Alaska Air says Boeing paid it $160M in compensation for grounding
(Reuters) — Alaska Air Group said Thursday that Boeing Co. had paid it about $160 million in the first quarter as initial compensation to address the hit from the temporary grounding of 737 MAX 9 jets.
The payment is equivalent to lost profits in the quarter, the carrier said in a filing, adding it expects additional compensation.
An Alaska Airlines-operated MAX 9 jet experienced a mid-air cabin panel blowout in January, which led the Federal Aviation Administration to ground 171 jets for about three weeks.
“Although we did experience some book away following the accident and 737-9 MAX grounding, February and March both finished above our original pre-grounding expectations,” Alaska said.
The airline had earlier planned to include the payment in its results but will exclude the compensation from first-quarter adjusted loss per share, which is expected to be $1.05 to $1.15.
In response to questions about the payment, Boeing referred to comments Chief Financial Officer Brian West made last month. He said Boeing payments to customers stemming from the Jan. 5 incident, known as customer consideration, would be included in Boeing first-quarter earnings.
Alaska and United Airlines UAL.O bore the brunt of the 737 MAX 9 aircraft grounding after the panel blowout sparked a manufacturing and reputational crisis at Boeing and supplier Spirit AeroSystems.
Last month, Alaska said its 2024 capacity plans were in flux due to the Boeing crisis. The carrier does not expect to get all of the 47 deliveries from the planemaker planned over the next two years, Alaska CEO Ben Minicucci has said.
