Boeing Pays Alaska Airlines $160 Million Compensation After Safety Fiasco

In the wake of the shocking controversy surrounding the safety of Boeing aircraft, the major manufacturer compensated Alaska Airlines for its “significant” negative impact on the airline. 

$160 Sum for Alaska Airlines

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According to an official SEC filing and announcement from Alaska Air Group, Boeing has paid Alaska Airlines $160 in compensation following a controversial incident back in January.

Significant Impact On the Airline

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The filing, released on Thursday, shows that the aviation industry giant paid a substantial figure to compensate for Alaska Airlines “significantly impacted” first-quarter earnings due to the incident.

A Fleet of Crafts Grounded

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The losses were a result of a fleet of Boeing 737 Max 9 aircraft owned by the airline being temporarily grounded and unable to fly.

Financial Damages Incurred

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The Alaska Air Group filing clearly stated that the amount was “initial compensation” to “address the financial damages incurred as a result of Flight 1282 and the 737-9 MAX groundings.”

Cabin Blowout in January

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Back in January, a cabin panel was blown off a Boeing 737 midflight on the way from Portland, Oregon. Footage of the missing panel and panicking passengers went viral around the world, bringing a flood of negative attention and security concerns around Boeing aircraft.

Full Inspections Needed

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Following the incident, the Federal Aviation Administration ordered 171 MAX 9 aircraft to be temporarily grounded while they carried out full inspections to ensure they were in working order.

Thousands of Canceled Flights

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While it was later suspended before the month was up, the grounded planes and negative publicity also led to thousands of canceled flights for the airline.

Further Compensation Expected

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Alaska Air Group acknowledged that they expected further compensation from Boeing, but they did not expect the incident to have a longer-term impact on overall flight demands.

Above Pre-Grounding Expectations

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“Although we did experience some book away following the accident and 737-9 MAX grounding, February and March both finished above our original pre-grounding expectations,” the company said.

Production Halted

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Further payouts for Alaska Airlines are not the only issues Boeing has to contend with. Boeing has also slowed the production of new aircraft to give itself time to address public and industry concerns about its safety and the overall manufacturing process.

Effect on the Industry

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These production delays will have run-on effects for major airlines beyond Alaska, including RyanAir, United Airlines, and others.

Costumers On Alert

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A few weeks after the Alaska incident, RyanAir alerted their customers that flight costs would see a periodic increase to mitigate production delays.

Financial Drop for United Airlines

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United Airlines also told investors that they expected a financial drop due to plane groundings and production delays and encouraged pilot staff to take unpaid leave.

Warning for Investors

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Boeing itself had warned investors that, due to the previous incidents, it anticipated expenditures of $4bn more than it otherwise would in the first quarter.

More Expensive Than Anticipated

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However, at this rate, unexpected expenses could exceed even that number as Boeing is currently facing criminal charges.

NTSA Report

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A report from the US National Transportation Safety Board concerning the Alaska Airlines flight found that four bolts on the cabin panel had not been properly fitted during the manufacturing process.

Legal Action From Passengers

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Now, dozens of passengers who were on board the flight from Portland to California, many of whom narrowly missed serious injury, are now taking legal action against the aviation titan.

Staff Stand Down

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Several executives and high-ranking staff members of Boeing have also resigned following the incident as it prepares for a companywide shake-up to get things “back on track.”

CEO Resigns

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Most notable was the resignation of CEO Dave Calhoun, who will leave the company at the end of the year in a move he described as a “watershed moment for Boeing,” in a letter to employees.

“The Eyes of the World Are On Us”

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“The eyes of the world are on us,” he declared. “We are going to fix what isn’t working, and we are going to get our company back on the track towards recovery and stability.”

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The post Boeing Pays Alaska Airlines $160 Million Compensation After Safety Fiasco first appeared on From Frugal to Free.

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