American Airlines says it expects the grounding of the Boeing 737 MAX to have a US$540 million impact on pre-tax profit in calendar 2019 after posting a double-digit improvement in third quarter net profit.
The airline reported net income, or net profit, of US$425 million for the three months to September 30 2019, up 14.2 per cent from US$372 million in the prior corresponding period.
Revenue rose three per cent to US$11.9 billion, American said in a regulatory filing on Thursday (US time).
American said it was forced to 9,475 flights in the third quarter due to its 24 737 MAX aircraft being grounded. Those cancelled flights had a US$140 million impact on the company’s pre-tax income.
The airline has scheduled the 737 MAX to return to service on January 15 2020, pending the re-certification of the aircraft to fly again by regulators.
It estimated the full impact of the grounding for calendar 2019 would be US$540 million.
“As it relates to the 737 MAX that situation is of course ongoing,” Parker said during American’s third quarter results conference call with analysts and media.
“We have two goals for the MAX. First, of course is for Boeing to complete the FAA’s required recertification process and ensure the aircraft is safely flying there.
“Second is to ensure that American is compensated to the loss revenue, the MAX grounding has caused.
“We missed deadlines and extended grounding for our customers, our team members, and our shareholders. So we’re working to ensure that Boeing shareholders bear the cost of Boeing failures not American Airlines shareholders.”
Boeing has said previously it expected the 737 MAX to be cleared to fly before the end of 2019, with regulators currently reviewing changes to an anti-stall software that was implicated in the fatal crashes involving Lion Air and Ethiopian Airlines in October 2018 and March 2019, respectively.
American president Robert Isom said there would be a phased approach to reintroducing the 737 MAX back into the flying schedule once it had been re-certified.
This would begin with five aircraft operating 22 departures per day in the first two weeks, increasing to 17 aircraft after that.
The remaining seven 737 MAXes would then be gradually added to the flying schedule along with new aircraft when they were delivered. American has a further 76 737 MAX aircraft on order
“By year end 2020, we have planned to take delivery of an additional 26 MAX aircraft for a total of 50 in our fleet,” Isom said.
“While 10 of those 26 aircraft had been built we don’t know exactly when they’ll be delivered or when the remainder will be built.”
Meanwhile, Parker said talks between the airline and labour groups over a new work contract were ongoing.
“We’ve seen significant improvements in our operational reliability as our negotiations are resumed,” Parker said.
“We’ve been remediated talks through the National Mediation Board since early September those are our first talks since April.
“And both parties are agreed not to discuss the content of those talks publicly at the request of NMB but you should know that we’re very focused on reaching agreement, which is fair to all involved ensures our operations back on track.”
