Southwest, which had about 59,000 employees at the start of the year, said Thursday that the settlement covers only a portion of its projected damages from the Max grounding. It declined to provide more details on its ongoing negotiations with Boeing.
The Dallas carrier has been among the hardest hit by the grounding of the Max in March after a pair of deadly crashes in Indonesia and Ethiopia. Without the planes, Southwest has been canceling about 175 flights each weekday. Southwest had 34 Max planes when they were grounded and expected more to be delivered this year.
Southwest reported in October that the grounding had cost it $435 million in operating income during the first nine months of the year. Earlier this month, the airline pushed back the expected return date for the troubled aircraft until at least March 6. Pilots union officials believe it will be at least April before Southwest puts passengers on the Max.
The airline said Thursday that money given to employees will be funded as part of its annual 2019 profit sharing distribution next year. Boeing spokesman Peter Pedraza said the company won't comment on discussions with individual customers, “but we are working closely with all of them to support them through this difficult time.”
Jon Weaks, president of the Southwest Airlines Pilots Association, said his group appreciates that Boeing has acknowledged the need to compensate Southwest workers. “However, this agreement doesn't get anywhere close to compensating the very real and significant losses SWAPA plots and other employees have experienced and continue to experience as a result of Boeing's negligence and fraud,” Weaks said.
The union has criticized Boeing for not telling pilots about a new flight-control system that was on the Max and played a role in the crashes. Weaks said the union will push ahead with a lawsuit it filed against Boeing in October in federal district court in Dallas. The union said then that its members had lost more than $100 million in wages.
Southwest is among the first airlines to announce at least a partial settlement with Boeing. In September, Icelandair said it had an agreement covering its six grounded planes, but it did not disclose details.
In July, Chicago-based Boeing took a pretax charge of $5.6 billion to cover Max-related compensation, which could be cash or other considerations such as discounts on services over the next several years.