American Airlines, the dominant airline in Philadelphia, said Monday that it has reached a settlement with Boeing for financial losses related to the worldwide grounding of the 737 Max jet after two deadly crashes that killed 346 people.
Although the terms are confidential, American CEO Doug Parker said a portion — $30 million — will be shared with employees through the company’s profit-sharing plan. (As of Dec. 31, 2018, the company had about 128,900 full-time employees.)
American is the second U.S. carrier to reach a settlement with the company. Southwest Airlines announced that it had reached a settlement with Boeing in December.
"Despite the ongoing challenges the grounding has brought, American Airlines team members continue to do an incredible job caring for our customers," Parker said in a news release. "Our ability as an airline to weather these unprecedented times is thanks to our phenomenal team, and it was important to us that we get a deal done this year."
The newest version of Boeing's best-selling jet has been grounded worldwide since March, after the fatal crash of an Ethiopian Airlines jetliner. The March 10 crash was the second involving a Max jet in less than five months. In October 2018, a Lion Air jet crashed shortly after takeoff in Indonesia.
The tragedies have led to intense scrutiny of Boeing and of the Federal Aviation Administration, which oversaw the process for determining that the 737 Max jet was safe to fly.
Boeing has been working on software fixes to an automated flight control system that was implicated in both tragedies. The company had hoped that the jets would resume flying by the end of 2019, but regulators at the FAA have not given their approval. Adding to Boeing's woes, international regulators are also scrutinizing the company's proposed fixes.
American, which has 24 737 Max jets in its fleet, has removed the jet from its schedule through April 6.
Parker said the settlement covers losses American incurred in 2019. In October, the airline announced a loss of $540 million in pre-tax revenue for 2019. Parker said American will continue discussions with Boeing for damages related to the Max grounding beyond 2019.
The money is expected to be paid out to employees in March.
In December, Southwest Airlines announced that it had reached a settlement and would share a portion of that — $125 million — with its employees. The terms of Southwest’s settlement were confidential, but the amount is probably greater given that it has the most 737 Max jets of any U.S. carrier — 34, all of which have been grounded since March 13.