Boeing blowout to cost $200m to United Airlines

United Airlines has attributed a significant financial setback of $200 million to Boeing, impacting its earnings in the first quarter of the year. This financial hit was a result of having to ground its fleet of Boeing 737 MAX 9 aircraft for three weeks. The grounding was a precautionary measure following a serious incident involving a similar model operated by Alaska Airlines, where a cabin blowout occurred mid-flight in January. This unfortunate event drove United into a pre-tax loss of $164 million for the quarter.

Despite this setback, United Airlines noted that it would have achieved a profitable quarter if not for the grounding. The actual financial loss turned out to be less severe than what analysts on Wall Street had anticipated, leading to a surge in United’s stock prices by over 5% following the announcement.

United Airlines boasts the largest fleet of Boeing 737 MAX 9s among its competitors, with 79 aircraft, trailing only behind Alaska Airlines. The grounding in January led to the cancellation of thousands of flights by United and Alaska, causing significant operational disruptions until the U.S. aviation regulators declared the aircraft safe to fly again later in the month.

Boeing has been proactive in addressing these financial damages, compensating Alaska Airlines with $160 million earlier in the month to cover their losses. Additionally, during a conference in March, Boeing’s Chief Financial Officer, Brian West, emphasized the company’s commitment to enhancing industry safety and quality, acknowledging the supportive stance of their customers, including United Airlines.

Furthermore, United Airlines has faced challenges with delays in the delivery of new Boeing aircraft, prompting adjustments to their fleet plans. Scott Kirby, United’s CEO, emphasized the necessity of aligning their fleet expansion with the current capabilities of aircraft manufacturers.

Boeing’s integrity was further challenged by new allegations from a whistleblower, engineer Sam Salehpour, who accused the company of compromising on safety standards in the construction of its 787 and 777 jets. Salehpour claimed that his concerns were met with threats of termination. However, Boeing has contested these claims, asserting the safety of their aircraft. Salehpour is scheduled to testify as a primary witness in a U.S. Senate hearing on April 17.

The recent incidents, including the alarming door plug blowout on the Alaska Airlines flight on January 5, have intensified scrutiny on Boeing. This follows the tragic history of two fatal crashes involving the 737 Max 8 model in 2018 and 2019, which collectively resulted in the loss of 346 lives. These events continue to raise serious questions about the safety protocols and manufacturing practices at Boeing.

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