‘We Expect Boeing to Take This Bill.’ One Airline Demands to be Repaid for 737 Max Groundings
In a sign of the sort of costs Boeing may face over the mass groundings of its 737 Max planes, Norwegian Air will demand compensation from the plane manufacturer.
Norwegian Air has 18 Max jets, which have all been grounded by European air regulators following Sunday’s deadly Ethiopian Airlines disaster involving a Max 8. This is the second crash of a Max 8, after the October loss of a Lion Air flight off the coast of Indonesia. China, Australia, Singapore and Indonesia have also grounded all Max models while investigations continue.
“We expect Boeing to take this bill,” Norwegian told Reuters Wednesday, having the previous day announced that it would not operate any Max flights “until further notice.” The airline said there was no change as yet to its order of dozens more Max planes for delivery in the next couple of years.
Right now it’s an open question as to how big Boeing’s bill might be. Analysts told Reuters that Norwegian, which is already running at a loss, could probably handle a short-term disruption to its fleet, but longer than a couple of weeks and it would have to start bringing in new planes. Morningstar thinks Boeing could end up being on the hook for as much as $1.5 billion for the whole crisis.
The Lion Air crash was most likely due to a glitch in the plane’s automated stall prevention system, which Boeing knew about but did not reveal to pilots before the accident—grieving families are already suing the manufacturer over that.
It is still far too early to say whether the Ethiopian Airline Flight 302 disaster, which claimed 157 lives, was attributable to the same problem. Nonetheless, Boeing’s shares (BA) have fallen more than 11% this week.
The U.S. Federal Aviation Administration (FAA,) one of the few regulators not to order that 737 Max planes stop flying, has claimed that the jets are safe while also telling Boeing to hurry up with the software fix for the known glitch.
“Safety is Boeing’s number one priority and we have full confidence in the safety of the 737 MAX,” the company said in a Tuesday statement. “We understand that regulatory agencies and customers have made decisions that they believe are most appropriate for their home markets. We’ll continue to engage with them to ensure they have the information needed to have confidence in operating their fleets.”
Boeing had not responded to Fortune‘s request for comment on Norwegian’s compensation demand at the time of writing.