Airlines Face Challenges as United and Alaska Ground Boeing 737 MAX Jets
United Airlines' shares fell following the grounding of Boeing 737 MAX planes, while Alaska Airlines faced a scare due to a mid-flight incident.
Sam Morgan
- 2024-01-08
- Updated 12:24 PM ET
(NewsNibs) - United Airlines' (UAL) stock declined by 2% after a tumultuous day marked by flight cancellations and ongoing issues with its fleet of Boeing 737 MAX 9 aircraft. The stock opened at $41 per share against the backdrop of a roughly $13.5 billion market capitalization. Adding to the sector's concerns, an Alaska Airlines 737 MAX 9 was forced to return to Portland Airport after a door plug detached post-takeoff. The incident led both United and Alaska Airlines, currently the only US carriers operating this model, to ground their newest planes. Thankfully, there were no serious injuries reported. United Airlines has a significant stake in the model, comprising 73 Boeing 737 MAX 9s within its fleet.
Market Impact and Industry Setback
The aviation sector witnessed a ripple effect from this event. United Airlines' shares experienced a 4% dip over the past year but managed to rebound slightly by almost 1% after a rough start in the trading session. In contrast, Alaska Airlines' stock value sunk by more than 3%. Boeing's shares had seen a 20% rise over the prior two months amid a recovery with the resumed delivery of 737 jets. However, industry confidence has been hit by the recent incident, which recalls the troubled history of the 737 MAX jets, grounded globally for nearly two years following a high-profile scandal five years ago. Invariably, this incident is viewed as a significant setback for United, Boeing, and the broader aviation industry, struggling to regain its footing post-pandemic. Meanwhile, the Global JETS ETF, inclusive of prominent airline stocks, has seen a 35% decrease over the past five years, with United's shares dropping by 47%.
Response and Recovery Efforts
In response to the immediate disruptions, United Airlines managed to reinstate 85 out of 180 flights initially canceled on January 7, deploying alternate aircraft, despite additional weather-related delays a day later. The airline, operating primary hubs in Chicago, Denver, Houston, and Los Angeles, maintains a resilient approach to their operational hurdles. Furthermore, Boeing, continuing to regain its market position, announced an increase in 737 MAX deliveries, touting over 5,300 backorders. On the ground, the detached door plug was notably retrieved from a backyard approximately six miles west of downtown Portland. The National Transportation Safety Board (NTSB) is slated to inspect the component, a step expected to take a mere few hours, before issuing precise inspection guidelines to Boeing. This process is critical in ensuring the timely and safe return of the 737 MAX jets to regular operations as air travel continues to rebound to levels approaching the pre-pandemic era.
United Airlines and the aerospace manufacturer Boeing face a critical juncture as they navigate the repercussions of the recent air travel disruptions and aircraft malfunctions. The companies, alongside the aviation industry, are in a collective race to restore trust, safety, and stability in the skies.
