Southwest Airlines is halting operations at four airports and cutting flights from others in an effort to cut costs as its expansion plans were also hampered by fewer-than-expected deliveries of planes from Boeing.
The airline, which flies only Boeing 737 planes, said Thursday that delays from the plane maker contributed to its struggles. Southwest reported a first-quarter loss of $231 million, worse than analysts had expected, sending its stock price down 10% in early trading.
To cut costs, Southwest said, it will cease operations at four airports starting in early August: Bellingham International Airport in Washington State, Cozumel International Airport, George Bush Intercontinental Airport in Houston and Syracuse Hancock International Airport . It will also “significantly restructure” its flights from other airports, notably by reducing flights to Hartsfield-Jackson Atlanta and Chicago O’Hare International Airports.
Southwest CEO Bob Jordan said in an interview CNBC on Thursday that the decision to pull out of those airports was not related to delays in receiving new Boeing planes, although those delays were causing other problems.
“The network’s actions really have nothing to do with Boeing’s delay. We undertake network actions independently,” he said. “Now, Boeing’s delays are very painful. They’re making us redesign, they’re hurting us on the revenue front, they’re making us inefficient, and we’re working on all of that.”
The airline’s woes were another major result of the Jan. 5 incident, when a panel on a Boeing 737 Max 9 jet exploded during an Alaska Airlines flight. The event led to the temporary grounding of the popular jet model and a production slowdown as Boeing faced increased regulatory scrutiny over its quality control.
Southwest said it expects to take delivery of 20 new Boeing jets this year, down from the 46 previously expected. The timing of deliveries depends on the Federal Aviation Administration, which has curbed Boeing’s production while bringing quality issues under control.
“Recent news from Boeing of further aircraft delivery delays presents significant challenges for both 2024 and 2025,” Mr Jordan said in a statement.
The airline said it would cut back on hiring and end the year with 2,000 fewer employees. It also said it planned to take fewer planes out of service than it had previously planned.
On Wednesday, Boeing reported a first-quarter loss of $355 million, a sharp setback but smaller than analysts had expected.
Demand for travel remains strong, and while other airlines struggle to manage production slowdowns at Boeing, Southwest appears to be most affected by its competitors, many of which also buy planes from Airbus.
American Airlines reported a quarterly loss of $312 million on Thursday, but provided a better-than-expected forecast for current-quarter earnings and maintained its growth target for the year.
Alaska Airlines and United Airlines recently reported smaller-than-expected losses for the first three months of the year and said they would have reported a profit if the Boeing 737 Max 9 had not grounded, even briefly, after the Jan. 5 flight. Delta Air Lines was the only major airline to post a profit in the first quarter.
Niraj Chokshi contributed to the report.