Alaska Airlines suffered a lot from the AS 1282 incident. Not only did they receive bad press, but the subsequent groundings cut deeply into their operations and finances. Given this, and their reliance on a single manufacturer, it’s only fitting that Alaska receives $200 million from Boeing to compensate for all their troubles.
In the U.S., Alaska and United were the most impacted airlines by the Boeing 737 MAX 9 groundings following the AS 1282 door plug incident. 171 aircraft in total were sidelined as Boeing, regulators, and airlines tried to determine the cause of the failure and how to fix it. Of course, that triggered major cancelations across both airlines’ networks, inconveniencing passengers and costing both hundreds of millions of dollars.
Given that Boeing’s own broken supply chain was responsible for all of this, the airlines rightfully wanted to seek compensation. And since Alaska and United are some of Boeing’s most important customers, they, naturally, acquiesced.
Alaska Receives Over $200 Million from Boeing
Though both airlines received compensation from the plane maker, I couldn’t find any information on how much United got paid. However, what we do know is that Alaska receives over $200 million from Boeing – $223 million, to be exact. Not all of this was received as a cash payment, though. Yes, a vast majority of this – $162 million – was in cash, but $61 million was provided as credits from Boeing.
I know what you’re thinking. Credits? For more planes? Not quite. Alaska Air will be able to apply these credits to outstanding orders they already have with Boeing. And though they’ve already received 67 Boeing 737 MAX 9s and 1 MAX 8, they still have 13 and 19 on order, respectively, along with 103 MAX 10s. As a point of comparison, the MAX 8 has a list price of $122 million, the MAX 9 a list price of $129 million, and the MAX 10 comes in at $134.9 million. Yup, even though Alaska receives over $200 million from Boeing, their overall compensation doesn’t even amount to two new jet. But, the amount does cover the estimated financial impacts of the groundings.
Unfortunately, the AS 1282 debacle isn’t over yet. Alaska Airlines, along with Boeing, is still subject to a civil lawsuit. Given the NTSB’s preliminary findings, I think the lawsuit citing Alaska is a bit silly, but we’ll see what happens. But even if Alaska is somehow found liable, I’m sure they’ll be turning to Boeing for additional compensation.
Final Thoughts
Though Alaska receives over $200 million from Boeing, things are far from over for both the airline and the manufacturer. That said, don’t expect Alaska to turn its back on Boeing. Doing so would be far too costly for them to do, since their entire fleet 230 active mainline aircraft and their supporting infrastructure are variants of Boeing 737s. And if you think that purchasing Hawaiian, a primarily Airbus is going to change this, think again.
Yes, Alaska wants Hawaiian for its trans-Pacific operations and wide body aircraft knowhow, but the focus on the later is definitely on the Boeing 787-9. And, remember, Alaska is considering replacing Hawaiian’s 717s with 737s, though I still think that’s not the greatest idea.