Alaska Cites ‘Challenging’ Start to 2024 Amid Max Grounding

An Alaska Airlines Boeing 737 Max-9 aircraft.

(Bloomberg) — Alaska Air Group Inc. expects slower growth this year and a financial hit of $150 million after a midair accident led to the grounding of a portion of its Boeing Co. 737 planes.

Flight capacity in 2024 will be at or below the low end of its prior expectation for 3% to 5% growth, the Seattle-based airline said Thursday in a regulatory filing. Including the negative financial impact, adjusted earnings will be $3 to $5 a share, while analysts expected $5 on average.

Alaska is “in the midst of a challenging start to 2024,” Chief Executive Officer Ben Minicucci said in a statement.

Investors are closely watching the fallout after a Jan. 5 incident in which a fuselage panel blew out of the side of an Alaska-operated 737 Max 9 plane mid-flight. While no one was injured, the terrifying ordeal led US safety regulators to ground the model for inspections, upending flight plans for Alaska and other operators of the Max 9, including United Airlines Holdings Inc.

Alaska’s CEO drew attention earlier this week after saying in a televised interview that he was “angry” with and “disappointed” in Boeing, heightening tension with a manufacturer already facing scrutiny from regulators, customers and the flying public. Minicucci also said inspections had turned up loose bolts in many of its Boeing-made planes.

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The flight disruptions could be ending soon after the US Federal Aviation Administration said late Wednesday that it had approved inspection procedures that would allow the Max 9 to return to the skies. Alaska subsequently said it would resume flights with the plane model beginning Jan. 26, with inspections on the full fleet of 65 completed by next week.

Adjusted earnings were 30 cents a share for the final three months of 2023, Alaska said. That beat the 18-cent average of analyst estimates compiled by Bloomberg. Operating revenue was $2.55 billion in the fourth quarter, which ended days before the flight disruptions began. The company didn’t immediately specify its expectations for the first quarter.

Alaska’s shares were unchanged in premarket trading Thursday in New York. The stock fell 8.3% this year through Wednesday.

United said earlier this week that the grounding would raise costs and contribute to an adjusted loss of as much as 85 cents a share this quarter. The carrier, the largest operator of the Max 9, plans to resume those flights starting Jan. 28.

(Updates with forecast details beginning in first paragraph)

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