United Airlines (UAL) has just warned investors that Boeing’s continued safety issue with its 737 Max 9 aircraft fleet has cost the airline millions of dollars in profits and has forced it to significantly shrink its aircraft delivery forecast for 2024, which could spell trouble for travelers during a historic airline travel season.
“The grounding of the Boeing MAX 9 fleet negatively impacted our earnings by more than $200 million and without it, we would have had a profitable quarter,” said United CEO Scott Kirby during a call that discussed the company’s first-quarter earnings.
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On Jan. 5 an Alaska Airlines flight was forced to make an emergency landing after a door plug blew off of the Boeing 737 Max 9 aircraft mid-flight. Video of the incident, which was filmed by passengers on the plane went viral and led to an investigation by the Federal Aviation Administration which looked into Boeing’s safety and quality control practices and halted the production of its 737 Max expansion.
United Airlines reported a net loss of $124 million during the first quarter of 2024 compared to the $194 million net loss it faced during the same time period in 2023.
United Airlines Chief Financial Officer Mike Leskinen warned during the earnings call that Boeing’s continued jet delivery delays, which is the result of its safety issues, has created “an impractical bow wave of aircraft deliveries” for United to address, and its aircraft delivery forecast for this year will be cut as a result.
“In 2024, we now expect to take delivery of 61 narrowbody aircraft and five widebody aircraft,” said Leskinen during the call. “This compares to our contractual deliveries of 183 narrowbody aircraft at year-end and the 101 aircraft we were planning for at the start of the year. Due to these fleet changes, we now expect full year 2024 total capital expenditures to be approximately $6.5 billion, down from $9 billion at the start of the year.”
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United Airlines is also facing a safety probe of its own from the FAA after the airline has faced multiple incidents involving safety issues such as a wheel falling off of its Boeing 777 aircraft as it was heading to Osaka, Japan on March 7. Also, on March 15, a United Airlines flight, which was a Boeing 737-800 aircraft, was revealed to be missing an external panel after it landed in Medford, Oregon.
During the earnings call, United Airlines President Brett Hart claimed that the FAA probe will cause the airline to experience even more aircraft delivery delays.
“These reviews are being taken very seriously and we will see this as an opportunity to further strengthen our commitment to safety,” said Hart during the call. “As we work through this safety review with the FAA, certain certifications will be delayed. As a result of this, we expect a small number of aircraft scheduled for delivery in the second quarter to be delayed. We expect this to have a minimal impact to our 2024 capacity plans.”
United Airlines’ aircraft issues come amid a year that is expected to have record-high airline travel. According to a December report from the International Air Transport Association, a record 4.7 billion people are expected to travel in 2024, which the association claims is “an historic high that exceeds the pre-pandemic level of 4.5 billion recorded in 2019.”
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