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22 July, 2019

Boeing dedicates more than $70 million to families for 737 MAX near-term relief

Boeing has dedicated more than $70 million of a previously announced pledge of US$100 million (over $142 million) to provide relief to families affected by the 737 MAX accidents.

Earlier this month, Travel Weekly reported Boeing had announced US$100 million in financial support to families of victims lost in the Lion Air and Ethiopian Airlines accidents.

Last week, the aircraft manufacturer revealed in a press statement that US$50 million ($71 million) of the proposed fund has been dedicated to provide near-term financial assistance, which will be designed and administered by American attorney Kenneth Feinberg and Camille Biros.

“The tragic loss of life in both accidents continues to weigh heavily on all of us at Boeing, and we have the utmost sympathy for the loved ones of those on board,” Boeing chairman, president and CEO Dennis Muilenburg said.

“Through our partnership with Feinberg and Biros, we hope affected families receive needed assistance as quickly and efficiently as possible.”

All monies distributed by Feinberg and Biros will be independent from any resolution provided through the legal process.

“We are honoured to take on this important assignment of providing needed financial relief to the families of these two tragedies,” Feinberg said.

Co-administrator Camille Biros said: “We know how important it is to assist the families of the victims who have endured a personal tragedy, and will work to design and administer the fund and distribute the money as efficiently and expeditiously as possible.”

Ahead of the release of Boeing’s second-quarter 2019 financial results on 24 July, the manufacturer has said it expects to recognise an impact to earnings by recording an after-tax charge of US$4.9 billion ($6.96 billion), resulting in a US$5.6 billion ($7.96 billion) reduction of revenue and pre-tax earnings in the quarter.

This comes as a result of disruptions “related to the 737 MAX grounding and associated delivery delays”, which have also resulted in an increase in production costs of US$1.7 billion ($2.42 billion).

“We remain focused on safely returning the 737 MAX to service,” Muilenburg said. “This is a defining moment for Boeing. Nothing is more important to us than the safety of the flight crews and passengers who fly on our airplanes.

“The MAX grounding presents significant headwinds, and the financial impact recognised this quarter reflects the current challenges and helps to address future financial risks.”

For purposes of the second-quarter financial results, Boeing has assumed that regulatory approval of the 737 MAX and its return to service in the US and other jurisdictions will begin early in the fourth quarter of 2019.

However, the manufacturer echoed the Federal Aviation Administration’s (FAA) statement by saying the 737 MAX’s approval and return to service is not operating on a strict timeline.

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Boeing 737 Max Boeing pledge Federal Aviation Administration