Southwest cuts outlook amid Boeing 737 Max jet groundings
Southwest on Wednesday trimmed its revenue outlook for the first quarter by $150 million following the recent grounding of its Boeing 737 Max jets.
Shares of Southwest, the largest operator of the 737 Max 8 jets, fell on the revised forecast.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| LUV | SOUTHWEST AIRLINES CO. | 31.97 | +0.18 | +0.57% |
Now, Southwest expects its operating revenue per available seat mile -- an airline’s passenger-carrying capacity -- to increase in the 2 to 3 percent range, compared with its previous guidance of 3 to 4 percent, according to federal filings.
Boeing operates 34 Boeing 737 Max 8 jets. It was the first North American flight operator to receive a 737 Max 8 delivery.
“Due to the current uncertainty regarding the duration of the MAX groundings and any requirements for reinstatement of the aircraft into service, it is difficult for the company to forecast the impact of the MAX groundings beyond first quarter 2019,” Southwest said in the filing. “The company is proactively managing cancellations, minimizing operational disruptions, re-accommodating customers, and minimizing the impact on its on-time performance.”
The Dallas-based airline became the first U.S. airline to cut its forecast because of the groundings. The U.S. Federal Aviation Administration grounded the jetliner earlier this month following the crash of an Ethiopian-operated Boeing 737 Max, which left 157 people dead. Five months earlier, the aircraft was involved in a Lion Air crash that killed 189 individuals. U.S. regulators have not connected the two incidents but suggested there are similarities.
Boeing is scheduled on Wednesday morning to hold an informational session for more than 200 pilots, technical leaders and regulators regarding its plan to return the model to service, a representative told Fox News.
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As of March 13, the company had 41 remain Max deliveries scheduled for the year, and 221 firm orders beyond 2019.
Southwest reports its quarterly earnings in late April.