Summary
- Alaska Airlines could receive as many as 13 fewer Boeing 737 MAX aircraft than it planned in 2024.
- The airline had already received $162 million in cash from Boeing due to the 737 MAX 9 groundings in Q1 2024.
- Alaska Airlines said that it still prefers the Boeing 737 MAX 10, which is not yet certified.
Alaska Airlines executives provided an update on its Boeing 737 MAX delivery schedule, saying that the carrier could receive 13 fewer aircraft of the type by the end of the year. The airline has already adjusted its full-year capacity guidance.
Compensating for the groundings
Ben Minicucci, President and chief executive officer (CEO) of Alaska Airlines, affirmed that the airline’s long-standing partnership with Boeing is important to Alaska Airlines and its success during the company’s Q1 2024 earnings call. The financial compensation that Alaska Airlines agreed for the Boeing 737 MAX 9 grounding that followed the Alaska Airlines flight AS1282 incident was “a strong reflection of that relationship,” Minicucci added.
“We remain committed partners. But we will hold Boeing to the highest bar for quality out of the factory and to that end, we have enhanced in-person oversight of our Boeing 737 production line and are regularly engaging with Boeing leadership on quality and schedule.”
Photo: NTSB
According to Alaska Airlines, the incident in January 2024 and the subsequent grounding cost the airline $162 million, which Boeing compensated with an all-cash payment for the impact during Q1 2024. Excluding the grounding’s impact, the carrier disclosed that its adjusted income before income tax would have been $5 million, with adjusted earnings per share (EPS) of $0.03. Now, the adjusted loss per share is $0.95.
Related
Boeing Compensates Alaska Air Group $162 Million For 737 MAX 9 Incident Losses
The group’s CEO noted that despite the challenges, Alaska Airlines and Horizon Air performed above expectations during the quarter.
Boeing 737 MAX delivery delays
Meanwhile, Ryan St. John, Alaska Airlines’ Vice President of Finance, Planning, and Investor Relations, disclosed that the airline expects to receive only some of the 23 deliveries from Boeing that it originally had planned. The carrier is in discussion with Boeing, and as it gains more clarity on the upcoming delivery schedule, Alaska Airlines will update its expectations accordingly.
Photo: The Global Guy | Shutterstock
According to St. John, the airline now expects its capital expenditure (CapEx) to be between $1.2 billion and $1.3 billion, while previously, the expectation was that it would range from $1.4 billion to $1.5 billion.
According to the airline’s Q1 2024 United States Securities and Exchange Commission (SEC) filing, its capacity, measured in available seat miles (ASM), should grow by less than 3% year-on-year (YoY) in 2024. Its Q1 capacity declined by 2% YoY, with the airline’s operational fleet growing by a single aircraft. The operational fleet excluded aircraft that were removed from service.
Related
Alaska Airlines Restarts Boeing 737 MAX 9 Flights
The first MAX 9 flight in three weeks took off from Seattle on Friday.
Preferring Boeing 737 MAX 10 aircraft
Shane Tackett, the Executive Vice President and CFO of Alaska Airlines, explained that there are a few moving pieces regarding the airline’s delivery schedule, one of which is Boeing’s ability to get back to production rates that support a consistent and reliable delivery stream. Still, the executive noted that for the airline, the most important factor was the quality and safety of the manufacturing process.
“We also prefer the 737 MAX 10 at this point, as it is not yet certified. We have to make decisions about when to expect that, I think it is going to come later than we expected, which was the second half of next year.”
Photo: Boeing
According to Tackett, while the airline anticipated 23 Boeing 737 MAX deliveries in 2024, it now expects between ten and twenty aircraft. The executive shared that Boeing already has ten aircraft of the type built, and they are going through the final check process.
Related
Why Alaska Airlines Is So Keen To Get Its Hands On The 737 MAX 10
The airline is keenly anticipating the start of its biggest narrowbodies’ deliveries.
