Aviation

Boeing May Change Name of B737 MAX, Earmarks $5.5bn to Compensate Its Customers

Airline CEO publicly backs Boeing's embattled 737 Max program
Boeing 737 MAX
Boeing 737 MAX

The US aircraft manufacturer, Boeing, may have concluded decision to change the name of Boeing 737 MAX in order to ease passengers’ fears.

This is coming as the US plane maker announced Thursday that it has earmarked $5.6 billion compensation plan for Boeing B737 MAX jetliner customers.

In a statement, Boeing said that it has made a material announcement that it would recognize a $5.6 billion pre-tax earnings charge in connection with an estimate of potential concessions and other considerations to customers for disruptions related to the 737 MAX grounding and associated delivery delays.

The company announced that it will record an additional $1.7 billion pre-tax charge due to projected higher costs associated with a longer than expected reduction in our 737 production rate.

“These earnings charges are based on some fundamental assumptions, including that regulatory approval of 737 MAX return to service in the US and other jurisdictions begins early in the fourth quarter of 2019.  This assumption reflects our best estimate at this time, but actual timing of return to service could differ from this estimate,” Boeing said.

“Our second-quarter financial results will further assume a gradual increase in the 737 production rate from 42 per month to 57 per month in 2020, and that the 737 MAX airplanes produced during the grounding will be delivered over several quarters following return to service. Any changes to these assumptions could result in additional financial impact. We continue to work with the regulators to ensure the MAX’s safe return to service, and these authorities will determine the timing of return to service,” it added.

There are also indications that Ethiopia Airlines might sue Boeing over Boeing B737 MAX.

Although this is yet to be confirmed by the airline, but the indication is strong that ET could sue Boeing if it was not properly compensated for the loss it incurred as result of the March 10, 2019 plane crash in which 157 people perished.

In the statement, Boeing indicated that it has been in constant contact with its customers to support them during this difficult time.

“Our decades-long relationships are very important to us.While we do not comment on our arrangements with particular customers, we will continue to work closely with them to reach a fair and reasonable outcome. Potential concessions and other considerations for customers could come in many forms, not necessarily cash payments (delivery timing, features, services, etc.), and will likely be spread over time.  Timing, amount and form of potential concessions and other considerations will be unique for each customer,” Boeing said.

 

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