American Airlines expects the grounding of its fleet of 24
Boeing 737 Max aircraft to cost $350 million, CEO Doug Parker said during the
company's Q1 earnings call Friday morning.
The costs will be higher, Parker said, if the carrier isn't
able to put its Max fleet back in service on Aug. 20. American has already
taken the preemptive step of removing all Max flights from its schedule until
that date.
Parker wasn't ready to say what steps American might take to
get remuneration from Boeing for the costs associated with the grounding.
"It's not something we've had any conversations about
yet," he said. "At some point perhaps we will, but right now we are
working to get the aircraft back flying."
Max aircraft worldwide have been grounded since March 13 due
to a pair of crashes that investigations indicated were caused by erroneous
information transmitted from an aircraft sensor to the automated flight control
system. A total of 346 people died in last October's Lion Air crash and the
Ethiopian Airlines crash in March.
Parker said American set Aug. 20 as the date to begin
scheduled Max flying because the company has 95% confidence the aircraft will
be recertified by then. Airline president Robert Isom added that should
certification come faster, American will use the aircraft as spares in the
meantime.
American reported Friday that the Max grounding caused 1,200
flight cancellations during the 18 days of the first quarter for which the
grounding was in effect, resulting in a bottom-line impact of $50 million. For
the period from March 13 through Aug. 19, American has cancelled 15,000 Max
flights and has had to re-accommodate 700,000 customers, Isom said.
Along with the 24 Max aircraft in its fleet, American has 74
more on order.
The grounding of the Max played a role in American seeing a
5.4% year-over-year decline in operating income during the first quarter.
However, the company's net income still increased 16%, to $185 million.
American reported revenue of $10.58 billion, up 1.8% year over
year, but $30 million below analyst expectations, according to the website
Seeking Alpha.
Earnings per share were 52 cents, beating expectations by 2
cents.