Southwest Airlines Co. plans to cut flying capacity for the full year, halt most hiring and rework schedules after Boeing Co. lowered expected 737 Max deliveries as the plane maker faces regulatory and criminal investigations over safety issues.
The carrier expects a net loss this quarter, and said in a regulatory filing Tuesday that it's reevaluating prior guidance for the full year, including capital spending plans, because of the slowing growth. Hiring already has stopped for "multiple" work groups, including pilots and flight attendants, and Southwest expects to end the year with lower headcount compared to 2023.
The situation highlights how the growing challenges facing Boeing are causing ripples through the airline industry. Southwest reworked its fleet plan last year based on earlier delivery delays, and said Tuesday it now assumes it won't receive any long-awaited Max 7 aircraft this year because the variant hasn't received federal certification. The airline expects 46 deliveries this year of other Max models, down from 79.
The U.S. Justice Department has opened a criminal investigation into a January accident in which a fuselage panel flew off of an almost-new 737 Max operated by Alaska Air Group Inc., and regulators have tightened oversight of the company, capping Boeing's output of its top-selling aircraft.
A temporary grounding of all Max 9s after the incident reduced profits at Alaska Air by $150 million, the carrier said Tuesday. The carrier has returned its full fleet to service and restored its schedule, Alaska said in a separate regulatory filing.
"Full year capacity expectations are still in flux due to uncertainty around the timing of aircraft deliveries as a result of increased Federal Aviation Administration and Department of Justice scrutiny on Boeing and its operations," Alaska said.
At Southwest, schedule changes planned in the second half of the year will reduce capacity at least one percentage point in 2024 compared to 2023 as the aircraft delivery schedule continues "to be fluid."
Southwest's unit revenue this quarter will be flat to up 2%, compared with an earlier forecast for an increase of up to 4.5% on lower-than-expected leisure passenger volumes. Capacity will increase 11%, up from an earlier plan for 10%, and unit costs will increase 6% instead of as much as 7% earlier. Second-quarter bookings are ahead of normal, Southwest said.
The updates came ahead of an industry conference Tuesday in New York featuring many of the largest U.S. airlines.
American Airlines Group Inc. expects a first quarter loss at the low end of prior guidance for a deficit of 15 cents to 35 cents a share, according to a regulatory filing Tuesday. Delta Air Lines Inc. reiterated its current first-quarter financial guidance.
JetBlue Airways Corp. said first-quarter revenue will decline as much as 7.5% from a year ago, compared with a prior outlook for a drop of as much as 9%.
A six-week audit by the Federal Aviation Administration of Boeing's production of the 737 Max jet found dozens of problems throughout the manufacturing process at the plane maker and one of its key suppliers, according to a slide presentation reviewed by The New York Times.
Last week, the agency announced that the audit had found "multiple instances" in which Boeing and the supplier, Spirit AeroSystems, failed to comply with quality-control requirements, though it did not provide specifics about the findings.
The presentation reviewed by the Times, though highly technical, offers a more detailed picture of what the audit turned up. Since the Alaska Airlines episode, Boeing has come under intense scrutiny over its quality-control practices, and the findings add to the body of evidence about manufacturing lapses at the company.
Information for this article was contributed by Mark Walker of The New York Times.