Alaska drops after Max jet grounding, flight cancellations

Alaska Air Group Inc. fell after Alaska Airlines cancelled about 20% of its flights Monday due to the grounding of its 737 Max 9 jets, even though analysts say the setback may prove short-lived.

Alaska canceled 139 scheduled Monday flights, or about 20% of its total schedule, based on data from tracking website FlightAware.com. Alaska’s fleet includes 65 737 Max 9s. Flight cancellations also were affected by weather in some cities.

The Federal Aviation Administration ordered inspections of the Boeing Co.-made jets after a fuselage section on a brand new Alaska Airlines plane blew out during a Jan. 5 flight. 

The carrier expects flights to be affected through at least midweek. Shares of Alaska Air Group, the airline’s holding company, pared an early decline of as much as 6.3% to trade down 3.8% to $36.50 as of 9:41 a.m. in New York. 

Investigators are probing the fuselage incident and it’s unclear if Alaska, Boeing or other parts or service suppliers contributed to the mishap. The FAA said Sunday that the Max 9 will remain grounded until the agency is satisfied that the jets are safe.

For all the negative attention that Alaska Airlines has received, the grounding may have little more impact to the carrier’s operations than a bad winter storm.

“I’d look at it as a really bad winter storm for operational impact,” said Savanthi Syth, a Raymond James analyst. By comparison, Delta Air Lines Inc. canceled about 20% of its flights for three days during a December 2022 winter storm, Syth said.

The effect will be somewhat muted by a lull in travel following the winter holidays.

United Airlines Holdings Inc., with 79 Max 9 planes, will suffer the equivalent of “a bad day in Chicago,” one if its major airport hubs, said Bob Mann, president of consultancy R.W. Mann & Co. United has canceled about 204 flights Monday, or about 7% of its total, due to the Max 9 issue, according to FlightAware.com.

United shares rose 1.1% to $42.19.

None of the 177 passengers and crew were seriously injured in the Jan. 5 event, when a portion of fuselage on Alaska Flight 1282 tore loose, leaving a gaping hole in the plane. It was able to return to Portland, Oregon, where it had departed en route to Ontario, California. The National Transportation Safety Board is investigating to determine the cause.

Alaska Air said in an emailed statement that the incident won’t affect its pending $1.9 billion acquisition of Hawaiian Holdings Inc.

“If for some reason it shows up this was Alaska’s negligence, then it could have an impact from a regulatory view,” said Raymond James’ Syth.