by Donald Wood
Last updated: 10:55 AM ET, Fri January 3, 2020
Update: January 7, 2020 at 8:20 a.m. ET
Officials from American Airlines announced Monday it had reached a confidential agreement with Boeing regarding compensation for the grounding of the 737 MAX fleet and its impact on the carrier in 2019.
American's Board of Directors has authorized a portion of the settlement to be returned to employees through the company's 2019 profit-sharing program. An additional accrual of more than $30 million will be made to the program, which is expected to be distributed in March 2020.
"Despite the ongoing challenges the grounding has brought, American Airlines team members continue to do an incredible job caring for our customers," American CEO Doug Parker said in a statement. "Our ability as an airline to weather these unprecedented times is thanks to our phenomenal team, and it was important to us that we get a deal done before the end of the year."
"On behalf of the Board of Directors, we are proud to take the step of including this compensation in our 2019 profit-sharing program, even though the compensation will be received over several years," Parker continued.
Officials from American Airlines revealed they would share compensation received from Boeing for the 737 MAX grounding with employees.
According to The Associated Press, American has been forced to cancel thousands of flights since the airline's fleet of 24 MAX planes were grounded as part of a worldwide investigation following two crashes that left 346 people dead.
American executives estimated the grounding would reduce its full-year 2019 pretax income by $540 million and has cost the carrier's pilots and flight attendants thousands of dollars in revenue.
An American spokesperson told The AP the company is working with Boeing to determine how the compensation will be administered, but the airline believes it will be in the form of cash, training assistance, spare parts and more.
The carrier also expects a portion of the compensation to be eligible for employee profit-sharing.
Boeing has already reached undisclosed settlements with Southwest and Turkish Airlines and is working on agreements with other airlines who operate routes that utilize 737 MAX planes.
In total, the airplane manufacturer believes it will eventually issue $5.6 billion in compensation related to the grounding over the coming years, but several aviation analysts estimate the figure will be much higher when all claims are settled.
In December, Boeing released a new batch of "disturbing" documents to the Federal Aviation Administration (FAA) and Congress amid the ongoing investigation.
The new documents compound previously released information suggesting that Boeing may have cut corners in the plane's development, with one senior engineer alleging the company prioritized cost over safety.
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