737 Max Groundings Drove United's Capacity Trims
April 17 2019 - 2:21PM
Dow Jones News
By Alison Sider
United Continental Holdings Inc. said the grounding of its
Boeing Co. 737 MAX jets and the suspension of flights to New Delhi
led the carrier to trim its forecast for capacity growth this
year.
United's shares rose 4.5% on Wednesday as executives explained
their plans to increase flying by at most 5% this year, down from a
previous forecast to add 4% to 6% to its capacity this year. The
airline said after hours on Tuesday that earnings in the first
quarter had roughly doubled from a year earlier.
Chief Operating Officer Greg Hart said during an earnings call
on Wednesday that United's 14 MAX jets represent just 1.4% of its
flight capacity. United said earlier this week that it would pull
the MAX from schedules until early July, citing uncertainty about
when regulators will clear the planes to fly again as Boeing works
to fix a software issue following two deadly plane crashes. The MAX
has been grounded around the world since last month, after the
crash of an Ethiopian Airlines flight.
United said it has made up for the missing MAX jets with spare
aircraft, putting off optional work on planes like Wi-Fi
installation, and flying bigger jets on routes that the MAX would
ordinarily operate. Executives have said that can only continue so
long before challenges and costs mount.
"With 14 aircraft, that was something that we could manage for a
month or two given some flexibility we have in our maintenance
plans," Mr. Hart said. "Beyond that, it gets really tough to
manage."
Mr. Hart said United didn't plan to add simulator training
requirements for the MAX. The Federal Aviation Administration on
Tuesday took another step toward formally signing off on training
requirements associated with a pending software fix to the MAX's
suspect automated anti-stall system, which investigators are
focusing on in both recent crashes. The proposed revisions, which
were released for additional public comment, don't mandate
additional time for pilots in ground-based flight simulators.
United is due to receive another 16 MAX planes this year.
Executives said they don't anticipate major delays to those
deliveries if the plane returns to service this summer. Chief
Financial Officer Gerry Laderman said United would likely discuss
with Boeing costs incurred as a result of the grounding.
Write to Alison Sider at alison.sider@wsj.com
(END) Dow Jones Newswires
April 17, 2019 14:06 ET (18:06 GMT)
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