The albatross of the Boeing 737 Max grounding continues to
hang around the neck of Southwest Airlines.
CEO Gary Kelly on Thursday estimated the Max groundings cost
Southwest $828 million in operating income in 2019. Besides the 34 Max planes
in its fleet, Southwest had expected that number to increase to 75 by the end
of last year along with another 38 deliveries this year, so the grounding
represents about a tenth of its fleet, he said during the airline’s Q4 earnings
As other carriers have indicated, Boeing’s recent pushback
of its approval timeline means Southwest’s current plan to return the Max to
service by early June is “unworkable,” Kelly said. Southwest is losing market share
due to the grounding but expects to make it up once the aircraft returns to
service, he said.
“The timing remains uncertain, but we’re working through all
of that right now,” Kelly said in an earnings call. “I’m confident about the
Max, and more importantly, our pilots are confident about the Max. We want it
to return to service so we can run a great operation and continue to serve our
customers very well and better.”
Kelly dismissed recent media chatter that its grounded fleet
would force Southwest to make an acquisition, such as JetBlue. “I do not agree
that the Max crisis compels us to acquire another carrier, and we would not
overpay,” he said.
Southwest Airlines’ fourth-quarter revenue inched up 0.4% to
a quarterly record of $5.7 billion, despite lower capacity.
Passenger revenue declined 0.1% to $5.3 billion. That was
offset by an 8.8% increase in other revenue.
Traffic was down 1.5% as capacity declined 0.9%. Load factor
declined 0.4 percentage points to 83.1%. Southwest’s average fourth-quarter
passenger fare increased 0.3% to $154.94.
Southwest reported net income of $514 million for the
quarter, down from $654 million in the fourth quarter of 2018. For the full
year, Southwest’s net income was $2.3 billion, down 6.7%.
Source: Business Travel News