The head of Boeing Co. says the plane maker is considering a compensation program for airlines that own the 737 Max passenger jet, which remains grounded after two recent fatal crashes.
Dennis Muilenburg, Boeing’s chief executive officer, said he is not surprised by the growing list of airlines, including AeroMexico and three big Chinese carriers, demanding to be reimbursed for money lost after the global fleet of 737 Max jets was grounded by regulators in mid-March.
“Obviously our customers’ fleet schedules have been interrupted by the Max [grounding] and we regret that. We know we have impacted the summer schedules for many of them and it’s difficult,” Mr. Muilenburg told an investor conference in New York on Wednesday.
“There are a number of different ways we can address these issues. In some cases it’s [delivery lineup] positioning, it’s services and training support,” Mr. Muilenburg said. “And in some cases cash may be part of the solution.”
Two 737 Max planes have crashed since October, killing 346 passengers and crew. Preliminary investigations indicated that automated controls, which pilots were unable to override, were putting the planes into a nosedive. Boeing says it has fixed the automated control system and had it flight tested, and will soon submit it to regulators for approval.
Meanwhile, about 360 737 Max jets are parked at airfields around the world, including dozens owned by Air Canada, WestJet and Sunwing.
Both major Canadian airlines cancelled flights, routes and rewrote their flight schedules well into the summer. To make up some of the lost seat capacity, Air Canada extended plane leases, subcontracted flights and sped up the arrival of used planes it bought from Wow Air of Iceland. WestJet extended one plane lease and is using the rest of its fleet to cover 96 per cent of its seat capacity.
Both carriers withdrew financial guidance for 2019. It’s expected the initial costs related to the loss of the planes will be revealed in second-quarter financial statements.
A spokeswoman for WestJet, which has 13 of the 737 Max jets and 57 on order, declined to say if the company is seeking compensation from Boeing. “At this time, our focus and priority is on guests impacted by this decision along with scheduling while the aircraft are grounded,” Morgan Bell said.
Air Canada has 24 737 Max planes and 37 on order. An Air Canada spokesman declined to comment. “Any such conversations [with Boeing] would be contractual and confidential,” Peter Fitzpatrick said.
Regulators and Boeing have not given a timeline for the plane’s return. Boeing says it has updated the plane’s software to give pilots better control over the automated systems, and made changes that limit the ability of the system to throw the plane into a nosedive if it detects the plane is stalling.
“We know that in both accidents a common link was the so-called MCAS [Manoeuvring Characteristics Augmentation System] software on the Max,” Mr. Muilenburg said. “We’ve identified specific improvement to that software. We have completed the engineering testing and flight testing on that software and we are now in the process of applying for final certification.”
Mr. Muilenburg said the company’s other focus is restoring the public’s faith in its bestselling plane, a two-year-old update to a jet that first flew in the 1960s. Boeing says it has 4,400 orders for the plane, but has slowed output at its plant in Renton, Wash., to 42 a month from 52 as a result of the groundings.
“These two accidents have been devastating for us, devastating for the families involved. The trust of the flying public has been hurt and it will take time for us to rebuild that trust and re-earn that confidence,” he said.