China Eastern seeks compensation from Boeing

Yang Jian
The Shanghai-based carrier is claiming losses from Boeing after its 737 MAX fleet was grounded due to safety concerns following two deadly crashes.
Yang Jian

China Eastern Airlines is claiming losses from Boeing after its 737 MAX fleet was grounded following two deadly crashes in Indonesia and Ethiopia.

The Shanghai-based carrier has 14 Boeing 737 MAX aircraft, operated by affiliates, which have been grounded since March following orders from the Civil Aviation Administration of China.

China Eastern originally planned to take delivery of another 11 aircraft of the same series in 2019, among the 60 aircraft it is set to receive this year, the carrier said.

"The overall impact of the 737 MAX disruption has lessened, because it occurred after the Spring Festival travel peak season," a spokesperson told a press conference in Beijing on Tuesday.

The carrier had to replace the grounded aircraft with Airbus 320 series to ensure normal operation of its flights.

According to analysts, the operational cost to rent an aircraft comparable to the 737 MAX is about US$1 million over three months. Grounding also denotes higher maintenance and management costs for airlines, while some passengers may be reluctant to fly too.

China Eastern has claimed losses from the US aircraft manufacturer, but the results of its claims depend on whether the aircraft has a serious design flaw, the spokesperson said. The carrier will also follow instructions from civil aviation authorities.

China booked the largest number of 737 MAX aircraft in the world. Thirteen Chinese carriers operate 96 such aircraft. By the end of January, Boeing had delivered 350 of the 737 MAX family jets to customers worldwide, with about 4,660 more on order, according to Reuters. Domestic operators also include Air China and China Southern, as well as Hainan, Xiamen, Shandong and Shenzhen airlines.

Chinese administrators ordered the grounding of all 737 MAX planes after a recent Ethiopian Airlines crash appeared to have similarities to a Lion Air crash in October involving the same plane.

"Given that the two accidents both involved newly delivered Boeing 737-8 planes and happened during the takeoff phase, they have some degree of similarity," said Li Jian, deputy director of the Chinese regulator. The 737 Max is also known as the 737-8.

According to media reports, Boeing may face compensation claims of more than US$2 billion.

Norwegian Air has also sought compensation from Boeing for costs and lost revenue after grounding its 737 MAX fleet. The Oslo-based airline has 18 such passenger jets in its 163-aircraft fleet.

This is the second time that global airlines have asked for compensation from Boeing after the grounding of its aircraft. Carriers including Japan Airlines, All Nippon Airways and Polish Airlines received compensations from Boeing after the US Federal Aviation Administration grounded the Boeing 787 Dreamliner after two lithium-ion-battery-related fires in the aircraft in early 2013.

Special Reports