Southwest Airlines suspends operations at four airports and reduces flights from others in a bid to cut costs after lower-than-expected aircraft deliveries from Boeing curtailed growth plans are doing.
The airline, which operates only Boeing 737s, said Thursday that delays at the beleaguered aircraft maker contributed to its struggles. Southwest Airlines reported a first-quarter loss of $231 million, worse than analysts expected, and its stock fell 10% in early trading.
Southwest Airlines announced that it will suspend operations at four airports starting in early August: Bellingham International Airport in Washington state, Cozumel International Airport in Washington state, George Bush Intercontinental Airport in Houston, and Syracuse Hancock International Airport to cut costs. Flights from other airports will also be “significantly restructured,” with fewer flights at Hartsfield-Jackson Atlanta International Airport and Chicago O'Hare International Airport.
Southwest Airlines CEO Bob Jordan said in an interview with CNBC on Thursday that the decision to withdraw from these airports was unrelated to Boeing's delays in accepting new planes, but that the delays caused other problems. Said to be causing it.
“The actions on the network have nothing to do with Boeing's delays. We are taking network actions regardless,” he said. “Right now, the Boeing delays are very painful. They force us to change plans, they hurt us revenue-wise, they create inefficiencies, and we're grappling with all of that. .”
The company's woes are a further fallout from the Jan. 5 incident in which a panel on a Boeing 737 Max 9 jet exploded during an Alaska Airlines flight. The incident has left Boeing facing increased regulatory scrutiny of its quality controls, leading to a temporary grounding of the popular jet model and slowing production.
Southwest Airlines said it expects to buy 20 new Boeing jets this year, down from the 46 it previously expected. The timing of deliveries depends on the Federal Aviation Administration, which has limited Boeing's production while managing quality issues.
“Recent news from Boeing regarding further aircraft delivery delays presents significant challenges for both 2024 and 2025,” Jordan said in a statement.
The company announced it would limit hiring and end the year with 2,000 fewer employees. It also said it plans to ground fewer aircraft than previously planned.
On Wednesday, Boeing reported a first-quarter loss of $355 million, a significant setback even though it was smaller than analysts expected.
Travel demand remains strong and while other airlines are trying to cope with Boeing's production slowdown, Southwest Airlines appears to have been more adversely affected than its competitors, many of which also buy planes from Airbus. ing.
American Airlines on Thursday reported a quarterly loss of $312 million, but said it expected better-than-expected profits this quarter and maintained its growth target for the year.
Alaska Airlines and United Airlines recently reported narrower-than-expected losses for the first three months of this year, and would have made a profit had the Boeing 737 Max 9 not been grounded, albeit briefly, after a Jan. 5 flight. He said that he would have accounted for it. Delta Air Lines was the only major airline to report a profit in the first quarter.
Niraj Chokshi Contributed to the report.