The Dallas-based airline, which only has Boeing 737s in its fleet, is severely impacted by Boeing’s aircraft delays as a result of its quality and safety issues.
In Short
- Southwest Airlines’ revenue grew by over 11% to $6.33 billion but fell short of LSEG’s projections.
- Boeing’s aircraft delays are hindering Southwest’s expansion plans until 2025.
- The airline reduced its Boeing 737 Max 8 aircraft expectation from 46 to 20.
TFD – Southwest Airlines faces challenges as Boeing’s delays affect its revenue growth, despite a notable 11% increase. Discover how this impacts the airline’s future plans.
Boeing’s aircraft delays will impede Southwest Airlines’ expansion until 2025, the airline warned on Thursday as it revealed a larger first-quarter loss than it did during the same period previous year.
The airline had planned to increase capacity by 6%, but now intends to enhance capacity by 4% this year. It predicted growth of 8% to 9% and a 3.5% decline in sales for the second quarter.
In early trade, Southwest’s stock fell by about 9%.
In a quarterly report, the airline stated that it has reduced its previous expectation of 46 Boeing 737 Max 8 aircraft to just 20. The airline is reducing expenses by providing optional time off to employees and has decided to postpone decommissioning several of its older Boeing aircraft. According to Southwest, it will have 2,000 fewer workers at the end of the year than it did at the end of 2023.
Additionally, it will stop operations at a few airports, including the George Bush Intercontinental in Houston, Bellingham International Airport in Washington, Cozumel International Airport, and Syracuse, New York.
According to CEO Bob Jordan, “Achieving our financial goals is an immediate imperative” in a release of earnings. “The latest information from Boeing about more aircraft delivery delays poses serious difficulties for 2024 and 2025. In order to minimize the operational and financial effects while preserving predictable flight schedules for our customers, we are responding and rescheduling swiftly.
The Dallas-based airline, which only has Boeing 737s in its fleet, is severely impacted by Boeing’s aircraft delays as a result of its quality and safety issues.
The airline had before issued a warning that its expansion was being hampered by delayed Boeing deliveries.
Based on LSEG consensus projections, here’s how Southwest fared in the first quarter in relation to Wall Street expectations:
In the first three months of this year, Southwest lost $231 million, or 39 cents per share, as opposed to $159 million, or 27 cents per share, in the same period last year when it was still recovering from its holiday disaster.
After excluding one-time expenses such as fuel and labor contract costs, Southwest nevertheless lost $218 million, or 36 cents per share.
Revenue increased by over 11% to $6.33 billion, falling just short of LSEG’s analysts’ projections.
Conclusion
Despite revenue growth, Southwest Airlines grapples with Boeing’s delays, leading to operational adjustments and challenges in meeting future goals.
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