Slow production and deliveries of Boeing 737s mean that Southwest will introduce cost-cutting measures, affecting its employee numbers.
Southwest announced its results for the first quarter of this year. The airline had a net loss of $231 million, which amounts to an adjusted loss of 36 cents per share. Financial analysts expected losses of 34 cents per share.
Southwest is experiencing slower revenue growth than anticipated, which has a lot to do with slow deliveries of Boeing aircraft. The airline has now reduced its estimates for aircraft deliveries three times in 2024.
Originally, Southwest banked on picking up 85 new jets from Boeing this year, including its first 737-7s. Now, the certification of this variant (as well as the larger 737-10) looks set to happen in 2025, or later.
Southwest is changing some of these orders to the larger Boeing 737-8, but slow production means that all 737 deliveries are getting much slower. As an all-737 operator, Southwest is suffering more from Boeing’s issues than many other airlines.
Knock-on Effects Of Slow Boeing 737 Deliveries on Southwest
As a result, Southwest will have to limit or even end service to several destinations. The airline will reduce flights to and from Chicago Midway (KMDW) and Atlanta (KATL). But it will completely stop flying to Bellingham (KBLI) in Washington, Cozumel (MMCZ) in Mexico, George Bush Intercontinental (KIAH) in Houston, and Syracuse Hancock (KSYR) in New York State.
These changes will come in August. But the thinning of schedules will have knock-on effects on the airline’s employees. Overall, lagging Boeing deliveries and other market challenges mean that Southwest will end 2024 with 2,000 fewer people on its payroll than in 2023.
The airline has already stopped hiring pilots and cabin crew this year. Southwest CEO Bob Jordan acknowledged the challenging times for the airline but suggested that the company is quick to adjust to its new environment.
“While it is disappointing to incur a first quarter loss, we exited the quarter with healthy profits and margins in the month of March. We are focused on controlling what we can control and have already taken swift action to address our financial underperformance and adjust for revised aircraft delivery expectations.
“I want to thank our more than 74,000 Employees for their continued Warrior Spirit to maintain a reliable and resilient operation as we adapt to aircraft delivery constraints and adjust to slower than planned growth for this year and next.”
