United Airlines has said that the grounding of some Boeing 737 MAX planes in early 2024 cost it $200m and caused the company to record a loss for Q1 despite an increase in revenue compared to 2023.
In the airline’s latest earnings report, it said it had seen a net loss of $124m for the first quarter of the year but projected a stronger Q2 than expected with adjusted earnings per share of between $3.73 and $4.25.
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United said its total operating revenue for the period was $12.5bn, up 9.7% on Q1 2023, and, despite the notable losses, it had also improved on earnings in 2023 when the first quarter saw a net loss of $194m.
Additionally, United revealed further details about the adjustments it had made to its incoming fleet of aircraft as it adapts to the continued delays from Boeing’s 737 MAX programme, which have already led the airline to pause pilot hiring and ask current pilots to take unpaid leave.
Despite originally expecting to receive 183 narrowbody aircraft in 2024, United said it was now expecting 61 narrowbody aircraft and five widebody planes this year, with a portion of its order for MAX 10 aircraft converted to MAX 9s for 2025 through to 2027 and deals signed with two lessors for 35 new Airbus A321neos in 2026 and 2027.
CEO Scott Kirby had already said that the airline was working with an alternative plan for the year after it became clear that the MAX 10 would not be ready in time in the wake of the Federal Aviation Administration’s (FAA) increased scrutiny of Boeing’s production following a number of concerning reports about quality control at the manufacturer.
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By GlobalDataHe said: “We’ve adjusted our fleet plan to better reflect the reality of what the manufacturers are able to deliver.
“And, we’ll use those planes to capitalize on an opportunity that only United has: profitably grow our mid-continent hubs and expand our highly profitable international network from our best in the industry coastal hubs.”
United’s claim of a $200m hit from the FAA’s grounding of the planes in response to the door plug blow out incident on an Alaska Airline’s flight in January comes shortly after Alaska also said it had seen a $160m loss as a result of the incident and subsequent groundings, with Boeing paying the difference as compensation.
In its own Q1 earnings, Alaska said that without the groundings it would have expected to make a pre-tax profit of $5m and also revealed that it was expecting to return to a profitable earnings in Q2 with a projected earnings per share of between $2.20 and $2.40.
The direct hit to the airlines, which have the two biggest 737 MAX fleets in the US, shows the latest industry fallout of the ongoing issues at Boeing, which have seen CEO Dave Calhoun announce his resignation from the role amid a wider shake up of the company’s management.
