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Boeing 737 Max 9 Issues Cost United Airlines Nearly $200 Million In Q1 Profits

The airline reported a net loss of $124 million in Q1 2024.

United Airlines has announced its first quarter results, reporting a loss but explaining that it was primarily because of the 737 MAX 9 groundings faced after the Alaska Airlines blowout incident. Still, the airline said that demand remained strong and capacity was up as passengers continued to return in significant numbers.

United posts Q1 loss

The first-quarter 2024 financial results of United Airlines are out, with the carrier reporting a net loss of $124 million against an operating revenue of $12.5 billion. The revenue was up 9.7% compared to the first quarter of 2023, and the pre-tax loss was a $92 million improvement over the same quarter last year.

However, it would have been a completely different story had the Alaska Airlines' midair blowout incident not happened in January. Airlines operating the Boeing 737 MAX 9 variant had to ground the aircraft for several days following the incident, and United was one of the worst affected airlines, along with Alaska.

The groundings had an impact of approximately $200 million, without which United would have reported a quarterly profit. The airline’s CEO, Scott Kirby, commented,

“… We've adjusted our fleet plan to better reflect the reality of what the manufacturers are able to deliver. And, we'll use those planes to capitalize on an opportunity that only United has: profitably grow our mid-continent hubs and expand our highly profitable international network from our best in the industry coastal hubs.”

Shifting strategies

United had initially planned its near future fleet development significantly around the MAX aircraft and had signed up to be the launch customer of the MAX 10 variant. But given Boeing’s recent troubles, it seems that the MAX 10 certification will still take a long time.

As such, United converted a portion of its MAX 10 orders to MAX 9 from 2025 through 2027. The airline also moved closer to Airbus in the narrowbody segment and signed letters of intent with two lessors to lease 35 new Airbus A321neos with CFM engines. These are expected to arrive in 2026 and 2027.

Following a string of delays with Boeing’s MAX program and the recent production slowdown, United’s projection for narrowbody aircraft deliveries has also taken a hit. By the end of 2023, it was anticipating 183 narrowbody aircraft, which was reduced to 101 at the beginning of 2024. The airline now expects 61 narrowbody and five widebody aircraft to be delivered in 2024.

Consequences of the Alaska Airlines incident

We’re now beginning to see the financial implications of the Alaska Airlines blowout incident in January this year. Along with United, Alaska Airlines also had to ground its MAX 9 planes for inspection, losing money due to operational disruption.

It was recently paid $160 million by Boeing as compensation, but Alaska says it expects more and referred to the money as “initial compensation.” Boeing, which will also share its first-quarter results later this month, will likely announce the impact the incident has had on its balance sheet, including the money it had to part with for compensation.

This article originally appeared on Simple Flying

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