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Chinese Airlines Demand Compensation Over Boeing 737 Grounding

An aerial photo shows Boeing 737 MAX airplanes parked at the Boeing Factory in Renton, Washington, U.S. March 21, 2019. | Photo: Reuters An aerial photo shows Boeing 737 MAX airplanes parked at the Boeing Factory in Renton, Washington, U.S. March 21, 2019. | Photo: Reuters
Three major Chinese airline companies have officially requested compensation for losses caused by the grounding of Boeing’s 737 Max fleet.
Air China, China Southern and China Eastern request reimbursement for lost income incurred since they were grounded in March 2019.

Air China, China Southern and China Eastern told CNN on Wednesday that they have asked to be reimbursed for costs and losses incurred since the plane was deemed unsafe to fly on March 2019 following two fatal crashes in Ethiopia and Indonesia. 

“The grounding of 737 MAX aircraft since March 11, 2019, has caused relatively big losses to China Eastern. With the passing of time, related losses will further expand,” the company said, adding that “at the same time, delayed deliveries of planes ordered also caused economic losses.” The amount requested from Boeing has not been disclosed.

China was the first country to ground about 96 planes from its fleet made by the United States (U.S.) aircraft manufacturer, Boeing. “This is about four percent of its airplanes. The grounding causes huge losses for Chinese airlines,” China aviation expert Li Xiaojin said. Soon after, governments around the world followed China by grounding the 737 Max. 

This was a result of the fatal crash of an Ethiopian Airlines flight on March 10, which killed all 149 passengers and eight crew members on board. This was the second crash connected to the model in less than five months. In October 2018, a Lion Air flight crashed near Indonesia killing all 189 people aboard, as the pilots fought an automatic safety system for control of the craft.

On April 4, the company’s CEO Dennis Muilenburg acknowledged that bad data played a role in the crashes.

"It’s apparent that in both flights the Maneuvering Characteristics Augmentation System, known as MCAS, activated in response to the erroneous angle of attack information,” Muilenburg in a statement. 

The accident and global response have resulted in a hasty drop in the company’s stock value. From a price of US$422.42 on March 8, the firm's stock has dropped almost 17 percent to US$352.78 as of May 22. The company reported in April that profits fell 21 percent in the first quarter of 2019.

The acting head of the Federal Aviation Administration said on Wednesday he does not have a specific timetable for when the agency may again take flight in the U.S.

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