Alaska Air Group has trimmed its 2024 capacity expectations and expects to take a $150 million hit this year due to the 737 Max 9 door-plug issue, which Alaska’s chief executive has now squarely pinned on Boeing.
“We got a faulty door plug from Boeing,” CEO Ben Minicucci says during Alaska’s 2023 earnings call on 25 January. “We are going to hold Boeing’s feet to fire, to make sure we get good airplanes out of that factory.”
Alaska Air’s subsidiary Alaska Airlines grounded 65 737 Max 9s after a mid-cabin emergency exit door plug blew out of a Max 9 during a flight on 5 January.
That event did not seriously injure passengers or crew but prompted the FAA to order a grounding of other Max 9s with those plugs. It also prompted a new wave of inquiries into Boeing’s production processes, quality and safety.
Though the FAA’s inquiry continues, the agency on 24 January said it approved inspections that, once complete, will let airlines return jets to service.
Alaska expects “a gradual return the Max 9 fleet through the first week of February,” and estimates the grounding will force it to cancel more than 3,000 flights in January alone, says chief commercial officer Andrew Harrison.
Those grounded flights will leave Alaska’s first-quarter capacity down, year on year, in the mid-single-digit percentage point range, Harrison adds.
Alaska is also revising its 2024 fleet-expansion expectations. It had expected to receive 23 737 Max this year, including 16 Max 9s and seven Max 7s.
“We believe it is likely that several aircraft deliveries could be delayed, which could further affect our full-year capacity plans,” says Minicucci.
Alaska chief financial officer Shane Tackett estimates the grounding will cost Alaska $150 million in 2024, mostly attributable to lost revenue.
“We fully expect to be made whole,” he says, though executives decline to elaborate, citing their initial focus on getting grounded jets back in the sky.
“We remain fully committed to our relationship with Boeing, but we fully intend to hold them accountable,” Minicucci says. ”We have a longstanding, deep relationship with Boeing.”
Alaska returned a $235 million profit in 2023, up from $58 million in 2022. It lost $2 million in the fourth quarter of last year, the company reports.
