United said it lost $200 million from the temporary grounding of the Boeing 737 Max 9
United Airlines said it took a $200 million hit from the grounding of the Boeing 737 Max 9 earlier this year
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United Airlines released its first quarter earnings on Tuesday in which it indicated that it lost about $200 million due to the temporary grounding of the Boeing 737 Max 9 earlier this year.
The Chicago-based airline announced that it had a pre-tax loss of $164 million for the quarter, which was an improvement of $92 million from the same quarter a year ago, and noted that the loss was caused by the 737 Max 9 grounding.
"These earnings reflect the approximately $200 million impact from the Boeing 737 Max 9 grounding, without which the company would have reported a quarterly profit," United wrote in its earnings release. "
United is one of two U.S. carriers that operate the Boeing 737 Max 9, with the other being Alaska Airlines. The aircraft was temporarily grounded by the Federal Aviation Administration (FAA) the day after a Jan. 5 incident in which a 737 Max 9 operated by Alaska Airlines suffered a midair blowout of its plug door panel after takeoff, causing the cabin to depressurize and forcing the airliner to return to Oregon's Portland International Airport for an emergency landing.
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United Airlines said it took a $200 million hit from the grounding of the Boeing 737 Max 9 earlier this year. (Angus Mordant/Bloomberg via Getty Images / Getty Images)
After the FAA, Boeing and airlines conducted inspections on aircraft in the 737 Max 9 fleet that have plug door panels, the aircraft was cleared to return to service after Jan. 24 following the completion of inspections. Alaska returned its fleet to service on Jan. 26, and United followed suit the following day.
The grounding of the Max 9 and the FAA's constraints on Boeing's production capacity due to increased oversight of its manufacturing quality was also noted in the earnings report. At the start of the year, United anticipated 101 narrowbody airliners to be delivered, but it now expects 61 narrowbody aircraft and five widebody aircraft to be delivered in 2024.
"In the short run, the company expects a small number of aircraft previously scheduled to enter into service in the second quarter to be pushed into the third quarter, which is expected to have minimal impact on the company's capacity plans," United wrote.
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United and Alaska are the two U.S. air carriers that operate the Boeing 737 Max 9. (Gary Hershorn/Getty Images / Getty Images)
United declined to offer a comment beyond what was included in its earnings release.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BA | THE BOEING CO. | 149.31 | -4.93 | -3.20% |
| UAL | UNITED AIRLINES HOLDINGS INC. | 78.26 | -2.16 | -2.69% |
Boeing referred FOX Business to comments by chief financial officer Brian West at the Bank of America Industrial Conference on March 20 in which he discussed the impact of the 737 Max 9 grounding and delivery issues on customers.
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United noted that delivery delays will have a minimal impact on its flight scheduling this quarter. (AaronP/Bauer-Griffin/GC Images / Getty Images)
"We put the customers in a tight spot, the most important thing we do is communicate with them. And they have been supportive of everything we're trying to do to enhance safety and quality for the industry," West explained.
"We are in regular, very transparent communications, and they know precisely where we stand the progress we're making and we, at the same time, have to understand what their needs are as they think about their flight schedules and their passengers," he said. "So, in the near term, the slowdown has impacted us, and it's impacted them, and we're communicating it to them so that we can work our way through it, and we will stand behind our customers."
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"So, as it pertains to the events of January the 5th, of course, there's customer consideration that is going to manifest itself in the quarter, in the P&L, and we've got to take care of that, and we're well down the road to do that. And we continue to stand behind our customers with that responsibility," West added.