Icelandair Agrees More 737 MAX Compensation With Boeing

The Icelandair Group has reached a second agreement with Boeing regarding the compensation it is owed for the suspension of the 737 MAX aircraft. The details of the agreement are confidential.

Icelandair Boeing 737 MAX
Currently, all Boeing 737 MAX aircraft are grounded. Photo: Dylan Agbagni via Flickr

Yesterday, the Icelandair Group released its third-quarter results in which it stated that that the airline has come to a second agreement with Boeing. An initial agreement was reached in September, but discussions are still ongoing. In their results, the airline commented,

“…another agreement was made on second partial compensation. Details on these agreements with Boeing are confidential. The Company is in ongoing discussions with Boeing regarding further compensation for the financial loss resulting from the suspension.”

What happened?

The Boeing 737 MAX fleet has been grounded since the two fatal crashes in October 2018 and March 2019. There are ongoing investigations into the causes of the crashes and over the safety of the 737 MAX aircraft. Boeing 737 MAX planes were first put into use in 2016. Both fatal crashes involved the 737 MAX 8.

Lion Air Boeing 737 MAX 8
Lion Air was operating the Boeing 373 MAX 8 which crashed in October 2018. Photo: Boeing

So why does Boeing owe Icelandair compensation?

Icelandair had expected to have nine 737 MAX in operation by the end of this year which would have accounted for 25% of its fleet, as reported by Flight Global. The result of the suspended aircraft has left the airline with an imbalance that has affected its fares and routes.

In its quarterly statement the airline said: “The number of available seats has been reduced as a result of the MAX suspension”. This has resulted in an 11% drop in capacity compared to previous years.

Icelandair Aircraft
Icelandair has had to adapt its flight schedule due to the grounded 737 MAX. Photo: Riik@mctr via Flickr

Icelandair currently has five Boeing 737 MAX aircraft which have been grounded since the March incident. The airline has said that it does not think the planes will be in service until at least the end of February next year. The airline was expected to take delivery of three more 737 MAX aircraft this year with another aircraft due next year. However, they have now stated that this is “uncertain at this point in time”.

Due to the ongoing complications of the grounded aircraft, the airline has had to adjust its flight schedule until the planes are back in service. The airline commented that “We have managed to reduce the impact of the MAX suspension by implementing an extensive action plan”. 

Additionally, the company was recently forced to transport its five grounded planes to Spain in order to protect them from harsh winter weather. The warmer Spanish climate will help to protect the sensitive equipment from damage.

A Boeing 737 MAX aircraft engine
Due to harsh winter conditions, Icelandair has moved all its grounded Boeing planes to Spain. Photo: Liam Allport via Flickr

What is happening with the Boeing 737 MAX now?

Icelandair is not the only airline that is coping with grounded Boeing 737 MAX aircraft. Yesterday, Reuters reported that American Airlines staff are refusing to work on the 737 MAX amid continuing safety concerns.

This comes just days after Boeing CEO Dennis Muilenburg was questioned by Congress regarding the safety of the 737 MAX fleet and despite his assurances that, “We’ve dedicated all resources necessary to ensure that the improvements to the 737 MAX are comprehensive and thoroughly tested. When the 737 MAX returns to service, it will be one of the safest airplanes ever to fly.”

But after reports earlier this year that a Boeing pilot tried to raise awareness of issues in 2016, do you think the American Airlines staff are correct in expressing continuing concern over the grounded aircraft?