On Friday, Ethiopian Airlines CEO Tewolde Gebremariam said that his carrier expects a settlement from Boeing over the March 2019 MAX crash by the end of June. In addition to the crash itself, the airline is also seeking compensation for damages caused by the grounding of the planes, and the accident’s “impact on the brand.”
Damages to revenue and reputation
Boeing’s woes are heaping up. As passengers are requesting refunds for canceled flights en masse from their airlines, so are airlines demanding compensation from the 737 MAX manufacturer for lost revenue and, in the case of Ethiopian Airlines, reputation.
“We have invited Boeing to discuss compensation. It’s compensation for the grounded MAX…there is also compensation for delayed delivery of the MAX that was supposed to come and loss of revenue,” Ethiopian’s CEO Tewolde Gebremariam told Reuters earlier today. He went on to say:
“By the end of June, which is the end of our fiscal year, we should have something…meaning compensation,” and that the airline was also seeking damages for the negative impact the fatal crash had on its brand.
From 30 down to four
The carrier is also seeking compensation for the delay of the delivery of additional 737 MAXs still on order. Although to be fair, at the moment, it is probably better off not paying for maintenance costs for the extra aircraft.
Ethiopian received its first 737 MAX on the 2nd of July 2018, just months before the first fatal crash. Back then, it was still expecting to take delivery of a total of 30 of the model. It had received five before the crash. Now it has four, and the future of the plane with the carrier remains uncertain.
GOL and Southwest recently received payment
Just two days ago, Brazilian carrier GOL agreed on a $412 million compensation with Boeing for losses incurred from the grounding of the plane. Late April, the manufacturer paid $428 million to Southwest Airlines.
Boeing has previously settled lawsuits brought by families affected by the fatal crashes and has pledged in total $100 million to the victims’ relatives.
Ethiopian Airlines flight 302 bound for Kenya crashed six minutes after take-off from the capital Addis Ababa, killing all 157 passengers and crew on the 10th of March 2019. Five months prior, on the 29th of October 2018, Lion Air flight 610 crashed about 12 minutes after take-off from Jakarta, killing all 189 people on board.
Both planes were brand new. The fault for both incidents was later found to lie with a malfunction in the plane’s Maneuvering Characteristics Augmentation System (MCAS) software that automatically pitches down the nose of the plane to prevent a stall.
Recertification still uncertain
Killing a combined 346 people, the crashes led to regulatory authorities around the world grounding the aircraft. The losses to revenue for carriers globally were, up until a few months ago, the most significant crisis commercial aviation had seen in a decade. Boeing has since been working to resolve the MCAS issues and to get the plane recertified and back in the air.
Meanwhile, several other issues have kept popping up, delaying the recertification process from the Federal Aviation Administration (FAA). Some are of the opinion that all the extra work will make the Boeing 737 MAX the safest plane in the skies once it is allowed to fly again.
What do you think? Will people be willing to fly the MAX after recertification?