United Airlines faced considerable financial challenges in the first quarter of 2024 after the grounding of the Boeing 737 Max 9 fleet. This issue stemmed from a severe incident involving a door plug blow-out on Alaska Airlines flight 1282, which led to an estimated $200 million loss, deeply affecting United’s financial performance for the quarter.
Despite these challenges, United Airlines disclosed on February 16 that its first-quarter losses totaled $124 million. This figure showed an improvement compared to a $194 million loss during the same period the previous year. Throughout the first three months of the year, the airline managed to generate $12.5 billion in revenue, marking an almost 10% increase from the $11.4 billion reported in the first quarter of 2023. United pointed out that, if not for the grounding incident, the airline would have likely reported a profit.
The incident on January 5, involving a mid-flight door plug malfunction on a flight from Portland, Oregon to Southern California, prompted not only Alaska Airlines but also United to take drastic measures. Following the event, the Federal Aviation Administration (FAA) ordered most of the global fleet of Max 9s out of service, affecting all 79 of United’s aircraft of this model. These planes were grounded for about a month, with gradual reintroduction beginning in early February.
In response to these challenges and ongoing delays in the certification of the Boeing 737 Max 10, United revised its fleet strategy. The airline announced on April 16 that it had arranged to lease 35 new Airbus A321neos to help compensate for the delayed Boeing aircraft.
Compensation and Broader Industry Impact
In a related development, Boeing compensated Alaska Airlines with $160 million for the first-quarter financial losses directly linked to the Max 9 grounding. This compensation was described by Alaska as “initial compensation.”
The fallout from the door plug incident also triggered significant changes in management at Boeing and led to increased scrutiny of safety practices across the airline industry.
Aside from the grounding setback, United experienced a robust demand increase for business travel, with overall capacity rising by 9% year over year. The airline successfully leveraged several opportunities to adjust domestic capacity, which positively influenced profitability for the quarter. United is set to provide more detailed insights into its quarterly performance and strategic responses in an upcoming conference call with investors scheduled for April 17.
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