Aircraft Manufacturer Boeing has reached an agreement with American Airlines over the lost time of the 737 MAX aircraft. The 737 Max is under review by the Federal Aviation Administration. Boeing has agreed to settle with American for the year 2019.
It covers lost time for American Airlines Employees
American Airlines in previous communication in October have said that 5% of the total settlement amount would go to its Employees. Public Information suggests that $30 million is part of the employee’s settlement. In a little mathematical exercise, that becomes roughly $600 million dollars for 2019.
Analysts Double the Global Amount of Settlements
Analysts at the end of the year said that estimated the Global Settlement Amount for the 737 Max would be $5 billion. Currently, the same Analysts are doubling the amount, at $10 Billion. It compels Boeing to seek a line of credit (raise its debt) to bolster its financials. The grounding of the aircraft has made the financials, not in the best of shape. A reminder that for Boeing that could become worse. American Airlines isn’t the only airline seeking compensation.
The problem hasn’t ended
We are in 2020, and the FAA has not declared the 737 Max worthy to return to the skies. It’s difficult to categorize these agreements as closed, making it an open-ended result. Opening the question of whether Boeing has to revisit them in 2020.
Whether the problem ends for Boeing is at the hands of the FAA, the sooner the 737 Max returns to the skies, the better for is Boeing overall. Financially and Reputation-wise.
However, I can say that the charm offensive of David Calhoun as the incoming CEO and Larry Kellner replacing David Calhoun as Chairman seems to be working.
It seems they are giving assurances to its clients and giving short term results. Both of its objectives are in stabilizing the company as a whole, in addition, to assuring its clients and passengers.
Featured Image: American Airlines.
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