Alaska Airlines Gets $160 million Compensation Check from Boeing

That door plug is setting Boeing back nine figures.

Alaska Airlines revealed in a filing with the Securities and Exchange Commission that it has received $160 million from Boeing in compensation for the loss in profits Alaska incurred after a door plug blew off one of its planes in January. That little snafu resulted in the Federal Aviation Authority grounding all Boeing 737 9 MAX planes for three weeks. For Boeing, this is just the latest, but not the last, of a thousand cuts.

You’re Grounded

Grounding compensation has become a pretty key part of the aviation industry, and Boeing is no stranger to it. Boeing’s 737 aircraft were grounded in 2019 for two years following two mass casualty crashes, and 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 died in the crashes, Boeing agreed to hand over another $1.77 billion to its airline clients. 

Exactly how much got paid out to whom isn’t entirely clear, however. “Boeing and Southwest reached a confidential agreement on compensation late in 2019 over the Boeing 737 Max grounding,” aviation consultant Sindy Foster told The Daily Upside. “Other airlines have publicly announced they are pursuing claims and then we have heard nothing more,” she added. This time around, Alaska Airlines says it’s not done chasing Boeing for compensation, although it didn’t give a number it’s targeting. Of course, it’s not the only airline out for blood:

• Michael O’Leary, CEO of Irish budget airline Ryanair said in February that the company would pursue compensation from Boeing. O’Leary said this was because the manufacturing chaos at Boeing that followed the door blow-out meant they had not delivered planes on schedule, which in turn constrained Ryanair’s growth. 
• Ryanair isn’t the only one struggling to cope with a dearth of Boeing aircraft. Fortune reported this week that United is asking pilots to volunteer for unpaid leave because Boeing hasn’t delivered enough planes for the airline to fly. 

Personal Touch: Boeing’s undergoing a bit of a management shake-up, and its new chairman Steve Mollenkopf has reportedly ripped apart the company calendar, bailing on some planned meetings with airline CEOs. Instead, sources told Bloomberg, Mollenkopf is reaching out individually to each of those CEOs in an effort to repair the relationship between Boeing and its disenchanted airline customers. Nothing like some quality one-on-one time to get the magic back, Steve.