Key Takeaways
- Alaska Air announced that it was getting monetary compensation from Boeing following the January midair incident when a door plug in a 737 Max 9 blew out.
- The airline said the mishap and the subsequent grounding of the Max 9 planes significantly affected operations and financial results, costing it $160 million in the first quarter.
- Alaska Air explained that Boeing paid the $160 million, and it expects additional compensation from the plane maker.
Alaska Air Group (ALK) reported Thursday it was receiving compensation from Boeing (BA) for financial damages incurred related to a January incident when a door plug on an Alaska Airlines Boeing 737 Max 9 plane blew out in midair.
The carrier wrote in a regulatory filing that the mishap, followed by the grounding of 737 Max 9s because of it, “significantly impacted” operations and financial results that extended into February, costing about $160 million in the first quarter. Alaska Air said that the negative impact primarily comprised “lost revenues, costs due to irregular operations, and costs to restore our fleet to operating service.”
Alaska Air reported Boeing paid the airline an initial $160 million in cash during the first quarter, and added that it expects additional compensation from the plane maker “to be provided beyond Q1, the complete terms of which are confidential.”
The carrier explained that the money from Boeing won’t be counted towards earnings, and it expects a first quarter loss in the range of $1.05 to $1.15 per share. It noted about $0.95 of that would be attributable to the incident and grounding.
Alaska Air noted that it lost some bookings as a result of the accident and the 737-9 Max grounding, but that results for February and March were above the company’s original pre-grounding expectations. The carrier cited network adjustments, strong demand and the recovery of business travel.
Shares of Alaska Air Group rose early Thursday to as high as $44.29, their highest intraday level since last August, but ended the trading session down 0.3% at $41.76. Boeing shares finished 0.9% lower at $183.29.