Global airlines submit compensation claims for Boeing's B737 MAX fault

Boeing admitted its fault in the two crashes

Boeing in early April admitted that the two crashes of Lion Air and Ethiopian Airlines flights were caused by a fault with the aircraft's Manoeuvring Characteristics Augmentation System (MCAS). “We now know that the recent Lion Air Flight 610 and Ethiopian Airlines Flight 302 accidents were caused by a chain of events, with a common chain link being erroneous activation of the aircraft's MCAS function. We have the responsibility to eliminate this risk, and we know how to do it,” said Boeing CEO Dennis Muilenburg.

"As part of this effort, we are making progress on the B737 MAX software update that will prevent accidents like these from ever happening again. Our teams are working tirelessly, advancing and testing the software, conducting non-advocate reviews, and engaging regulators and customers worldwide as we proceed to final certification," Muilenburg added.

After the admission was published, representative of Southwest Airlines, which has been using 34 B737 MAX aircraft, said that it suffered $200 million in losses in this year’s first quarter due to the US government’s ban of B737 MAX aeroplanes.

American Airlines, which has 24 B737 MAX planes in its fleet, also had to cancel more than 15,000 flights until August.

Norwegian Airlines also estimated that it suffered a damage of $58 million. The airline currently has 18 B737 MAX planes and ordered 100 more.

German airline Tui also stated that the global ban on B737 MAX will cause it $300 million of damage until September.

The two crashes, as well as the global ban, may lead to the company losing $600 billion worth of orders for more than 5,000 planes across the world. 157 people died in February’s Ethiopian Airlines crash, shedding further doubt on the safety of Boeing 737 MAX aircraft just a few months after 189 died in the Indonesian Lion Air crash last October.

According to analysis expert Ronald Epstein from Bank of America, Boeing may spend at least $500 million to revise the error. Similarly, Richard Aboulafia, vice president and analyst at Teal Group, a US aerospace and defence consultancy company, told VIR, “ It could be as few as two months or as many as six months, but the likeliest scenario is that these planes will be grounded for about three months.” Thus, revising the error could lead to Boeing losing a year of sizeable profit on the aircraft.