Southwest cuts sales outlook as 737 MAX grounding hits US carriers

phys.org | 3/27/2019 | Staff
urbanagirl3 (Posted by) Level 3
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Southwest Airlines trimmed its revenue estimate Wednesday, citing flight cancellations due to the Boeing 737 MAX grounding among key factors dragging on earnings.

Southwest, which focuses primarily on travel within the United States, cancelled 9,400 flights in the first quarter, with the Boeing grounding accounting for about a third of that number, the company said in a securities filing.

Disclosure - Hit - Boeing - Debacle - US

The disclosure highlighted the hit from the Boeing debacle to US airlines following a Federal Aviation Administration order on March 13 after two deadly crashes involving the aircraft.

Larger carriers American Airlines and United Continental have also signaled a likely hit to earnings resulting from cancelled 737 MAX flights.

Percent - Southwest - Flights - Percent - Maintenance

About 40 percent of Southwest's flights were cancelled due to weather, with the remaining 30 percent resulting from maintenance disruptions connected to talks with a mechanics union.

In total, these cancelations will result in $150 million in lost revenues in the first quarter, on top of the previous hit of $60 million due to lost business from the government shutdown, the airline said.

Hit - Flights - Shares - Southwest - US

Despite the hit from the cancelled flights, shares of Southwest and other US carriers rose Wednesday after Southwest described solid consumer demand.

Dallas-based Southwest has grounded all 34 of its 737 MAX 8 aircraft and also has 41 remaining MAX deliveries scheduled in 2019, with more than 300 orders and options beyond this year.

Uncertainty - Duration - MAX - Groundings - Requirements

"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...
(Excerpt) Read more at: phys.org
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