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United Airlines Holdings Inc (NASDAQ:UAL) will be compensated by Boeing Co (NYSE:BA) for financial losses incurred in the first quarter due to the grounding of 737 MAX 9 aircraft, the carrier said in a recent filing.
United Airlines revealed in a filing that a confidential deal with Boeing will involve “credit memos” for future purchases to offset the financial impact of the grounding and delivery rescheduling. A credit memo is an official acknowledgment of owed money to a customer.
United plans to account for these arrangements as a reduction to the cost basis of the previously-delivered Boeing 737 MAX 9 aircraft and future deliveries of the MAX 9 and MAX 10 aircraft.
United Airlines’s first quarter earnings reflected the approximately $200 million impact from the Boeing 737 MAX 9 grounding, without which the company would have reported a quarterly profit.
By February 5, 78 of United Airlines’ 79 737 MAX 9 aircraft had returned to service after receiving final approval from the Federal Aviation Administration, reported Reuters.
The mid-air panel blowout has significantly damaged Boeing’s reputation, leading to management changes and regulatory restrictions on production, with deliveries halving in March.
Price Action: UAL shares are trading higher by 5.21% at $51.20 on the last check Thursday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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