American Airlines Co.’s Chief Executive Doug Parker says his shareholders shouldn’t shoulder losses for the protracted grounding of Boeings 737 MAX.
“So we are working to ensure that Boeing shareholders bear the cost of Boeing’s failures, not American Airlines shareholders”, American Airlines Chief Executive Doug Parker.
Shares of American Airlines AAL, +3.96% rallied 4.0% to $29.41 Thursday, after the air carrier beat profit expectations, despite headwinds related to the grounding of the Boeing’s 737 MAX fleet in March and a separate labor dispute.
CEO Parker acknowledged that results “should have been better,” as business continued to suffer as from the 737 MAX groundings. The company said it canceled 9,475 flights during the third quarter as a result, reducing earnings by about $140 million. Since the company has removed all MAX flights through Jan. 15, 2020, American expects a combined $540 million hit to 2019 earnings.
Since March 13, when the Federal Aviation Administration directed the grounding of all U.S.-registered Boeing 737 MAX aircraft following two deadly crashes, American’s stock has lost 4.9%, to wipe out roughly $661.5 million in market value.
Over the same time, the Boeing shares BA, +1.19% have lost 8.2%, representing a roughly $17.4 billion loss of market capitalization, while the NYSE Arca Airline Index XAL, +0.35% has rallied 7.9% and the Dow Jones Industrial Average DJIA, -0.11% has gained 4.9%.
Parker said he had two goals for the 737 MAX:
1) Boeing to complete the FAA’s required recertification process and ensure the aircraft’s safety.
2) Ensure American is compensated for the loss of revenue from the planes groundings.
“We missed deadlines and extended groundings for our customers, our team members and our shareholders,” Parker said in the post-earnings conference call with analysts. “So we are working to ensure that Boeing shareholders bear the cost of Boeing’s failures, not American Airlines shareholders.”
