX scandal according to sources at the carrier.  Negotiations are still ongoing between the Dallas Fort Worth-based airline and Boeing’s legal team with an initial settlement expected to cover lost revenues and some damages.  Further settlements are also being pursued.

Senior executives have signalled their intent to share the initial compensation fund with employees as part of the annual profit-sharing bonus – much in the same way as Southwest Airlines has already said it will.  Earlier this month, Southwest revealed it would plough approximately $125 million from a settlement it had secured from Boeing into its employee profit-sharing pot.

While Southwest wasn’t able to reveal the exact amount it had actually secured from Boeing owing to a confidentiality agreement the two sides had struck, the airline said the amount announced would make up for a loss of revenues directly linked to the worldwide grounding of Boeing 737MAX aircraft since March.

Southwest is currently the biggest customer of the 737MAX with orders totalling 310 out of which 34 have currently been delivered to the airline.  The airline is currently cancelling around 300 flights per day because of the ongoing debacle as Boeing fights to win approval from the FAA to recertify the MAX.

The payout for American Airlines is likely to be a lot less than at Southwest because it operates a smaller 737MAX fleet – out of a total 100 jets ordered, American has so far taken delivery of 24 MAX8 variant aircraft.  American is currently cancelling around half the number of flights per day that Southwest is.

Both American and Southwest have removed all MAX flights from their schedule until April 2020, although United has already taken the decision to remove the aircraft from its schedules until June.

Whatever the amount American does win from Boeing, it’s unlikely to bolster the profit-sharing pot to such an extent that employees are actually happy with.  Last year, the airline accrued a total profit-sharing pot of $175 million – in comparison, Delta Air Lines shared a staggering $1.3 billion with its employees.

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