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Southwest Airlines Will Give $125 Million Chunk of Boeing 737 MAX Settlement to Employees

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Southwest Airlines workers will get a nine-figure piece of their Dallas-based employer's settlement with Boeing, the airline announced Thursday. The settlement comes with the Boeing 737 MAX, a key component of both Southwest's and American Airlines' fleets, still grounded because of two crashes that killed more than 300.

Southwest Airlines will shell out $125 million of its settlement from Boeing to its employees.
Southwest Airlines will shell out $125 million of its settlement from Boeing to its employees.

The terms of the settlement are confidential, according to Southwest, but employees will split $125 million. The payments will be issued as part of employees' regular profit-sharing in 2020.

"Our people have done an incredible job managing through the MAX groundings, while providing the highest levels of customer service and one of the best operational performances in our history," Southwest CEO Gary Kelly said in a statement. "On behalf of the Southwest Board of Directors, we are grateful to our employees for their extraordinary efforts throughout the year and are pleased to share proceeds from our recent agreement with Boeing."

Southwest grounded its 34 Boeing 737 MAX planes in March, after an Ethiopian Airlines flight crashed southeast of Addis Ababa. Investigations into the crash, as well as an October 2018 Lion Air 737 MAX that crashed into the Java Sea 12 minutes after takeoff, have placed blame on a flight-control system intended to keep the 737 MAX from stalling.

In November, both Southwest and American said they will keep the 737 MAX on the ground until at least March. On Wednesday, however, Federal Aviation Administration Administrator Stephen Dickson told CNBC that the process for recertifying the planes would extend into 2020.

As the grounding continued in October, the Southwest Airlines Pilots Association sued Boeing for more than $100 million. Thursday, they praised the settlement but said that the lawsuit — which Boeing calls "meritless" — will proceed.

“SWAPA appreciates that Boeing has finally acknowledged the importance of compensating Southwest employees for the incredible financial damages they have incurred as a result of the grounding of the 737 MAX. However, this agreement doesn’t get anywhere close to compensating the very real and significant losses SWAPA pilots and other employees have experienced — and continue to experience — as a result of Boeing’s negligence and fraud," the pilots group said.

"Today’s announcement solidifies SWAPA’s claim, and we will continue to pursue our legal action against Boeing. We look forward to obtaining the details of the agreement between Boeing and Southwest in discovery, especially since it now appears that the MAX won’t return to revenue service until at least April.”

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