Southwest Airlines Co. (NYSE: LUV) has announced it reached a confidential agreement with The Boeing Company to compensate Southwest for a portion of projected financial damages related to the grounding of the airline´s Boeing 737 MAX aircraft, the company said.
In light of this agreement, the Southwest board of directors has authorized a discretionary, incremental profit-sharing accrual for employees, which is tied to the projected reduction in operating income for annual 2019 due to the MAX groundings. The company currently estimates this incremental profit-sharing accrual to be approximately USD 125 million.
This incremental profit-sharing award will be funded as part of the company´s annual 2019 profit-sharing distribution in 2020, in accordance with normal Profit-sharing Plan policies and Board of Director approval. The company plans to provide 2019 profit-sharing details early next year, including the percentage each eligible Southwest employee will receive.
The company continues to engage in ongoing discussions with Boeing regarding compensation for damages related to the MAX groundings.
In its 49th year of service, Dallas-based Southwest Airlines Co. (NYSE: LUV) continues to differentiate itself from other air carriers with its customer service delivered by more than 60,000 Employees to a customer base topping 130 million passengers annually. In peak travel seasons, Southwest operates more than 4,000 weekday departures among a network of 101 destinations in the United States and 10 additional countries.