American Airlines

Ouch! American Airlines takes a $350 million hit in grounding of Boeing 737 MAX fleet

American Airlines is taking a $350 million hit because of the grounding of its fleet of Boeing 737 MAX aircraft following two overseas disasters.

The Fort Worth-based airline announced in its first quarter earnings call Friday morning that it expects to lose $350 million because of the grounding of the fleet through Aug. 19.

“As we begin to prepare for summer peak season, the fundamentals of our business remain strong,” Doug Parker, American Airlines chairman and chief executive officer, said Friday during a first quarter earnings call.

“The near-term forecast, however, has been affected by the 737 MAX grounding, which we currently estimate will impact our pre-tax 2019 result by approximately $350 million, and that assumes that they are flying as we have them scheduled by Aug. 19.”

Despite the Boeing 737 MAX fiasco, American reported a first-quarter 2019 pre-tax profit of $245 million, and record first-quarter revenue of $10.6 billion.

Parker said that after consulting with Boeing and the Federal Aviation Administration about their efforts to re-certify the 737 MAX fleet, he is confident that it is prudent for the airline to begin selling tickets for flights on those planes after Aug. 19.

“We told Boeing and the FAA we needed 95 percent certainty what we are selling will actually be flown,” Parker said. “That’s what we think about Aug. 19.”

American’s shares were down 1.7 percent in early morning trading. The company trades on NASDAQ under the symbol AAL.

Boeing’s newest commercial model, the 737 MAX, is under intense scrutiny after the March 10 crash of 737 MAX operated by Ethiopian Airlines. Five months earlier, a 737 MAX operated by Lion Air crashes into the Indonesian seas.

In both flights, pilots battled to keep the plane’s nose pointing upward. The investigation has drawn attention to Boeing’s sensor system on the 737 MAX, which may have malfunctioned and forced the noses of both doomed flights to point downward.

Gordon Dickson joined the Fort Worth Star-Telegram in 1997. He is passionate about hard news reporting, and his beats include transportation, growth, urban planning, aviation, real estate, jobs, business trends. He is originally from El Paso, and loves food, soccer and long drives.
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