Southwest Airlines cuts capacity, and rethinks 2024 financial forecast, citing Boeing problems

Daily News
3 Min Read
Southwest Airlines cuts capacity, and rethinks 2024 financial forecast, citing Boeing problems

Boeing 737 MAX airplanes are seen parked at a Boeing facility on August 13, 2019 in Renton, Washington.

David Ryder | Getty Images

Southwest Airlines said Tuesday that it will have to trim its capacity plans and reevaluate its financial forecasts for the year, citing delivery delays from Boeing, its sole supplier of airplanes.

The Dallas-based airline said Boeing informed Southwest’s leaders that it should expect 46 Boeing 737 Max 8 planes this year, down from 58. Southwest had expected Boeing to deliver 79 Max planes, including some of the smallest model, the Max 7, which hasn’t yet won certification from the Federal Aviation Administration.

Because of the delays, Southwest said in a filing that it is “reevaluating all prior full year 2024 guidance, including the expectation for capital spending.”

Southwest’s statements, ahead of a JPMorgan industry conference on Tuesday, are the latest sign of how Boeing’s quality control crisis and production problems — both before and after a door plug blew out of an Alaska Airlines flight in January — are weighing on some of its best customers.

Alaska Airlines said in a filing Tuesday that its 2024 capacity is “in flux due to uncertainty around the timing of aircraft deliveries as a result of increased Federal Aviation Administration and Department of Justice scrutiny on Boeing and its operations.”

Last week, United told staff that it would have to pause pilot hiring this spring because of late-arriving aircraft from Boeing, CNBC reported. Southwest said it has stopped hiring pilots, flight attendants and other employees this year and expects to end 2024 with lower headcount than last year.

Southwest shares were down more than 7% in premarket trading. The airline said leisure bookings in the first quarter were weaker than expected and forecast unit revenue to be flat to up no more than 2% compared with a year earlier, down from a January estimate of a rise of as much as 4.5%.

Boeing didn’t immediately respond to a request for comment.

Don’t miss these stories from CNBC PRO:

Share This Article
Leave a comment