United Airlines strikes compensation deal with Boeing for Max groundings, delays

By Claudia Assis

Terms of the deal are confidential, airline says; Alaska Air has disclosed $160 million in compensation

United Airlines Holdings Inc. has struck a deal with Boeing Co. to get compensation for Max jet groundings and delays, the airline said in a filing Wednesday.

The terms of the deal are confidential, United (UAL) said in the filing. The airline said it stems from damages incurred in the first quarter due to the groundings of Boeing's (BA) 737 Max 9s and certification delays for the 737 Max 10 aircraft.

Compensation will take the form of "credit memos for use on future purchases from Boeing," United said. United, which predominantly flies Boeing jets, recently said it was getting more planes from Europe's Airbus SE (FR:AIR).

United is the second U.S. airline to receive compensation from Boeing as it relates to Max jets and their problems.

Earlier this month, Alaska Air Group Inc. (ALK) said it had gotten about $160 million from the jet maker to compensate for the midair door-panel blowout in January on one of its planes, and subsequent plane groundings.

Alaska said it expected to receive additional compensation in future quarters, and details of the deal were also kept confidential.

United reported first-quarter earnings after the bell Tuesday, sparking a stock rally that boosted shares by more than 17% on Wednesday.

The airline reported better-than-expected first-quarter results and forecast a second-quarter profit above Wall Street's expectations, thanks to strong demand and a rebound in business travel.

United also said it expects to bring fewer aircraft into its fleet this year, due to the Max 9's groundings and production limits. United said it has reworked its orders on other aircraft, and has agreements in place to lease a few dozen more jets from Airbus.

-Claudia Assis

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04-17-24 1702ET

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