Chinese airlines seek compensation from Boeing for faulty planes

US aircraft maker faces new financial hit over grounding of 737 Max after fatal crashes


China’s biggest airlines have demanded compensation from Boeing for grounding their 737 Max fleets, heaping pressure on the US aircraft maker on the eve of a crucial regulatory meeting to determine if the plane is allowed to fly again.

The aircraft has been grounded around the world since March when one of the jets crashed in Ethiopia, killing all 157 people on board, just five months after another 737 Max crashed in Indonesia, killing 189 passengers and crew. The two fatal crashes were blamed on design flaws and other errors in the aircraft’s safety system.

On Wednesday, a spokesperson for Air China, the country’s flagship carrier, confirmed it was seeking compensation but declined to provide further details.

China Southern Airlines said in an email that it was demanding compensation for “losses caused by the Boeing 737 Max grounding and late delivery”.

The Guangzhou-based carrier grounded 24 737 Max aircraft in on March 11, in accordance with an order issued by the Civil Aviation Administration of China (CAAC). “We have asked Boeing to negotiate a compensation plan as soon as possible,” it added.

The Chinese Communist party’s flagship newspaper, the People’s Daily, reported that the third of China’s “big three” carriers, Shanghai-based China Eastern Airlines, had also demanded compensation from Boeing.

China Eastern declined to comment, but a spokesman for China’s foreign ministry said that any such compensation requests would be justified. “The Boeing 737 Max aircraft was grounded all over the world for safety reasons and the technical problems have not been solved yet,” the spokesman said. “But it is justifiable for any enterprise to claim its legitimate interests in accordance with law.”

Aviation regulators from around the world are scheduled to meet Federal Aviation Administration officials on Thursday in Texas, where they will review Boeing’s application to allow the aircraft to fly again.

The CAAC did not respond to a request for comment about the compensation demands — or on its likely position at Thursday’s meeting.

The CAAC was the first regulator to order a suspension of the 737 Max in on March 11, highlighting its growing clout. US president Donald Trump and the FAA followed the CAAC’s lead two days later. China is expected to overtake the US as the world’s largest aviation market by 2033, propelled by its demand for single-aisle aircraft, according to Boeing projections.

China has the world’s biggest 737 Max fleet, with 97 planes accounting for more than a quarter of total deliveries to date. The country is a crucial market for the 737 Max, with Chinese airlines and leasing companies accounting for at least 10 per cent of Boeing’s unfilled order book for the aircraft.

Ireland-based Avolon, part-owned by China’s troubled HNA Group, and aviation leasing companies controlled by Bank of China and China Development Bank have more than 260 737 Max planes on order.

A spokesperson for Boeing’s China operations declined to comment on the compensation requests, saying “we don’t discuss our conversations with customers”.

While Chinese and US officials are bracing themselves for a new round of tariffs on each others’ merchandise exports that will take full effect on June 1, Beijing is sensitive to perceptions that it might target large US investors with non-tariff related administrative sanctions as part of its retaliation.

Both Boeing and its main rival, Airbus, have moved key parts of their supply chains to China and also opened assembly facilities in the country.

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