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Alaska Airlines Receives $61 Million in Boeing Credits

Alaska Airlines Receives $61 Million in Boeing Credits

Alaska Airlines, headquartered in Seattle, has obtained an additional $61 million in credits from Boeing in response to the mid-flight incident involving Alaska Flight 1282. This incident, characterized by a door plug blow-out, prompted the grounding of Alaska’s 737 Max 9 fleet. This sum supplements the $162 million cash payment received from Boeing during the initial quarter of the year.

In a regulatory filing dated May 3, Alaska Air Group, also based in Seattle, revealed the receipt of these “supplier credit memos.” These credits are designated for future acquisitions of Boeing products. Alaska Airlines accounts for this compensation as a reduction in the cost basis of specific Max 9 aircraft.

Following the January 5 incident during a flight from Portland, Oregon, to Southern California, Alaska voluntarily grounded all 65 of its Max 9s. The fallout from this event resonated throughout the airline industry, prompting the Federal Aviation Administration to issue grounding orders for the majority of the global Max 9 fleet. This crisis further compounded challenges for Boeing’s next-generation narrowbody program, necessitating a restructuring of the company’s management team.

The grounding of the Max 9 fleet persisted until early February, exerting a notable impact on the financial performance of Alaska Airlines during an otherwise robust first quarter. United Airlines similarly reported adverse effects.

Within the same regulatory filing, Alaska disclosed an allocation of $8 million towards its acquisition of Hawaiian Airlines. The airline anticipates ongoing integration costs as efforts supporting the proposed acquisition progress. However, the $1.9 billion transaction faces legal hurdles, with a consumer group filing a private lawsuit alleging violations of US antitrust laws. These allegations contend that Alaska’s acquisition of Hawaiian diminishes competition in specific airline markets and potentially jeopardizes Hawaii’s $20 billion tourism economy.

Alaska Airlines refutes the claims made in the lawsuit and expresses intent to vigorously defend against them. Concurrently, the company collaborates with the US Department of Justice in seeking regulatory clearance for the acquisition. The proposed acquisition of Hawaiian Airlines remains under review by the DOJ, which has yet to signal whether it will pursue actions to impede the deal.

Co-Founder
As an aviation pro in Dubai, He has delved into commercial aviation for 13+ years, specializing in GHA, airport ops, and airlines. With an academic background in Aviation Management, he navigates industry complexities adeptly. Passionate about staying updated on aviation news and trends.

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