Who can forget the images of an Alaska Airlines (ALK) plane in the air with part of the door and window panel blown out?
As the incident occurred due to a loose bolt on a Boeing (BA) 737 Max 9 plane, the company took both an image and stock hit amid international scrutiny over where oversight went wrong. Amid a U.S. Department of Justice investigation into the January 2024 incident, chief executive Dave Calhoun ended up stepping down while Boeing Commercial Airplanes lead Stan Deal went into early retirement.
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On April 4, Alaska Airlines revealed that Boeing had agreed to pay the airline $160 million in initial compensation over the incident. In a filing with the Securities and Exchange Commission, Alaska said that it had faced "significant" losses as a result of both the damage to the plane and disruptions as all 737 Max 9 planes remain grounded amid investigations.
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Alaska says it suffered 'lost revenues, costs due to irregular operations'
"As a result of the Flight 1282 accident and the Boeing 737-9 MAX grounding, we lost approximately $160 million in Q1 pretax profit, primarily comprising lost revenues, costs due to irregular operations, and costs to restore our fleet to operating service," Alaska Airlines told investors and the SEC in the form.
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It added that Boeing has agreed to "address the financial damage" stated and pay the $160 million outright to the airline while they are in the process of working out additional compensation to be paid by the aircraft-making giant (the exact numbers of which are still being kept private.)
"This cash payment is equivalent to the lost profits resulting from the accident and grounding in Q1 2024," the airline said further while adding that it "will account for the compensation predominantly as a reduction to aircraft assets."
"Additional compensation is expected to be provided beyond Q1, the complete terms of which are confidential," it said.
This is how much Alaska expects to lose over the January Boeing incident
Alaska further said that it expects to lose between $1.05 and $1.15 per share for the January-March quarter, 95 cents of which per share it accounts to the Boeing incident.
"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," the airline said.
Boeing has not been commenting on news of their payment. Since the start of 2024, its stock has fallen by nearly 26% to $187.50. The airline had formerly said it was cooperating with any investigations and taking steps to ensure that all measures preventing such an incident from happening again are taken although the ongoing scrutiny has drawn attention to problems within the company such as flouted safety standards and reported persecution of workers who have tried to come forward with these problems.
When he announced his resignation to the nearly 200,000 people who work for Boeing on March 25, Deal said that "the eyes of the world are on us, and I know that we will come through this moment a better company."
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