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Southwest Airlines reaches confidential settlement with Boeing for some of its 737 Max losses

A Southwest Airlines Boeing 737 Max aircraft lands at the Southern California Logistics Airport in the high desert town of Victorville, Calif., on March 23, 2019. (Matt Hartman / AP)
Washington Post

Southwest Airlines has reached a confidential settlement with Boeing for a portion of its financial losses tied to the grounding of Boeing’s 737 Max jet, the carrier announced this week.

The airline’s chief executive, Gary Kelly, said the company will share a portion of the settlement, roughly $125 million, with its employees through Southwest’s profit-sharing plan.

“Our people have done an incredible job managing through the MAX groundings, while providing the highest levels of customer service and one of the best operational performances in our history,” Kelly said in a news release.

The Boeing planes have been grounded worldwide since March, following the March 10 crash of an Ethiopian Airlines flight. It was the second crash involving a 737 Max in less than five months. In all, 346 people died in the tragedies.

In October, Southwest reported that the grounding of the 737 Max had cost the airline $435 million through the end of September 2020. Southwest has 34 Max jets in its fleet. The planes continue to be grounded, pending FAA flight approval.

The company emphasized the agreement is only a partial settlement and that it continues “to engage in ongoing discussions with Boeing regarding compensation for damages related to the Max groundings.”

Southwest’s pilots union is also suing Boeing. In a suit filed in October, the Southwest Airlines Pilots Association alleged that the company deliberately mislead the organization and its members about the safety of the Max. According to the suit, the grounding of the jetliner caused the elimination of more than 30,000 scheduled flights and resulted in financial losses of more than $100 million for the airline’s more than 9,700 pilots.

The case is currently awaiting a federal judge to determine whether it will be heard in federal court or be sent back to Texas State Court, where it was originally filed.

In a memo sent to its membership this week, Jon Weaks, president of the Southwest Airlines Pilots Association, said employees appreciated that Boeing has recognized the importance of compensating employees for the financial hardships they’ve endured as a result of the grounding.

However, he added that the union will continue to pursue its claim against Boeing.

“SWAPA feels that the Southwest/Boeing agreement only solidifies our legal claim,” he wrote. “We look forward to obtaining the specific details of the Boeing/Southwest agreement in the discovery process during litigation.”

Boeing did not return requests for comments on the union’s lawsuit, but has previously said it was “meritless.”