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American Reaches Settlement with Boeing

The airline still holds hope that the grounded Boeing aircraft model will see blue skies again in April

January 7, 2020

While American Airlines awaits the recertification of Boeing 737 Max aircraft it has quietly announced this week that it has reached a confidential agreement with Boeing on compensation for financial damages. The American Airlines fleet, which currently includes 24 Boeing 737 Max 8 aircraft with an additional 76 aircraft on order, suffered financial damages that needed to be managed before the end of 2019.  

“Despite the ongoing challenges the grounding has brought, American Airlines team members continue to do an incredible job caring for our customers,” said American’s Chairman and CEO Doug Parker. “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 before the end of the year. On behalf of the Board of Directors, we are proud to take the step of including this compensation in our 2019 profit-sharing program, even though the compensation will be received over several years.”

Given the projected reduction in annual operating income for 2019 as a result of the MAX groundings, American’s Board of Directors has authorized a discretionary portion of the settlement to be returned to American Airlines staff members through the company’s 2019 profit-sharing program. The profit-sharing award is based on the company’s estimate of projected full-year 2019 financial damages for the MAX groundings. An additional accrual of more than $30 million will be made to the airline’s 2019 profit-sharing program and distributed to staff members in March 2020.

American will continue its conversations with Boeing regarding compensation for damages related to the MAX grounding beyond 2019, and any future compensation will be similarly shared with its team members.

The airline is in continuous contact with the Federal Aviation Administration, Department of Transportation and Boeing. Accordingly, American anticipates that the resumption of scheduled commercial service on American’s fleet of Boeing 737 MAX aircraft starting April 7, 2020. American had previously cancelled service on the MAX through Jan. 15.

American expects to gradually phase in the MAX for commercial service and will increase flying on the aircraft throughout the month of March.