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It’s unclear how long the Federal Aviation Administration’s review of United Airlines’ safety procedures will last.
“It will conclude when it concludes,” CEO Scott Kirby told reporters during a conference call this morning to discuss United’s surprisingly strong earnings.
Among other things, the review prohibits the airline from putting new planes into service, further complicating an already difficult situation for United. The airline was poised to ramp up its growth plan this year, driven largely by new, larger aircraft.
But Boeing, its main supplier, has run into manufacturing and safety challenges, headlined by a January incident in which a panel of a new 737 Max blew off in mid-flight, causing the FAA to order Boeing to throttle back production.
The result is that United will have 40 fewer new planes this year than it expected, which means higher costs from extra pilots it hired and trained and less revenue from additional flying.
United’s own problems with a series of safety mishaps — from a plane sliding off a runway to a plane losing a wheel in flight — prompted the FAA to embark on a major review of the airline’s safety procedures and culture.
“The main focus has been less about changing the policies and processes but really making sure that everyone keeps safety as a top-of-mind awareness and spending a lot more time with the leadership team out talking about it,” Kirby said.
“Now we, of course, will go through with the FAA a pretty rigorous process and we’ll continuously look at ways to improve safety across-the-board. And that’s continuing.”
He added that “at some point we’ll start taking aircraft deliveries again” but that’s not the airline’s focus.
United’s stock climbed 16% today to about $48 per share as the company found ways to keep cost issues in check and present an upbeat picture to Wall Street. Like other carriers, United said it’s seeing a healthy recovery in corporate travel. It’s the biggest one-day gain for United’s stock since November 2020.
Bloomberg contributed. This article originally appeared in Crain’s Chicago Business.
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John Pletz, Crain's Chicago Business , 2024-04-17 21:11:19
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