Chinese airlines seek Boeing payouts

Three more Chinese airlines, besides China Eastern, have filed claims for compensation against Boeing for the grounding since March and delayed delivery of the 737 MAX fleet following two deadly crashes in Indonesia and Ethiopia.

Air China, China Southern and Xiamen airlines announced yesterday that they had filed claims.

The aircraft was grounded worldwide in March after two crashes killed 346 people.

Air China said that grounding and delays to delivery of the aircraft had resulted in great losses.

Guangzhou-based China Southern, Asia’s largest carrier by fleet size, said a letter had been sent to Boeing requesting negotiations on compensation as soon as possible.

China Eastern that operates the country’s second-largest fleet said grounding the 737 MAX had resulted in great losses that were still expanding.

The delayed delivery has also caused losses.

Air China has 15 737 MAX aircraft and China Southern owns 24, while Xiamen Airlines’ 10 737 MAX are being berthed at Xiamen and Fuzhou airports in southeast Fujian Province.

Shanghai’s China Eastern has 14, operated by affiliates.

All have been grounded on the orders of the Civil Aviation Administration of China.

China Eastern had planned to take delivery of another 11 aircraft this year.

According to analysts, the cost of renting a comparable aircraft is about US$1 million over three months.

Grounding means higher maintenance and management costs, while some passengers may be reluctant to fly.

Shanghai Airlines, a subsidiary of China Eastern, has its 737 MAX in storage at Lanzhou and Taiyuan airports in north China. Both are cooler and less humid than Shanghai.

“The Boeing 737 MAX model has been grounded around the world. As we all know, the reason is that there are security risks and the technical problems are not solved,” said foreign ministry spokesperson Lu Kang said on Tuesday.

China has ordered the largest number of 737 MAX aircraft. Thirteen carriers operate 96 such aircraft. By the end of January, Boeing had delivered 350 MAX worldwide, with more than 4,500 still on order.

Domestic operators also include Hainan, Shandong and Shenzhen airlines.

China was the first to ground the 737 MAX after the Ethiopian Airlines crash appeared to have similarities to the Lion Air crash. Boeing has acknowledged that it had to correct flaws in its simulator software used to train pilots.

“Boeing has made corrections to the 737 MAX simulator software and has provided additional information to device operators to ensure that the simulator experience is representative across different flight conditions,” it said in a statement.

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

This is the second time that global airlines have asked for compensation from Boeing after the grounding of its aircraft. Carriers received compensation after the US Federal Aviation Administration grounded the Boeing 787 Dreamliner in early 2013.