Southwest Airlines on Thursday reported a wider loss for the first quarter than in the same period last year and warned against it Boeings Flight delays will hamper growth until 2025.
The airline expects to increase capacity by 4% this year, compared to a 6% expansion planned. Growth of 8 to 9% and a decline in sales of up to 3.5% were forecast for the second quarter.
Shares of Southwest fell more than 9% Thursday afternoon, trading at a nearly five-month low.
The airline said in a quarterly filing that it now expects to deliver just 20 Boeing 737 Max 8 planes, down from 46 previously forecast. The airline will now delay the retirement of some of its older Boeing aircraft and cut costs, including by offering employees voluntary time off. Southwest said it expects to end the year with 2,000 fewer employees than at the end of 2023.
Some airports are suspending operations, including in Syracuse, New York; Bellingham International Airport in Washington; Cozumel International Airport; and Houston’s George Bush Intercontinental. The airline is also reducing service in Atlanta and Chicago O’Hare International Airport.
“Achieving our financial goals is an immediate imperative,” CEO Bob Jordan said in an earnings release. “Recent news from Boeing of further aircraft delivery delays presents significant challenges for both 2024 and 2025. We are responding and planning quickly to mitigate the operational and financial impacts while maintaining reliable and reliable flight schedules for our customers.”
The Dallas-based airline operates an all-Boeing 737 fleet and has been hit hard by Boeing aircraft delays stemming from safety and quality crises.
The airline had previously warned that slower Boeing deliveries would hinder its growth.
Southwest is not only rethinking its network, but also its business model. Jordan told CNBC that the airline may do away with the one-class cabin and open seating. While he said no decisions have been made yet, it would represent a huge change in the way big rivals like it United And delta are reporting strong sales growth in premium seats.
According to LSEG consensus estimates, Southwest performed as follows in the first quarter compared to Wall Street expectations:
- Loss per share: 36 cents adjusted versus an expected loss of 34 cents
- Revenue: $6.33 billion versus expected $6.42 billion
Southwest lost $231 million, or 39 cents per share, in the first three months of the year, compared with a loss of $159 million, or 27 cents per share, a year earlier as the company struggled with the fallout from the holiday crisis .
Adjusted for one-time items, including costs related to labor contracts and fuel, Southwest lost $218 million, or 36 cents per share.
Revenue rose nearly 11% to $6.33 billion, slightly below analyst estimates compiled by LSEG.
Correction: Southwest Airlines’ revenue of $6.33 billion was slightly below analyst estimates compiled by LSEG.
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2024-04-25 18:29:52
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