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Southwest looking to share Boeing 737 Max reimbursement payment with employees

Southwest CEO Gary Kelly wrote that the company is looking at ways to “share proceeds” with all employees.
Credit: AP
Southwest Airlines plane (AP Photo/David Zalubowski, File)

DALLAS — As Southwest Airlines and Boeing discuss a reimbursement package to recoup the airline for the financial damage the 737 Max grounding has caused, some of that money could go to Southwest employees.

"We need to know what those monetary and other reimbursements will look like, and we are looking at ways to share proceeds as appropriate with all of our Employees," Chief Executive Gary Kelly wrote in an internal memo Monday morning.

In July, Southwest Airlines Co. said it had begun discussions with Boeing Co. about reimbursements. Southwest operated 34 Max planes at the time of the March grounding, and said the aircraft has had a financial impact of $225 million for the first half of 2019.

Boeing is anticipating having to pay up for damage the 737 Max has caused, as the Chicago-based company recorded a $4.9 billion charge in the second quarter for potential settlements.

Like other airlines, Southwest has taken thousands of flights off its schedule this year as it works with a smaller fleet than anticipated.

The Dallas-based carrier scrapped the plane from its schedule until Jan. 5, 2020. Other carriers, like Fort Worth-based American Airlines Group Inc. (Nasdaq: AAL), are still holding out hope the Max will return prior to Christmas. American took the plane out of its schedule through Dec. 3.

Speaking at an industry conference last week, Tammy Romo, Southwest’s chief financial officer, said she projects the Max to be recertified before Thanksgiving. Southwest leadership has previously said it will take between one and two months to comply with all Federal Aviation Administration directives, including pilot training.

The 737 Max grounding is causing ripple effects throughout the company. For example, Southwest delayed several pilot hire and promotion classes scheduled for this fall as it works with a smaller fleet.

"I know we have all been affected by this disruption to our business and growth plan," Kelly wrote in the Monday memo. "More on that in the future, but I did want you all to know I recognize this hasn’t just affected some of you — it has affected all of you," he added, emphasizing "all."

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