Boeing to reassign 3,000 workers as it agrees more airline compensation deals

American Airlines and Mexico's Aeromexico both disclosed they had agreed settlements with US plane maker

FILE PHOTO: An employee works near a Boeing 737 Max aircraft at Boeing's 737 Max production facility in Renton, Washington, U.S. December 16, 2019. REUTERS/Lindsey Wasson/File Photo

Boeing said on Monday that it will reassign 3,000 workers to other jobs as it halts production of the its best-selling 737 Max jet in mid-January.

The announcement came after American Airlines and Mexico's Aeromexico disclosed they were the latest carriers to reach settlements with Boeing over losses resulting from the grounding of the 737 Max.

Neither airline disclosed the compensation. A number of other airlines, including Turkish Airlines, have struck confidential settlements with Boeing in recent weeks. Boeing said it does not comment on discussions with airlines.

Boeing's best-selling 737 Max has been grounded since March, following two fatal crashes in five months that killed 346 people.

In an email to employees, Boeing said about 3,000 employees, mostly in manufacturing, engineering and fabrication, will be reassigned to other tasks. Most of these work at Boeing's plant in Renton, Washington where the 737 Max is manufactured, while some are at Boeing's South Carolina facilities.

Some staff will be reassigned to work on the 767 and 777/777X aircraft in Everett, Washington. Boeing has said it does not plan to lay off or place any workers on leave as a result of halting production of the 737 Max.

Boeing also said it added a Max storage facility in Victorville, California. Some employees from Renton will staff Max aircraft storage locations in Moses Lake, Washington and Victorville.

Boeing's biggest supplier, Spirit AeroSystems, said on Monday it would offer voluntary layoffs to some employees as it grapples with the production halt. The company said last month it would suspend production of 737 Max parts from January 1.

Reuters has reported the Federal Aviation Administration is not expected to approve the plane's return to service until at least February.

US airlines will not resume 737 Max flights until at least early April, they have said.

Boeing and the FAA said on Sunday they are reviewing a potentially serious wiring issue that could delay the return of the 737 Max.

American said the compensation from Boeing will be received over several years, and of the total amount, more than $30 million will be used for the airline's 2019 employee profit-sharing programme.

Southwest Airlines, the world's largest 737 Max operator, said in December it had reached a confidential agreement with Boeing for a portion of a projected $830 million hit to operating income in 2019.

Boeing shares ended the day up 0.29 per cent at $333.74.