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lite.cnn.com - on gopher - inofficial
ARTICLE VIEW:
Boeing’s problems just cost United $200 million
By Chris Isidore, CNN
Updated:
9:30 AM EDT, Wed April 17, 2024
Source: CNN
United Airlines was pushed into the red by Boeing and its ongoing
quality issues, the airline said Tuesday. The company took a $200
million hit in the first quarter after the Boeing 737 Max 9 was
grounded following the door plug incident aboard an flight.
United did not say whether or not it expects to be reimbursed by Boeing
for the cost of the for three weeks following the January 5 incident.
But it did say that it would have been profitable without the cost of
the grounding.
The blow out of a door plug on an Alaska Airlines flight caused a
three-week grounding by the Federal Aviation Administration of the 737
Max 9 model of jets, and brought fresh questions about the safety and
quality of Boeing planes. United, which depends on Boeing planes for
about 80% of its mainline fleet, had 86 of the Max 9 jets, more than
any other airline in the world and it was hit particularly hard by
Boeing’s problems.
But United has also been hit with a series of other incidents,
including engines catching on fire and wheels falling off of planes,
problems that got in the wake of Boeing’s problems. It has forced
United CEO Scott Kirby to reach out to customers to assure them the
airline would itself make a by its own employees. The FAA has also said
it is putting .
Boeing’s publicity woes and the grounding of the jets weren’t the
only way that the airplane manufacturer hurt United.
The airline said Tuesday it now expects to take delivery of only 61
single-aisle jets from Boeing this year, or 40 fewer than it had
anticipated at the start of the year. The airline had previously
disclosed it had put a , and that it is asking pilots to accept due to
the cut in the number of flights it is operating.
United now says it no longer expects the Boeing 737 Max 10, the latest
and longest version of the Boeing 737, to be delivered this year. That
plane has not been certified to carry passengers as yet by the FAA.
With questions about the quality and safety of Boeing jets, the
certification has likely been pushed back to at least 2025.
So United said it has converted a portion of those Max 10 orders to the
Max 9 for deliveries from 2025 through 2027, and said it may convert
more orders to the smaller versions of that plane.
Of more concern to Boeing, United also said Tuesday that it has reached
agreements with two lessors to lease 35 new Airbus A321neos, a 737 Max
competitor. Deliveries of those Airbus planes is due in 2026 and 2027.
Asked for a comment on United’s loss estimate, Boeing pointed to
comments made to investors last month by Brian West, its CFO, that
suggested Boeing is prepared to compensate affected airline customers.
“We put the customers in tight spot,” he said. “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 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.”
United said it had an adjusted loss of $50 million in the quarter, an
improvement from the $207 million loss it had in the same period of
last year. Revenue was up nearly 10% to $12.5 million.
Most of that gain came because the miles flown by paying passengers
rose 9%, as United was able to increase capacity from a year earlier
despite the 737 Max 9 grounding. The measures of fares, such as the
average amount paid by passengers for each available seat, adjusted for
miles flown, were up about 1%.
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