Aircraft manufacturer Boeing and Southwest Airlines have reached an out-of-court settlement over damages caused by the safety-related grounding of the airline’s fleet of Boeing 737 Max jets.
Boeing agreed to pay Southwest $125 million in compensation for financial losses caused by the groundings. Southwest said the payout was based on projected reductions in the airline’s 2019 operating income arising from service disruptions caused by the groundings.
Federal regulators ordered all 737 Max to be taken out of service after the jets were involved in two fatal crashes resulting from software problems in the planes’ operating system.
Southwest officials said the money would be added to the company’s employee profit-sharing fund.
“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,” said Gary C. Kelly, chairman of the board and CEO of Southwest.
“On behalf of the Southwest Board of Directors, we are grateful to our employees for their extraordinary efforts throughout the year and are pleased to share proceeds from our recent agreement with Boeing.”
The airline and Boeing have continued to discuss other possible compensation arising from the 737 Max controversy. The US Federal Aviation Administration (FAA) ordered all 737 Max planes grounded on March 13, 2019, and the jets remain offline pending software enhancements and the implementation of new training requirements.
“The airline remains confident that, once certified by the FAA, the enhancements will support a safe return of the 737 Max aircraft,” Southwest said in a press statement.