China's Biggest Airlines Seek Damages for Boeing 737 Max Groundings
China's Biggest Airlines Seek Damages for Boeing 737 Max Groundings
(Bloomberg) -- China’s biggest airlines sought compensation from Boeing Co. for order delays and losses caused by the grounding of its 737 Max jet in the wake of two deadly crashes.
Air China Ltd. and China Southern Airlines Co. filed formal claims with the U.S. aircraft manufacturer, the carriers’ representatives said Wednesday. China Eastern Airlines Corp. said yesterday it had sought compensation, stating that the suspension has caused big losses that continue to widen.
The “big three” state-run carriers operate 53 of the 96 Max planes now lying idle in the country, according to data from local aviation statistics provider VariFlight. They also account for 65% of passengers who flew Chinese airlines in 2018, according to the Civil Aviation Administration of China.
“The 737 MAX aircraft have been grounded globally for security concerns and the technical problems have yet to be solved,” Ministry of Foreign Affairs spokesman Lu Kang told reporters in Beijing on Tuesday when asked about China Eastern’s claim. “A company can claim its legitimate rights.”
The back-to-back claims could give the airlines leverage to gain concessions as China’s influence in the aviation world soars. The country was the first major authority to ground the top-selling Max in March, disregarding the views of the U.S. authority at the time that the plane was safe to fly.
Other Chinese carriers including Xiamen Airlines Co., Hainan Airlines Holding Co., Shenzhen Airlines Co. and Shandong Airlines Co. have also taken delivery of the Max, while Ruili Airlines Co., Donghai Airlines Co. and Okay Airways Co. are awaiting their first jets.
It’s uncertain when the Max might return to service. U.S. aviation regulators expect to receive Boeing’s proposed software fix for the aircraft as soon as this week, and will then begin a review that will include test flights and input from a technical advisory board.
Boeing, meanwhile, is finalizing an update to a software system implicated in both crashes. Lion Air Flight 610 was the first Max to crash, in the waters off Indonesia in late October, killing all 189 people on board. Less than five months later, a second Max crashed in Ethiopia, killing 157 passengers.
To contact Bloomberg News staff for this story: Yan Zhang in Beijing at yzhang1044@bloomberg.net
To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Indranil Ghosh, Ville Heiskanen
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With assistance from Bloomberg