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Boeing to compensate German tour operator TUI over 737 MAX

03 June 2020, MVT 14:03
(FILES) In this file photo taken on March 27, 2019, employees work on Boeing 737 MAX airplanes at the Boeing Renton Factory in Renton, Washington. - US manufacturers are seeing the first hints of a tentative recovery but conditions for the industry were nonetheless terrible in May, according to an industry survey released June 1, 2020. The Institute for Supply Management's (ISM) monthly manufacturing survey was worse than expected and showed the continuing headwinds facing a key sector in the world's largest economy even as major firms restart production. And with social distancing protocols being enforced at major manufacturers who have restarted production like Boeing and the Detroit automakers, Fiore warned that the recovery may only bring manufacturing back to levels below what they were before the pandemic. (Photo by Jason Redmond / AFP)
03 June 2020, MVT 14:03

American plane builder Boeing will compensate giant German tour operator TUI over the grounding of its troubled 737 MAX aircraft, TUI said Wednesday.

While the companies did not reveal financial details of the settlement, TUI said it covered "a significant portion of the financial impact" from the grounding of its existing 737 MAX fleet, "as well as credits for future aircraft orders".

Last year, TUI said that keeping the 15 aircraft already on its hands grounded until September 2020 would cost between 220 and 245 million euros (USD 247-275 million).

On top of the financial compensation, TUI said it would push back deliveries of the 737 MAX it had on order before two crashes in Indonesia and Ethiopia killed 346 people, forcing the model's grounding worldwide from March 2019.

"This will significantly reduce TUI's capital and financing requirements for aircraft in the coming years and supports TUI's plan to reduce the size of fleet of its five European airlines in the wake of the corona crisis," TUI said.

Last month, Boeing said production of the 737 MAX had resumed even though several steps remain before it receives flight clearance from the US Federal Aviation Administration (FAA) and other regulators.

The aerospace giant had shut production in January amid uncertainty over when regulators would clear the jet to fly again.

The timeframe for the MAX's return to service remains hazy. Airlines cancelled 258 orders for the plane in March and April.

With travel one of the hardest hit industries by the pandemic, airlines have parked between 80 and 90 percent of their aircraft and an estimated USD 314 billion in revenues will be lost this year, IATA says.

Frankfurt am Main, Germany | AFP