Boeing shells out $160MILLION to Alaska Airlines in 'initial compensation' after 737 Max 9 jets were grounded in wake of door blowout

Alaska Air Group announced on Thursday that Boeing has made a one-time payment totaling over $160 million in the first quarter to make up for the financial loss the airline suffered when their 737 MAX 9 aircrafts were temporarily grounded. 

According to a filing from Alaska, the amount is equal to the lost revenues from the accident and grounding in Q1, and that it anticipates receiving extra compensation. 

Following a mid-air cabin panel blowout on an Alaska Air MAX 9 aircraft in January, the US aviation regulator ordered the grounding of 171 aircraft for inspections. Later that month, the grounding was lifted. 

Alaska also noted that demand remained high despite the immediate impact after the accident. 

'Although we did experience some book away following the accident and 737-9 MAX grounding, February and March both finished above our original pre-grounding expectations,' Alaska said.

The airline will now exclude the compensation from its calculation for first-quarter adjusted loss per share, which is expected to be between $1.05 and $1.15. They initially planned to include the payment in its results.

Alaska and United Airlines bore the brunt from the grounding of 737 MAX 9 aircraft following the panel blowout that has sparked a manufacturing and reputational crisis at Boeing and supplier Spirit AeroSystems.

The production of 737 MAX 9 jets at Boeing has fallen dramatically in recent weeks, which is predicted to have an effect on the rest of the airline industry as it scrambles to keep up with demand for travel.

Last month, Alaska said its 2024 capacity plans were in flux due to the Boeing crisis. The carrier does not expect to get all of the 47 planned deliveries from the plane manufacturer over the next two years, its CEO Ben Minicucci has said. 

The aviation industry's other major aircraft supplier Airbus SE is  sold out until the 2030 for single-aisle jets.

The incident has been damaging for Boeing's reputation and the CEO of United Airlines Scott Kirby warned Boeing needs 'real action' to restore its reputation.

Boeing and U.S. airlines report first-quarter results later this month. 

The FAA's decision to ground the fleet of Boeing 737 MAX 9's came as several airlines and regulators decided to take similar steps.

According to aviation outlet The Air Current, the aircraft involved in the incident had come under scrutiny by officials just a day before the window blew out.

The outlet claimed that on January 4, an intermittent warning light appeared as it taxied to a terminal from a previous flight, which led the airline to remove it from extended range operations. Later that same day in a separate flight, the warning came back on.

The Boeing 737 MAX 9 jet involved in the incident had reportedly only gone into service in November 2023, and was practically new by aviation standards after reportedly undergoing less than 200 flights before the incident.