Ethiopian Airlines’ management has reached a settlement with Boeing and said it expects to resume flying the jet again by January according to The Seattle Times.
The airline is now convinced the aircraft type is safe following the deadly Ethiopian Airlines 737 MAX crash in March 2019 with the final investigation report into the accident still pending.
“I can confirm that we are committed to the Boeing 737 MAX. My estimate is by the end of the calendar year or beginning of next year, January, we will be flying the airplane,” Ethiopian Airlines CEO Tewolde GebreMariam said in an interview with Bloomberg news adding that he was convinced “beyond reasonable doubt” that the MAX as upgraded by Boeing after the two fatal crashes is now safe. “We are happy on the settlement,” Tewolde said.
The Ethiopian government’s aviation authority has also not yet lifted the grounding of the MAX imposed a day after Flight ET 302 crashed and took 157 lives. This is follows the fatal crash of Lion Air Flight JT 610 just over four months earlier.Yet clearly the government-owned airline fully expects the regulators to approve the jet’s return to service by the end of the year.
Following the crash of Lion Air Flight JT 610 just over four months earlier, the ET 302 accident forced the grounding of the MAX worldwide.
The Settlement
Although the financial terms of the settlement were not disclosed, The Seattle Times reported earlier in January that Boeing had then offered an amount on the order of $500 million to $600 million, a large portion of which were not cash but concessions, including discounts on future airplane sales and waivers on maintenance costs.
A Chicago law firm advising the airline wrote a letter to CEO Tewolde then urging him to reject the settlement and instead to sue the manufacturer for punitive damages in the U.S., hoping to win “not less than $1.8 billion in cash.” That advice wasn’t taken.
Acccording to the seattle times, a person with knowledge of the final settlement said Saturday that it included a payment of $280 million in cash, discounts on future planes, free maintenance and parts for three years, and replacement of the aircraft that crashed — with an estimated value for the total package less than $600 million.
Africa’s Aviation hub
Parallel to the settlement over the MAX, Ethiopian Airlines recently announced that they have partnered with Boeing to make the airline’s base in Addis Ababa “Africa’s aviation hub” and to set up a manufacturing facility there to make airplane parts.
Ethiopia already supplies some small-scale wire harnesses for Boeing aircraft. Boeing has committed to expand local capabilities both in aerospace manufacturing and in airplane repair and overhaul.
In addition, the partnership will promote the training of pilots and aircraft technicians at the airline’s Aviation Academy in Addis Ababa, and STEM education in Ethiopian schools.
Boeing Struggles
Boeing finally started winning more orders for the 737 MAX in 2021. The U.S. aerospace titan got its biggest 737 MAX order in June, as United Airlines ordered 200 more units of the troubled jet. Unfortunately, other customers continued to reduce their 737 MAX order books, preventing Boeing from making much progress toward rebuilding its backlog.
A month before, Boeing suffered another setback in its effort to win regulatory approval for the 777X jetliner, a large jet designed for long-range flights.
After nine months of deliberations, the Federal Aviation Administration (FAA) said in a May 13 letter to Boeing that it was unconvinced that the company was ready to move ahead with ‘type inspection authorization’ – an authorization that signifies that a plane is about three-fourths of the way to being certified and is necessary to move forward in that process.
Moreover, the company recently discovered another production problem affecting the 787 Dreamliner, further disrupting its production and delivery plans.
These issues highlight just how far Boeing is from returning to health. The settlement of the MAX issues is a step forward towards covering the long and unwavering journey to profitability.
By Victor Shalton Odhiambo
