LOT Polish Airlines and Smartwings of the Czech Republic are challenging Boeing, accusing the company of failing to pay them hundreds of millions of dollars in compensation because of the prolonged grounding of the 737 MAX. LOT has requested a judge to reconsider the settlement Boeing reached with the U.S. Department of Justice. This request echoes the one made by an attorney for the survivors and beneficiaries of those affected by the 737 Max crashes.
"Boeing has an obligation to fairly pay out $1.77 billion to Smartwings and other airlines, appears not to be doing so and refuses to disclose anything about its handling of the agreed payments," Smartwings said earlier this month in a filing with U.S. District Court for the Northern District of Texas.
Boeing has reached an agreement with the Justice Department, granting the company immunity from prosecution in exchange for a $1.77 billion payment to customers affected by the 737 MAX grounding, a $500 million payment to the beneficiaries of victims of 737 MAX crashes, and a $244 million criminal penalty. The agreement resolves criminal charges that Boeing defrauded the Federal Aviation Administration in the process of certifying the 737 MAX.
Late in 2022, budget Smartwings and LOT began challenging the settlement, and the feud between Boeing and the two European carriers continues today.
"Boeing has been extremely secretive about the airline fund, and the few details that have leaked out have suggested that Boeing is not administering it fairly," Smartwings wrote in November 2022 court filings.
Some airlines have reportedly received large compensation payments, while others, such as Smartwings, have not received any, said the Prague-based airline in its statement.
Smartwings claims Boeing owes it hundreds of millions of dollars in damages related to the grounding of its 737 MAX jets.
LOT, who had been a party to the original settlement agreement, has requested that the judge reopen the settlement in order to ensure that the original terms of the deal are abided by. LOT argues that Boeing failed to deliver the promised reimbursement in exchange for the airline's willingness to cooperate in ongoing investigations - and that the amount of their loss is, in fact, exceeding $250 million.
"Because the [settlement] gave Boeing discretion as to how the airline compensation fund would be allocated, Boeing was not required to compensate foreign airlines," LOT wrote in October 2022.
Boeing and the Department of Justice have argued that the airlines were responsible for the economic consequences, which resulted after the European Aviation Safety Administration ordered the 737 Max to be grounded. The Department has also noted that by challenging the settlement agreement, LOT and SmartWings could cause the original concessions the manufacturer had made to be voided.
When the 737 MAX was grounded by regulators in March 2019, LOT was operating five of the aircraft in its fleet and had nine copies on order with leasing companies. SmartWings, meanwhile, had eight 737 MAX 8s in its fleet and had an agreement with the American aircraft manufacturer to take delivery of an additional 37 aircraft of the same type. Following the lifting of the grounding restrictions on the type, LOT currently operates 10 737 MAX 8s, while SmartWings has seven in service and 11 on order.
"Because the [settlement] gave Boeing discretion as to how the airline compensation fund would be allocated, Boeing was not required to compensate foreign airlines," LOT wrote in October 2022.
Boeing and the Department of Justice have argued that the airlines were responsible for the economic consequences, which resulted after the European Aviation Safety Administration ordered the 737 Max to be grounded. The Department has also noted that by challenging the settlement agreement, LOT and SmartWings could cause the original concessions the manufacturer had made to be voided.
When the 737 MAX was grounded by regulators in March 2019, LOT was operating five of the aircraft in its fleet and had nine copies on order with leasing companies. SmartWings, meanwhile, had eight 737 MAX 8s in its fleet and had an agreement with the American aircraft manufacturer to take delivery of an additional 37 aircraft of the same type. Following the lifting of the grounding restrictions on the type, LOT currently operates 10 737 MAX 8s, while SmartWings has seven in service and 11 on order.
