Boeing Pays $160 Million To Alaska Airlines For 737 MAX Grounding

Daniel Fowkes
05 Apr 2024
· Aircraft 
· Airlines 
Alaska Airlines received a payment of USD 160 million from Boeing as compensation for the 737 MAX groundings in the first quarter of 2024.

Following a significant grounding, a door blowout incident and several other knock-on effects, Alaska Airlines said it received around USD 160 million from Boeing.

The figure highlighted acts as compensation in the first quarter as part of the response to the troubles felt by the major airline that was arguably hit the hardest alongside United Airlines.

Additional compensation is expected. The airline noted that the specific amount was calculated to cover its losses in the first quarter. Alaska Airlines confirmed that its pretax profit dropped USD 160 million in Q1, hence the cash amount paid to the airline.

Development surrounding the compensation came following a filing published by Alaska Airlines dated April 4, 2024. While further payments are expected, the airline has confirmed that these are confidential.

The carrier says its losses in the first quarter came directly from its inability to offer a robust operation, which included many cancellations, delays, and other issues. Additionally, the airline cites the substantial costs of restoring the grounded fleet.

Troublesome Start To 2024

2024 has mainly been messier than expected for Alaska Airlines. When a door blowout incident occurred in the first week of the calendar year aboard one of their aircraft, the fallout was hard to predict.

Immediately, Alaska Airlines grounded its fleet of 737-9s, the impacted aircraft, as a precaution. Upon preliminary inspections, the airline identified loose bolts in several other planes, and thus, an actual fallout commenced.

For several weeks, the aircraft crucial to Alaska Airlines’ business and representing more than 20% of its active fleet were grounded, and its network was in disarray. While safety was prioritised, the airline felt the effects during a busy holiday season.

By the time approval had arrived for the aircraft to re-enter the service safely, this process was hardly overnight, with the staggered re-entry into service of the units for Alaska also limiting its ability to recover quickly.

The complications from several months of unrest are being felt in the form of finances and, hence, compensation handed down by the manufacturer for the troubles it’s caused.

More Compensation?

While it remains unclear how compensation will be handed down to other impacted airlines, more airlines are expected to seek some form of payment from Boeing.

Payments may not necessarily relate to the groundings that occurred at the beginning of the year but may now creep into the picture because of the persistent delays in acquiring new aircraft and the ultimate impact on finances and business.

Boeing has been unable to deliver aircraft on time for a considerable period. However, with their faults creeping into the reasons behind the delays, customers’ patience is wearing thin.

Airlines such as United are being forced to dip into the leasing market to cover for lost ground, and this is also being felt industry-wide. Ultimately, this move causes inconvenience not just because of delivery delays but also because of Boeing’s inability to get variants in the MAX program that are still certified.

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