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 AirlinesA Southwest Boeing 737 Max plane.
  • Airlines in the US and Europe are warning that they will lose hundreds of millions of dollars among them after the grounding of the Boeing 737 Max.
  • Airlines have canceled thousands of flights as the plane remains grounded around the world after two fatal crashes.
  • American Airlines estimated that the grounding would cost it $US350 million, while Southwest Airlines says it has already lost $US200 million.
  • The budget carrier Norwegian said “uncertainty” over when the plane would fly again could cost it up to $US58 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.
  • Visit Business Insider’s homepage for more stories.

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, has said it lost $US200 million in the first quarter from cancellations caused by the grounding of the plane and the government shutdown.

American Airlines, which has canceled more than 15,000 flights into August, estimates that the grounding will cost it $US350 million, the BBC reported. American has 24 Boeing 737 Max 8s in its fleet, compared with Southwest’s 34.

American Airlines Boeing 737 Max groundedJoe Raedle/Getty ImagesAmerican Airlines Boeing 737 Max planes.

Norwegian estimated that the “uncertainty” over the plane and when it would return to the sky would cost it up to 500 million Norwegian kroner, or $US58 million. Norwegian was operating 18 737 Max planes before they were grounded, and it had ordered a total of 110.

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Germany’s Tui Airways told the Financial Times that the grounding of the plane would cost it about 3 million euros, or $US3.4 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 euros if the planes were still grounded by September.

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. 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 have already had a major financial impact on Boeing. The company has said that it already lost $US1 billion over the 737 Max crisis and that it can’t estimate how much worse the effects on its profits might get this year.

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

Read more:
Boeing’s nightmare year just got worse, as profits plunge in the wake of 2 horrific 737 Max crashes that left the plane grounded worldwide

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 aeroplanes 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 probably wouldn’t 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 had offered compensation in forms like discounts on future orders or agreeing to defer orders.

Gerald Khoo, a transport analyst at the 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.”

Read more:
Boeing CEO vows that the fixed 737 Max will be ‘one of the safest aeroplanes ever to fly’ after the jet suffered 2 fatal crashes in 5 months

Bjorn Kjos, Norwegian’s chief executive, said the airline had “some productive meetings” with Boeing. He said they discussed “how we can manoeuvre 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, the 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 aeroplane back and recertified,” the FT reported.

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