China Eastern Airlines Seeking Compensation From Boeing For Massive Losses

China Eastern Airlines
The logo of China Eastern Airlines is shown on a panel at a check-in counter (Photo: Reuters / Bobby Yip)

China Eastern Airlines Corporation Limited has formally filed a claim against Boeing seeking for the embattled aircraft manufacturer to provide compensation for their defective Boeing 737 MAX airplanes.

The Shanghai-based airline, with major international, domestic, and regional routes, claimed that it had incurred considerable losses following the forced grounding of the 737 MAX aircraft in its fleet.

The grounding was caused by major safety issues related to the aircraft's software, which had resulted in two major crashes that killed hundreds of passengers. The first incident happened in Ethiopia in March of last year, which killed 157 passengers. It was then followed by a crash in Indonesia in October of last year, which killed 189 people.

China Eastern Airlines' claim stated the losses the company had incurred with the suspension of 14 of its 737 MAX aircraft since March. It also included the delayed deliveries of some of the aircraft it had ordered from the manufacturer. All of the carrier's MAX aircraft are currently in safe custody and will only be allowed to fly again once the Civil Aviation Administration of China and Boeing properly fix the issue.

Reports have revealed that the carrier was filing the claim alone and did not communicate with other airlines on the matter. The company also reportedly stated that it would not be making any public announcement related to the issues until they are properly investigated and resolved.

There were reports that China Eastern Airlines was in talks with Air China and China Southern Airlines to launch a joint action to seek compensation from Boeing. However, those reports have however not yet been confirmed by the companies involved.

This was in line with the recent statement issued by Foreign Ministry spokesman Lu Kang, who mentioned that the security risks and the technical problems related to the Boeing 737 MAX aircraft have yet to be resolved. In response to China Eastern Airlines' claim, Lu mentioned in a news briefing that it was only expected for enterprises to seek legitimate interests. Analysts revealed that in these situations, seeking claims for losses is really just part of normal business activities.

Boeing recently announced that it has not received any new orders for its aircraft, even for its other products such as the 777 and the 787 Dreamliner.

The company stated that it had already spent more than $1 billion since the grounding of their aircraft worldwide. The company will likely be spending even more money to settle claims against it as more companies step forward. China Eastern Airlines is likely only the first of many who may take legal action against Boeing, given mounting concerns and losses caused by the global grounding.

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