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Southwest Airlines

Southwest Airlines reaches settlement with Boeing over damages from 737 Max grounding

Southwest Airlines on Thursday said it has reached an agreement with Boeing over some of the financial damages it is seeking from the costly prolonged grounding of the 737 Max.

The airline did not release terms of the confidential agreement but said it will contribute approximately $125 million to its employee profit sharing plan as a result. It will be paid out as part of the airline's regular profit sharing in 2020.

Southwest CEO Gary Kelly has previously vowed to share some of the proceeds with the airline's workers, and he said in a statement Thursday the airline is "pleased" to do so.

“Our people have done an incredible job managing through the Max groundings, while providing the highest levels of customer service and one of the best operational performances in our history,'' Kelly said.

Southwest, United and American have had to cancel tens of thousands of flights as the grounding has dragged on. On Thursday, American became the first of the three airlines to push back the plane's return until early April at the earliest. The airline previously had it coming back in early March, a timeline that has been repeatedly revised. United and Southwest still show it returning in March, but that is subject to change.

Southwest was the launch customer for the Max and is an all-Boeing airline, so it is a critical customer for the aircraft maker. The Dallas-based carrier had 34 planes at the time of the grounding, more than any U.S. airline, with plans to add many more this year and beyond.

Kelly said in October that the airline was looking for a quick resolution in its negotiations with Boeing over damages from thousands of canceled flights since the plane was grounded by the FAA in March following two fatal crashes that killed 346 passengers and crew.

"I'm impatient on that,'' he said at the time. "It's a major objective of ours, of mine, and I want that wrapped up quickly.''

The airline said additional settlement talks with Boeing are ongoing.

Separate from the airline's talks with Boeing, Southwest pilots sued the plane maker in October. They says the steep reduction in flights has cost the airline's nearly 10,000 pilots an estimated $115 million in compensation.

The latest on the Max: FAA had predicted Boeing 737 Max would have 15 more fatal crashes over lifetime

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