United Airlines faces $200M hit due to Boeing 737 MAX 9 grounding

United Airlines reported a significant financial impact, attributing a $200 million loss to Boeing in the first quarter of 2024.

The airline had to ground its fleet of Boeing 737 MAX 9 jets for three weeks after a door plug blew out on an Alaska Airlines flight in January. This incident led to a pre-tax loss of $164 million for the quarter. Without these unforeseen costs, United claims it would have reported a quarterly profit.

Despite these setbacks, United's financial performance exceeded Wall Street expectations, with shares rising over 5% following the announcement.

United Airlines has the largest fleet of Boeing 737 MAX 9 aircraft, totaling 79, more than any other carrier except Alaska Airlines.

The grounding resulted in the cancelation of thousands of flights in January while the aircraft underwent safety inspections. It wasn't until these checks were completed that the U.S. aviation regulator gave the green light for the planes to resume operation.

Earlier this month, Boeing compensated Alaska Airlines with $160 million to cover losses from the grounding. United Airlines also highlighted delays in aircraft deliveries from Boeing, which has prompted a strategic adjustment in their fleet planning. "We've adjusted our fleet plan to better reflect the reality of what the manufacturers are able to deliver," United's CEO Scott Kirby stated.

Boeing recently came under fire after whistleblower Sam Salehpour raised concerns about safety standards in the manufacturing of Boeing's 787 and 777 jets.

According to Salehpour, his warnings were met with threats of termination. Boeing, however, has dismissed these allegations as "inaccurate" and stands by the safety of its aircraft. Salehpour is scheduled to testify as a key witness at a U.S. Senate hearing today, April 17.

This blowout incident not only raised fresh safety concerns but also added to the scrutiny Boeing faces following two fatal crashes involving the 737 Max 8 in 2018 and 2019, which resulted in the deaths of 346 people.

As United Airlines maneuvers through these challenges, the company has been forced to recalibrate its operational and fleet strategies, notably by diversifying its future fleet to include Airbus models as a counter to Boeing's 737 Max.

Source: Newsroom