Resumption of Flights and Inspection Approval
Alaska Airlines announced on Thursday that the prolonged grounding of the Boeing 737 Max 9 will result in a substantial financial setback, with an estimated cost of $150 million. However, late on Wednesday, the Federal Aviation Administration (FAA) granted approval for inspection instructions, paving the way for the aircraft to be reintroduced into service.
According to Alaska Airlines, the first Max 9 flights are expected to resume as early as Friday, with a gradual return of the aircraft through early February. This development comes after both Alaska and United Airlines, the only two U.S. carriers operating the Max 9s, conducted preliminary inspections following the recent incident and discovered loose bolts on several planes.
Impact on Earnings and Capacity Growth
Alaska Airlines has foreseen a challenging year ahead in terms of financial performance. The company expects full-year adjusted earnings per share to range between $3 and $5, taking into account the implications of the Max grounding. Financial analysts surveyed by LSEG, previously known as Refinitiv, had initially predicted an average of $4.93 per share.
Before the grounding, Alaska Airlines had anticipated a capacity growth of 3% to 5% for the year. However, due to the grounding and the potential for future delivery delays, the company now projects that capacity growth will be at or below the lower end of this range. CEO Ben Minicucci expressed his frustration and disappointment during an interview with NBC News on Tuesday.
In conclusion, Alaska Airlines faces significant financial challenges due to the grounding of the Boeing 737 Max 9. The recent approval of inspection instructions by the FAA allows for the resumption of flights. However, the financial impact and the potential for delivery delays contribute to a pessimistic outlook regarding earnings and capacity growth for the airline.