Southwest Airlines announced on Tuesday that it will need to adjust its capacity plans and reassess its financial projections for the year due to delivery delays from Boeing, its primary aircraft supplier.
According to the Dallas-based carrier, Boeing informed Southwest’s leadership that it should anticipate receiving 46 Boeing 737 Max 8 planes this year, a decrease from the previously expected 58.
Southwest had originally anticipated Boeing to deliver 79 Max planes, which also included some of the smallest model, the Max 7, pending certification from the Federal Aviation Administration (FAA).
As a result of these delays, Southwest stated in a filing that it is “reevaluating all prior full year 2024 guidance, including the expectation for capital spending.”
Southwest’s remarks, made before an industry conference hosted by JPMorgan on Tuesday, underscore the ongoing impact of Boeing’s quality control issues and production challenges on its key customers.
“Boeing needs to become a better company,” remarked Southwest CEO Bob Jordan at the conference.
Similarly, Alaska Airlines noted in a filing on Tuesday that its 2024 capacity is uncertain due to the timing uncertainty of aircraft deliveries amidst increased scrutiny from the FAA and Department of Justice on Boeing and its operations.
Last week, United Airlines informed its staff of a pause in pilot hiring this spring due to delayed aircraft deliveries from Boeing.
Southwest disclosed that it has suspended the hiring of pilots, flight attendants, and other staff this year, anticipating a lower headcount by the end of 2024 compared to the previous year.
Following these announcements, Southwest shares declined nearly 15% on Tuesday. The airline also reported weaker-than-expected leisure bookings in the first quarter and revised its unit revenue forecast to be flat to up no more than 2% compared to the previous year, down from the initial estimate of up to 4.5% growth in January.
“We are squarely focused on implementing changes to strengthen quality across our production system and taking the necessary time to deliver high-quality airplanes that meet all regulatory requirements,” Boeing stated in response.
“We continue to stay in close contact with our valued customers about these issues and our actions to address them.”
