Alaska Airlines Receives $160 Million from Boeing 737 MAX Grounding
Alaska Air Group revealed on Thursday that Boeing has compensated the airline with about $160 million. This initial payment addresses the financial repercussions stemming from the temporary 737 max grounding of the 737 MAX 9 aircraft. The airline noted in a regulatory filing that the compensation covers lost profits for the quarter, and it is expecting to receive further payments.
Incident Leading to737 Max Grounding and Inspection
What is the Alaska Airline Incident?
- The mid-cabin door plug was lost mid-flight on an Alaska Airlines flight leaving Portland, Oregon.
Passengers to fierce winds and demand an emergency landing - There were six staff members and 171 passengers on board, however, no one was seriously hurt.
what does Boeing company do?
As of January 2024, Boeing has a market cap of $138.53 Billion. This makes Boeing the world's 92nd most valuable company by market.
The Boeing Company is an American multinational corporation that designs, manufactures, and sells airplanes, rotorcraft, rockets, satellites, telecommunications equipment, and missiles worldwide.
The company also provides leasing and product support services.
Financial Adjustments and Outlook
Alaska Airlines has chosen to exclude the Boeing compensation from its adjusted loss per share for the first quarter, forecasting a loss between $1.05 to $1.15 per share. Initially, the airline had considered including this compensation in its financial results. As of this report, Boeing has yet to comment on the compensation payment.
Broader Impact on Airlines
The 737 MAX grounding the 9 jets significantly impacted both Alaska and United Airlines, creating a manufacturing and reputational crisis for Boeing and its supplier, Spirit AeroSystems.
Production Challenges and Capacity Concerns
Recent reports from Reuters indicate a significant reduction in Boeing's production of the 737 MAX aircraft, likely affecting airlines eager to meet rising travel demand. Last month, Alaska Airlines disclosed that its 2024 capacity plans are uncertain due to these production challenges.
CEO Ben Minicucci noted that the airline might not receive all 47 of the planned aircraft deliveries from Boeing in the next two years, highlighting the intense demand for aircraft as Airbus SE's single-aisle jets are sold out until the end of the decade.
This series of events underscores the interconnected challenges faced by airlines, manufacturers, and suppliers in the rapidly evolving aviation industry.
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