Alaska receives $160 million from Boeing due to explosion accident

Alaska receives $160 million from Boeing due to explosion accident

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Alaska said the $160 million was an initial payment from Boeing, and it expects more compensation after the first quarter.
-Meghna Maharishi

Alaska Airlines said in a regulatory filing on Thursday that it received $160 million from Boeing in initial compensation to compensate for lost profits caused by the sudden explosion of a 737 Max 9 door plug in January.

The $160 million is the initial payment — Alaska has said it expects to receive more compensation from Boeing for the explosion, but terms of future payments have not been disclosed.

The carrier also reported that it lost some bookings during the first quarter due to the later grounding of the Max 9, according to the regulatory filing.

Without the explosion and grounding of the Max 9, Alaska said its first-quarter pretax earnings would have improved by 80% compared to the same period last year. Alaska expects an adjusted first-quarter loss of $1.15 to $1.05 per share, a larger loss than the $0.55 to $0.45 per share it previously expected.

Boeing’s compensation will be excluded in Alaska’s first-quarter outlook.

Alaska and United Airlines, the only U.S. carriers operating the Max 9, canceled thousands of flights in January after the Federal Aviation Administration grounded the plane for about a month following the explosion.

Alaska CEO Ben Minicucci previously said the grounding would cost the airline about $150 million in the first quarter.

“We’re going to hold Boeing’s feet to the fire to make sure we get good planes out of this factory,” Minicucci said on a call with analysts in January.

Chief Financial Officer Shane Tackett also said in January that the carrier expects to receive full compensation for its first-quarter loss.

Minicucci became one of Boeing’s harshest critics after the explosion, telling NBC News that he was “furious” at the plane’s manufacturer. Alaska’s CEO was also part of a group of airline executives who lobbied for a change in leadership, according to a report by The Air Current.

The Federal Aviation Administration (FAA) halted production expansion of the 737 MAX once the plane was returned to service. Boeing previously said it would strengthen quality control after the Alaska explosion.

Boeing CEO Dave Calhoun is scheduled to step down at the end of the year.

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