American Airlines, Aeromexico reach compensation deals with Boeing over MAX crisis

 American Airlines, Aeromexico reach compensation deals with Boeing over MAX crisis

(Reuters) - American Airlines Group Inc , the largest U.S. airline, on Monday became the latest carrier to reach a settlement with Boeing Co for compensation for damages the airline incurred in 2019 from the ongoing grounding of its fleet of Boeing 737 MAX aircraft.

Earlier in the day, Mexico's Aeromexico said it had reached a compensation deal with Boeing over the MAX 737.

Neither airline disclosed the size of the payment to be received from Boeing.

Boeing's best-selling 737 MAX has been grounded since last March, following two fatal crashes in five months that killed 346 people, and there is no date set for when it will be able to return to use. Boeing is halting production in mid-January.

A number of airlines have struck confidential settlements with Boeing in recent weeks.

Boeing said it does not comment on discussions with airlines.

American said the compensation from Boeing will be received over several years, and of the total amount, more than $30 million (22.8 million pounds) will be used for the airline's 2019 employee profit-sharing program. It said it does not expect any material financial impact to be realized in its fourth-quarter 2019 earnings and it will continue talks regarding compensation for damages related to the MAX grounding beyond 2019.

Aeromexico said it remains in talks with Boeing and regulatory authorities.

Southwest Airlines Co , the world's largest 737 MAX operator, said in December it had reached a confidential agreement with Boeing for a portion of a projected $830 million hit to operating income in 2019.

Turkish Airlines last week agreed to a compensation deal with the planemaker and also did not specify the size of the payment. European charter airline TUI has said it was still in talks with Boeing.

Earlier on Monday, the Wall Street Journal reported that Boeing is considering plans to raise more debt to bolster its finances after the grounding of the 737 MAX.

Boeing is also considering deferring some capital expenditures, freezing acquisitions and cutting spending on research and development to preserve cash, the report https://www.wsj.com/articles/boeing-considers-raising-debt-as-max-crisis-takes-toll-11578308401?mod=searchresults&page=1&pos=3 said, citing people familiar with the matter.

Boeing did not immediately respond to a Reuters request for comment on the WSJ report.

Boeing shares ended the day up 0.29% at $333.74.

(Reporting by David Shepardson in Washington and Sanjana Shivdas and Shanti S Nair in Bengaluru; Editing by Leslie Adler)

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Updated Date: Jan 07, 2020 05:06:42 IST