Boeing Setback: United Airlines Reports $200m Loss
United Airlines has reported a $200 million blow to its earnings for the first quarter of this year, attributing the setback to Boeing. The airline was compelled to ground its Boeing 737 MAX 9 fleet for three weeks following a mid-air cabin incident on an Alaska Airlines flight in January.
As a result of this grounding, United incurred a pre-tax loss of $164 million for the first quarter, preventing what would have otherwise been a quarterly profit. Despite the Loss, United’s performance exceeded Wall Street’s expectations, leading to a more than 5% increase in its shares following the announcement.
With 79 Boeing 737 MAX 9s in its fleet, United Airlines possesses more of these aircraft than its competitors, trailing only Alaska Airlines. The grounding of these planes prompted both United and Alaska to cancel numerous flights as inspections were conducted before the US aviation regulator cleared them for resumed operations.
Boeing paid $160 million to Alaska Airlines earlier this month in an attempt to mitigate losses incurred by the grounding. United Airlines also cited delays in Boeing plane deliveries as another factor impacting its operations, necessitating adjustments to its fleet plan.
Scott Kirby, United’s CEO, noted that the airline had adapted its fleet plan to align with Boeing’s manufacturing capabilities. However, Boeing faced further scrutiny after a whistleblower raised safety concerns regarding constructing its 787 and 777 jets. Engineer Sam Salehpour accused Boeing of cutting corners in the manufacturing process and alleged that he was threatened with termination for bringing these concerns to light.
Boeing refuted the allegations, asserting the safety of its planes, despite the upcoming Senate hearing where Salehpour is expected to testify. The incident involving the door plug on an Alaska Airlines 737 MAX 9 in January reignited safety concerns surrounding Boeing’s aircraft, particularly following the fatal crashes of 737 Max 8 jets in 2018 and 2019, resulting in the Loss of 346 lives.
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