Southwest Airlines announced on Tuesday that it would need to adjust its capacity projections and reassess its financial outlook for the year due to delays in aircraft deliveries from Boeing, its primary aircraft supplier.
According to Southwest, Boeing notified the airline’s leadership that it should anticipate receiving 46 Boeing 737 Max 8 aircraft this year, a decrease from the previously expected 58.
Initially, Southwest had anticipated delivery of 79 Max planes, including the smaller Max 7 model, which is still awaiting certification from the Federal Aviation Administration (FAA).
In response to these delays, Southwest stated in a filing that it is “reassessing all previous full-year 2024 guidance, including capital expenditure expectations.”
Southwest’s announcement, made ahead of an industry conference hosted by JPMorgan on Tuesday, underscores the impact of Boeing’s ongoing quality control issues and production challenges on its major customers.
“Boeing needs to enhance its operations,” remarked Southwest CEO Bob Jordan during the conference.
Similarly, Alaska Airlines disclosed in a filing on Tuesday that its 2024 capacity is uncertain due to delays in aircraft deliveries stemming from increased scrutiny by the FAA and the Department of Justice on Boeing and its operations.
Last week, United Airlines informed its staff that it would need to halt pilot recruitment this spring due to delayed aircraft deliveries from Boeing, as reported by CNBC.
Southwest also revealed that it has suspended hiring of pilots, flight attendants, and other personnel this year and anticipates a reduction in headcount by the end of 2024 compared to the previous year.
Southwest’s stock experienced a nearly 15% decline on Tuesday.
The airline attributed weaker-than-expected leisure bookings in the first quarter and projected unit revenue to remain flat or increase by no more than 2% compared to the previous year, down from the January estimate of up to 4.5%.
“We are fully committed to implementing measures to enhance quality throughout our production processes and ensuring that we deliver aircraft of the highest standards that comply with all regulatory requirements,” Boeing stated in response.
“We maintain close communication with our valued customers regarding these issues and the steps we are taking to address them.”
