Boeing Pays Southwest for Grounded MAX Aircraft

The Seattle aircraft builder spent $4.7 billion in cash during Q1 2020.

737 MAX
Southwest was already operating 34 MAX aircraft at the time of last year’s grounding.Boeing

When Southwest Airlines reported its quarterly earnings last week, the company included a $428 million payment received from Boeing to cover a variety of ongoing issues surrounding the grounded 737 MAX aircraft. The MAX has been grounded since March 2019 following two accidents, one in 2018, the other in 2019. Southwest had already accepted delivery of 34 737 MAX aircraft at the time of the grounding and planned to accept an additional 41 before the end of last year.

According to The Motley Fool, Boeing and Southwest “last year reached a memorandum of understanding to compensate Southwest for estimated financial damages, but the terms were confidential at the time. Boeing hopes to have the 737 MAX recertified to fly before year’s end, but the financial ramifications from the grounding will continue for years to come. Southwest CEO Gary Kelly said on a call with investors last week that the airline intends to renegotiate its future purchases.”

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