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American Airlines today shared with its team that the company has reached a confidential agreement with Boeing on compensation for financial damages incurred in 2019 due to the grounding of the airline’s Boeing 737 MAX aircraft.
“Despite the ongoing challenges the grounding has brought, American Airlines team members continue to do an incredible job caring for our customers,” said American’s Chairman and CEO Doug Parker. “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 this 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.”
Given the projected reduction in annual operating income for 2019 as a result of the MAX groundings, American’s Board of Directors has authorized a discretionary portion of the settlement to be returned to American Airlines team members through the company’s 2019 profit-sharing program. The profit-sharing award is based on the company’s estimate of projected full-year 2019 financial damages for the MAX groundings. An additional accrual of more than $30 million will be made to the airline’s 2019 profit-sharing program, which is expected to be distributed to American’s team members in March 2020. Additional information will be shared at that time. The incremental dollar amount is in accordance with the company’s profit-sharing plan details.
American currently does not expect any material financial impact of the agreement to be realized in its fourth-quarter 2019 earnings. The company anticipates accounting for substantially all of the compensation as a reduction in cost basis of grounded MAX aircraft and certain future MAX aircraft deliveries. American will continue its conversations with Boeing regarding compensation for damages related to the MAX grounding beyond 2019, and any future compensation will be similarly shared with its team members.
American Airlines remains in continuous contact with the Federal Aviation Administration, Department of Transportation and Boeing. Based on the latest guidance, American anticipates that the resumption of scheduled commercial service on American’s fleet of Boeing 737 MAX aircraft will occur April 7, 2020. Once the aircraft is certified, American will run flights for American team members and invited guests only prior to April 7.
Frequently asked questions
Question: When will American run a schedule change and inform customers who were booked on a MAX from March 5 through April 6?
Answer: American had previously canceled service on the MAX through March 4. On Dec. 22, American will run a formal schedule change, and customers who were previously booked on a MAX through April 6 will see their reservation updated on aa.com.
Question: Will there be additional changes to the schedule once the MAX returns to commercial service?
Answer: American expects to gradually phase in the MAX for commercial service and will increase flying on the aircraft throughout the month of April. Since American will gradually phase the MAX into our operation over the course of a month, additional refinements to our schedule may occur. Affected customers will be contacted directly.
Question: My flight wasn’t scheduled to be on a MAX. Will it be canceled?
Answer: A flight that was not scheduled as a MAX flight might be canceled to enable our team to cover a MAX route with a different aircraft, in order to affect the smallest number of customers. In total, approximately 140 flights will be canceled per day through April 6.
Question: How will customers know if they are impacted?
Answer: American’s Reservations team will contact affected customers directly by email or telephone beginning Dec. 22. Customers who booked through a travel agent will be contacted by their agency directly.
Question: What is American’s rebooking policy for when the MAX returns?
Answer: Details regarding policies and procedures for customers who do not wish to fly on the MAX once the aircraft enters scheduled service April 7 will be released in the coming weeks.
Question: My flight was canceled and I don’t want to rebook. Can I get a refund?
Answer: Yes. If a flight is canceled and a customer chooses to not be rebooked, they may request a full refund by visiting aa.com/refunds.