Southwest reaches settlement with Boeing

Southwest Airlines has reached a confidential settlement with Boeing for a portion of its financial losses tied to the grounding of Boeing’s 737 Max jet, the carrier announced this week.

The airline’s chief executive, Gary Kelly, said the company will share a portion of the settlement, roughly $125 million, with its employees through Southwest’s profit-sharing plan.

“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 in a news release.

The Boeing planes have been grounded worldwide since March, following the March 10 crash of an Ethiopian Airlines flight. It was the second crash involving a 737 Max in less than five months. In all, 346 people died in the tragedies.

In October, Southwest reported that the grounding of the 737 Max had cost the airline $435 million through the end of September. Southwest has 34 Max jets in its fleet. The planes continue to be grounded, pending FAA flight approval.

The company emphasized that the agreement is only a partial settlement and that it continues “to engage in ongoing discussions with Boeing regarding compensation for damages related to the Max groundings.”

Southwest’s pilots union is also suing Boeing. In a suit filed in October, the Southwest Airlines Pilots Association alleged that the company deliberately misled the organization about the safety of the Max. According to the suit, the grounding of the jetliner caused the elimination of more than 30,000 scheduled flights and resulted in financial losses over $100 million for the airline’s more than 9,700 pilots.

The case is awaiting a federal judge to determine whether it will be heard in federal court or be sent back to Texas state court.