Grounding the 737 Max will cost Alaska Airlines $150 million


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The Landing of 737 Max 9 Alaska announced Thursday that it will cost the airline about $150 million after a Jan. 5 incident that blew a hole in the side of an Alaska Airlines flight earlier this month.

The loss is significant for an airline of Alaska's size, which on Thursday reported adjusted earnings of $38 million for the final three months of the year and $583 million for the full year. Alaska's fourth-quarter earnings were better than forecast.

On January 5, an Alaska Airlines plane took off after a door plug exploded hole in the side of the plane. Although no passengers were killed, the incident prompted the Federal Aviation Administration to ground all 737 Max 9 jets. Alaska has the second largest fleet of 737 Max 9 jets in its fleet, with 65 planes, behind United, which it has warned would expect. First quarter loss At least partly because of the cost of landing.

On Wednesday, the FAA detailed the inspection procedures Return the planes to the plane. Alaska Air said its grounded jets would return to service on Friday, with additional flights added each day as reviews are completed and each plane is deemed airworthy.

“We expect inspections to be completed on our 737-9 Max next week,” it said.

Even if flights return to service as scheduled, the airline said on Thursday it may have to cancel about 3,000 flights this month.

In an interview with NBC on Tuesday, Alaska Airlines CEO Ben Minicusi said the carrier “found some Loose bolt among many” Boeing 737 Max 9 during its inspections.

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But when asked on Thursday's investor call whether he was reconsidering the airline's decision to buy only Boeing planes, he wouldn't back away from those plans.

“We have a long and deep relationship with Boeing. But as I said, what happened is unacceptable. We're going to hold them accountable and raise the bar on the quality of Boeing,” he said. “We got 231 737s that we were happy with. Until the incident, we were happy with Max. We have 185 on order. With the network configuration we have, we believe the Boeing 737 is the best fit for our network. That's the long-term plan, but we're sure good airplanes will come out of that factory.” We're going to hold Boeing's feet to the fire to do that.

Even if it hits $150 million, Alaska expects full-year profits in 2024 to be between $381 million and $635 million, but that guidance could fall short of the $583 million estimate, according to analysts. Restoration. Analysts had forecast a loss of $79 million in the first quarter.

Alaska and United are the only US airlines with 737 Max 9 jets. But that doesn't mean they're the only ones affected by Boeing's problems.

Southwest Airlines said Thursday that it expects fewer 737 Max deliveries from Boeing than it has booked this year because one of the models it is ordering, the 737 Max 7, has not yet been certified by the FAA. Its order book calls for delivery of 27 of the Max 7 and 53 of the Max 8 this year, but the airline said it “should no longer be relied upon”.

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“The FAA will ultimately determine the timing [737 Max] 7 certification and entry into service, therefore the Company makes no assurance that the current estimates and timelines are correct,” it said.

Southwest CEO Bob Jordan said the airline no longer expects any 737 Max 7s to be delivered in 2024, but would be willing to replace the planes it receives from Boeing.

“If we don't get the Max 7, we'll take the Max 8,” he said in an interview with CNBC. He said it's unclear what the FAA's decision announced Wednesday to limit production of the 737 Max will do to its supplies.

“As always, if there is an adjustment, we will adjust,” he said. “Again, I support that [limitation]. Helping Boeing improve quality, solving problems, is good for Boeing, and it's good for Southwest Airlines.

American Airlines CEO Robert Isom said he does not expect any delays in deliveries of planes from Boeing this year. But he also had criticism of the aircraft manufacturer.

“They have to produce a quality product every time. Everyone at Boeing needs to work together. It's very necessary,” he said in an interview with CNBC. “That's not acceptable. We don't need distractions.

Southwest has no 737 Max 9 jets, no grounded jets or orders for purchase this month. But it has more than 200 of the 737 Max 8, which makes up about a quarter of its fleet. CEO Bob Jordan said he doesn't believe his airline, which flies nothing but Boeing 737s and uses Boeing and 737 Max jets, will be reluctant to book its flights.

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“Our customers want confidence in our product. They have a lot of confidence in Boeing, as do I,” he told CNBC.

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