Alaska Airlines on Thursday forecast second-quarter and full-year earnings well above estimates, with executives forecasting a powerful peak travel season despite a first-quarter loss attributed to a burst door plug on an almost recent Boeing 737 Max 9 in mid-air January was due.
Alaska received $162 million from Boeing for the Jan. 5 accident, which led to the Federal Aviation Administration briefly grounding the planes. Alaska said it expects additional compensation from the manufacturer.
The Seattle-based airline lost $132 million, or $1.05 per share, in the primary quarter, compared with a net lack of $142 million, or $1.11 per share, a yr earlier.
The accident has tightened regulators' scrutiny of Boeing and slowed deliveries of recent Max planes, whose foremost customer is Alaska. Alaska CEO Ben Minicucci backed Boeing during Thursday's earnings release, but reiterated that he doesn't expect Boeing to satisfy its plan to deliver planes to the airline this yr.
“We remain committed partners, but we will hold Boeing to the highest standards of factory quality, and to that end we have enhanced our personal oversight of our 737 production line,” Minicucci said.
“Alaska [Airlines] “Needs Boeing, our industry needs Boeing and our country needs Boeing to be a leader in aircraft manufacturing,” he said.
Minicucci told CNBC's “The Exchange” on Thursday that he was “encouraged” after Boeing leadership visited Alaska's offices in Seattle on Monday to explain the manufacturer's quality improvement plan.
Boeing's safety crisis has drawn criticism from lawmakers and customers. Boeing Chief Executive Dave Calhoun said last month he would step down at the end of the year, part of a broader restructuring at the manufacturer amid frustration expressed by airline CEOs.
Leading airlines say the resulting delays due to quality issues at Boeing have led to schedule changes. Minicucci said Alaska is taking the delays into account to “deliver a schedule with the high level of service and reliability that our guests have come to expect and know from us.”
Alaska forecast adjusted earnings per bunny between $2.20 and $2.40, above the $2.12 expected by analysts polled by LSEG. For 2024, the airline expects earnings of between $3.25 and $5.25 per share, well above the average of $4.36.
Shares of Alaska rose 4% to close at $44.44 on Thursday.
delta And United have also forecast that strong travel demand for 2024 will boost results this spring and summer.
Alaska reported first-quarter revenue of $2.2 billion, barely ahead of the $2.19 billion estimated by analysts surveyed by LSEG and a couple of% higher than a yr earlier. Adjusted for one-time items, Alaska posted a net lack of 62 cents per share within the second quarter, narrower than the $1.05 per share loss that analysts had expected, in accordance with LSEG.
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