Southwest Airlines Cuts Capacity And Rethinks 2024 Financial Outlook

(CTN News) – Due to delivery delays by Boeing, Southwest Airlines’ sole supplier of aircraft, it will have to reevaluate its capacity plans and financial forecasts for the year.

As a result of Boeing’s communication to Southwest Airlines leaders, Southwest Airlines expects to receive 46 Boeing 737 Max 8 aircraft this year, down from 58 in 2017.

In addition to 79 Max airplanes, Southwest had expected Boeing to deliver some of the smallest models, such as the Max 7, which has not yet been approved by the Federal Aviation Administration.

Southwest Airlines stated in a filing that it is reviewing all prior full year guidance, including capital spending expectations, as a result of the delays.

Southwest Airlines statements, ahead of a JPMorgan industry conference on Tuesday, provide further evidence that Boeing’s quality control crisis and production issues – both prior to and following the January blowout of an Alaska Airlines door plug – are negatively affecting some of its most valuable customers.

At the conference, Southwest Airlines CEO Bob Jordan stated that Boeing must become a better company.

The airline reported in a filing on Tuesday that its 2024 capacity is “in flux” due to uncertainty over the timing of aircraft deliveries due to increased scrutiny by the Federal Aviation Administration and Department of Justice.

According to News, United told employees last week that it would have to halt pilot recruitment this spring due to late Boeing aircraft arrivals.

According to Southwest Airlines, it has ceased hiring pilots, flight attendants, and other employees this year and expects to have a lower headcount at the end of 2024 than it had at the beginning.

Southwest shares fell by nearly 15% on Tuesday. In the first quarter, leisure bookings were weaker than expected and the airline forecast unit revenue to rise by no more than 2%, down from a January estimate of up to 4.5%.

We are focused on strengthening quality throughout our production system and taking the time necessary to deliver high quality airplanes that comply with all regulatory requirements, Boeing stated in a statement.

The company continues to keep in close contact with its valued customers regarding these issues and the actions it is taking to resolve them.

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