January 21, 2020 / 6:01 PM / a month ago

UPDATE 1-Brazil's GOL sees 737 MAX flying by April, with compensation talks under way

(Adds quotes on compensation, timing of MAX delivery, consumer concerns)

By Conor Humphries

DUBLIN, Jan 21 (Reuters) - Brazilian low-cost carrier GOL, which has 130 of Boeing’s grounded 737 MAX jets on order, expects to be flying the jet by April and hopes to secure a compensation deal within months, chief financial officer Richard Lark said on Tuesday.

GOL, Brazil’s largest domestic airline, expects to be flying 23 or 24 MAX jets by the end of the year, including seven grounded in Brazil, and will take delivery of around 12 per year after that, Lark said. GOL may “opportunistically” increase the rate if needed, he added.

Boeing grounded the 737 MAX in March after two fatal crashes in five months killed 346 people. A U.S. official briefed on the matter on Friday said U.S. regulator the Federal Aviation Administration is now unlikely to approve the plane’s return until March, and that it could take until April.

The Brazilian regulator is likely to approve the plane “within a short period of time” after the FAA, Lark told journalists.

GOL suffered higher fuel costs and lease payments for grounded planes and was forced to curb some longer-distance flights due to the MAX’s grounding, Lark said. The company’s operating margin last year would have been 150 basis points better without issues with the 737, he said.

But he said he expected the airline to be compensated in full in a deal to be wrapped up in the coming months.

“We will be made whole on the impact,” he said.

Asked about the possible form of compensation, he said it was being reflected in cash flows between GOL and Boeing “such as pre-delivery deposits and other things.”

GOL believes Brazil is likely to have less of an issue with consumer reluctance to fly the MAX than in the United States, due to the lower level of media coverage, Lark said. But the airline will work to reassure consumers.

“You will see owners and executives flying the aircraft with their families - things like that,” he said.

Boeing, he said, has “grossly underestimated” the size of this issue from a consumer standpoint. (Reporting by Conor Humphries; editing by David Evans and Nick Macfie)

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