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United took a $200 million hit from Boeing 737 MAX 9 grounding, driving it to a quarterly loss

Callaghan O'Hare/Bloomberg via Getty Images

United Airlines continues to grapple with its strategy in light of the cascading impact of more stringent oversight and subsequent production slowdown at Boeing, a key supplier of aircraft and a critical piece in its long-term expansion plan.

The carrier on Tuesday reported a $200 million impact after being forced to ground its Boeing 737 MAX 9 fleet for three weeks because a door plug ripped off an Alaska Airlines jet in January. United has since asked its pilots to take unpaid time off due to having too many staffers and not enough planes. And United today announced another slew of changes to its long-term fleet strategy because of the shifting delivery timelines at Boeing: A portion of Boeing MAX 10 orders will convert to MAX 9 from 2025 to 2027; this year, it only expects 61 narrowbody aircraft and 5 widebody aircraft, instead of the 183 it projected at the end of 2023.

“We’ve adjusted our fleet plan to better reflect the reality of what the manufacturers are able to deliver,” said United Airlines CEO Scott Kirby in a company statement. The company reported a net loss of $124 million for the first quarter, compared to $194 million during the same quarter in 2023. The stock price was up 5.6% after hours.

For United, the fallout pain has been great. The airline sources nearly all of its aircraft and parts from Boeing or Airbus S.A.S. If Boeing fails to make on-time deliveries either due to FAA hold-ups or inability to get regulatory approval, the hit to United will impact its operations, financial position and cash flows, the company said. “For example, due to the delay of the certification of the 737 MAX 10 aircraft and continued supply chain issues, the Company currently expects a reduction in deliveries from Boeing during the next couple of years,” United told investors early this year.

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The Chicago-based airline has hubs at O’Hare International Airport, Denver, Los Angeles, Newark, San Francisco and other locations. Its strategy, dubbed United Next, has been upended by the Boeing incidents. The plan, which the company said was a transformational key to its earnings, originally involved exercising options to buy 50 Boeing 787-9 aircraft to be delivered between 2028 and 2031, plus options to buy an additional 50 Boeing 787 aircraft. United also exercised purchase rights to get 60 A321 neo aircraft scheduled for delivery between 2028 and 2030 and was granted purchase rights to buy up to an additional 40 of the A321 neo aircraft. Overall, the company expected to accept more than 700 new narrow and widebody aircraft by the end of 2033.

The plan was expected to help United replace older, smaller jets and 200 regional jets with larger planes, with fuel efficiency benefits and a projected 17% to 25% decrease to carbon emissions per seat in comparison to its older airplanes.

But in January, an emergency order from the FAA suspended service of all Boeing 737 MAX 9 aircraft operated by U.S. airlines and United was forced to ground all 79 of the company’s Boeing 737 MAX planes, which hit the first quarter of the year’s financials. That followed a similar directive in February 2021, in which the FAA ordered the Boeing 777 Pratt & Whitney grounded, keeping United from operating more than 50 planes.

Since then, United has steadily reduced the number of aircraft it expects Boeing to deliver according to previously announced timelines.  The company said on Tuesday that it has letters of intent to lease 35 new Airbus A321s in 2026 and 2027.

This story was originally featured on Fortune.com