United Airlines (UA, Chicago O'Hare) has entered into an undisclosed agreement with Boeing to receive compensation for financial damages incurred in the first quarter of 2024 from the grounding of its B737-9 fleet, as well as “a confidential agreement to accommodate certification delays” of the B737-10, the airline announced in an SEC filing.
In the first quarter, the company reported a USD124 million net loss, which included an impact of approximately USD200 million from the MAX 9 grounding. Had it not been for this issue, derived from a mid-air cabin panel blowout on an Alaska Airlines flight in early January, United would have reported a quarterly profit.
“The compensation provided by Boeing for the grounding damages and in connection with rescheduling deliveries is in the form of credit memos for use on future purchases from Boeing,” the airline said.
United plans to account for these arrangements as a reduction to the cost basis of previously delivered MAX 9s and future MAX 9 and MAX 10 deliveries. This will reduce future depreciation expenses associated with the airframes, it said.
Among other US carriers impacted by the grounding, Alaska Air Group received about USD160 million in cash as compensation.
Due to the delays in certifying the MAX 10 type, United Airlines has converted 110 of its B737-10 orders to B737-9s and maintained the right to convert more if needed. In its latest 10-K filing, it said it had firm commitments for 150 B787s, thirty-six B737-8s, 144 B737-9s (up from 34 at the start of the year), 167 B737-10s (down from 277 at the start of the year), 123 A321-200NX, fifty A321-200NY(XLR)s, and forty-five A350-900s.
