Southwest Airlines is off to a rough start in 2019, with the
carrier putting a $150 million price tag on first-quarter flight cancellations.
From mid-February through the end of March, Southwest
expects it will have compiled about 9,400 flight cancellations due to weather,
maintenance disruptions and the grounding of its Boeing 737 Max 8 aircraft.
All told, Southwest said it will cost the company
approximately $150 million in lost revenue. That's on top of an estimated $60
million in lost revenue from reduced passenger demand attributed to the partial
federal government shutdown in first few weeks of 2019.
Of the cancellations, approximately 3,800 are
weather-related, 2,800 are due to maintenance disruptions arising from a
contentious labor relationship with the Aircraft Mechanics Fraternal
Association (AMFA), and 2,800 are due to the grounding of the Boeing 737 Max,
Southwest said.
Because of the cancellations, Southwest estimates that
first-quarter capacity will grow just 1%, down from previous guidance of 3.5%
to 4%.
Southwest was forced to ground its 34 Max jets on March 13,
when the FAA issued an emergency order for all U.S. airlines to stop flying
them. A worldwide grounding of the Boeing 737 Max followed the fatal Ethiopian
Airlines crash on March 10.
It appears that Southwest's dispute with AMFA may be over,
as the sides reached a tentative agreement on a pay raise on March 13.
In early March, Southwest sued AMFA, saying that the union
was deliberately causing flight cancellations by encouraging mechanics to write
up maintenance issues that have no impact on flight safety.
Southwest and AMFA had been battling over a labor contract
for the past six years. The tentative deal, on which AMFA members have yet to
vote, would result in an estimated $42 million in additional worker pay and
benefits in 2019, Southwest said.