Boeing Paid Alaska Airlines US$160 Million for MAX 9 Grounding

Alaska Air Group recently announced that Boeing has disbursed approximately US$160 million to the airline as compensation for the repercussions of temporarily grounding its 737 MAX 9 jets. This payment, which aligns with lost profits in the first quarter, highlights the financial strain caused by the mid-air cabin panel accident in one of Alaska Airlines' MAX 9 jets in January.

“As a result of the Flight 1282 accident and the Boeing 737-9 MAX grounding, we lost approximately US$160 million in Q1 pretax profit, primarily comprising lost revenues, costs due to irregular operations, and costs to restore our fleet to operating service," said Alaska Airlines. The carrier noted that this compensation would not be factored into its calculation for first-quarter adjusted loss per share, which is now projected to range from US$1.05 to $1.15, doubling initial estimates.

CEO Ben Minicucci acknowledged the challenges faced. "It took the company a month to get its planes back in the air, which hurt its efforts to turn around what he said is typically the company’s weakest quarter." Despite the setback, the airline expressed optimism about its operational performance. "February and March both finished above our original pre-grounding expectations,” added Minicucci.

Alaska Airlines, along with United Airlines, was notably impacted by the MAX 9 grounding, amplifying the ongoing crisis at Boeing and supplier Spirit AeroSystems. Reuters reported a significant decline in 737 MAX production at Boeing in recent weeks, impacting the broader aviation industry's efforts to address surging travel demand.

While Alaska Air Group anticipates further compensation from Boeing, specific details regarding the amount and terms were not disclosed. The airline's capacity plans for 2024 remain uncertain due to the Boeing crisis, with tempered expectations regarding the receipt of all planned deliveries from the planemaker over the next two years.