American Aerospace major Boeing has compensated Alaska Airlines $160 million, which the carrier termed as an initial payment, for the grounding of its 737 Max 9 planes after a door panel blew off an aircraft in early January.
In a filing to the Securities and Exchange Commission, the airline said that Boeing paid the sum since the airline's first quarter performance was "significantly impacted" , due to the incident involving a door plug panel fell off the Boeing B737MAX aircraft after taking off from a Portland, Ore.
Alaska Airlines said that they made loss to the first-quarter pretax profit, primarily due to the lost revenues, costs due to irregular operations, and costs to restore their fleet to operating service.
NTSB launched an investigation into the incident shortly after it happened. The Federal Aviation Administration (FAA) is also investigating overall safety at Boeing. FAA Administrator Michael Whitaker said there are issues at Boeing "around the safety culture."
The incident resulted in a grounding of its Boeing 737 Max 9 fleet. The airline said it expects Boeing to provide additional compensation, beyond the first quarter sum.
The company filing to the Securities and Exchange Commission read,
"As a result of the Flight 1282 accident and the Boeing 737-9 MAX grounding, we lost approximately $160 million in Q1 pretax profit, primarily comprising lost revenues, costs due to irregular operations, and costs to restore our fleet to operating service. "
"We have received initial compensation from Boeing to address the financial damages incurred as a result of Flight 1282 and the 737-9 MAX groundings. As part of this compensation, Boeing paid Air Group approximately $160 million in cash during the first quarter. "
"This cash payment is equivalent to the lost profits resulting from the accident and grounding in Q1 2024. Additional compensation is expected to be provided beyond Q1, the complete terms of which are confidential."
The Seattle based company is going through some worst phases of its product reliability and incomes from the business , which started when Boeing’s 737 MAX fleet was grounded in 2019 for two years following two mass casualty crashes.
In the immediate aftermath Boeing said it would pay out $4.9 billion to its airline clients. And, as part of an overarching $2.5 billion settlement with the Department of Justice in 2021, which included a $500 million fund for the families of people who’d died in the crashes, Boeing agreed to hand over another $1.77 billion to its airline customers.
Owing to the recent incidents and an ambiguous safety culture at Boeing assemblt lines , the FAA increased its oversight of Boeing and began an audit of the company's production and manufacturing in the wake of the door plug blow-out.
As a ramification of the door plug failure incident, Boeing announced last week that its CEO, Dave Calhoun, will step down at the end of the year.
"The eyes of the world are on us, and I know that we will come through this moment a better company," Calhoun said in a statement last week. "We will remain squarely focused on completing the work we have done together to return our company to stability after the extraordinary challenges of the past five years, with safety and quality at the forefront of everything that we do."
Despite the door incident and the grounding, Alaska said to have experienced
"strong demand within the quarter, and continued recovery of West Coast business travel." "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 due to these core improvements," the filing said.
The filing is a first look at what Boeing is doing to make up for several months of issues and increased scrutiny from customers and government agencies.
The Department of Justice (DOJ) launched a criminal investigation into Boeing in early March after the mid-air blowout. The DOJ has conducted interviews with pilots and flight attendants on the flight after the company admitted that it couldn't find records for work performed on the door panel, which the National Transportation Safety Board (NTSB) requested.
NTSB launched an investigation into the incident shortly after it happened. The Federal Aviation Administration (FAA) is also investigating overall safety at Boeing. FAA Administrator Michael Whitaker said there are issues at Boeing "around the safety culture."
Congress wants strict government oversight for Boeing after the blowout incident and other concerns owing to the high-profile aviation safety breaches in recent months. Lawmakers wants expedition on this, with possible legislation on the way to make sure it happens.
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