Airlines

Boeing pays $160mn in compensation to Alaska Airlines after MAX 9 grounding

Boeing pays $160mn in compensation to Alaska Airlines after MAX 9 grounding
Last month the airline said its 2024 capacity plans were in flux due to the Boeing scandal (Image credit: Adobe Stock)

Alaska Airlines states that Boeing has paid US$160mn in compensation over the temporary grounding of its 737 MAX 9 aircraft, following an incident in January where a door fell off the carrier’s plane mid-flight.

The payment was paid to the airline through the first quarter of 2024 as initial compensation for the incident, Reuters reports.

According to Alaska Airlines, the payment is equivalent to lost profits in the quarter. The carrier said in its filing it expects additional compensation.

Flight 1282 was forced to make an emergency landing shortly after takeoff when the door blew off the plane mid-air.

The Federal Aviation Administration (FAA) subsequently ordered the grounding of 171 aircraft for inspections before the order was lifted later that month.

Boeing has since been engulfed in a scandal over the safety and quality of its aircraft.

“Although we did experience some book away following the accident and 737 MAX 9 grounding, February and March both finished above our original pre-grounding expectations,” the carrier said.

It added that despite the impact of the incident, “strategic network adjustments, strong demand within the quarter, and continued recovery of West Coast business travel” had led to an improvement in its core business performance in the first three months of this year.

Without the blowout incident and grounding of the MAX 9, Alaska stated its first-quarter pre-tax profit would have improved 80 per cent compared to the same time last year.

According to Reuters, Alaska Airlines will now exclude the compensation from its calculation for first quarter adjusted loss per share, which is expected to be $1.05 to $1.15.

Alaska CEO Ben Minicucci previously said the grounding would cost the airline around $150mn in the first quarter.

The carrier does not expect to get all 47 planned deliveries from the plane maker over the next two years, he added.

Last month Alaska said its 2024 capacity plans were in flux due to the Boeing crisis.

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