Chinese Airline Asks Boeing For Compensation Over 737 MAX Grounding

As if more tariff threats weren't enough, China Eastern Airlines has become the first major carrier to petition Boeing for compensation for the grounding of its 737 MAX 8 jetliners, which began two months ago.

Chinese media reported Tuesday that the company has lodged an official claim with Boeing over the grounding of the airline's 14 Boeing 737 MAX 8s (the total number when 737 MAXs owned by subsidiary Shanghai Airlines are included). In what might be a bigger blow for Boeing, the airline has asked to delay deliveries of new planes.

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Among the three major Chinese airlines, CTGN said China Eastern owns the smallest fleet of the new 737s. And though the operational impact has been 'limited', the airline still feels it should be compensated.

The airline's decision was first reported by the People's Daily and other Chinese media. The reports did not list an amount of compensation being sought.

"The grounding of 737 MAX aircraft since March 11, 2019 has caused relatively big losses to China Eastern. With the passing of time, related losses will further expand," according to the People's Daily. "At the same time, delayed deliveries of planes ordered by China Eastern also caused economic losses."

Meanwhile, the FAA is hosting a meeting of global regulators in Dallas on Thursday to review Boeing's software update for the 737 MAX and new training proposals, which could factor into a decision to end the grounding. 

A spokesman for Boeing declined to comment to Reuters. A representative from China Eastern confirmed to Reuters that reports about it's plans to seek compensation from Boeing are accurate.

While this might not seem like such a big deal at first, if more Chinese airlines decide to halt or delay their Boeing orders until they've been compensated for the grounding, such a trend could be more damaging to Boeing's shares than trade-war-related fears.