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Southwest Airlines says bookings strong even as 737 MAX grounded

26 April 2019 01:25 (UTC +04:00)

Southwest Airlines Co forecast better-than-expected second-quarter revenue growth on Thursday, citing demand from leisure and business customers, even though it is uncertain when its grounded Boeing 737 MAX jets will return to service, ONA reports citing Reuters.

The No. 4 U.S. carrier is the biggest user of the Boeing Co aircraft that were grounded worldwide in March following two fatal crashes on other airlines.

Southwest’s 34 737 MAX aircraft represent less than 5 percent of daily flights on its fleet of 753 aircraft, but the grounding has forced the cancellation of thousands of flights and weighed on costs.

The Dallas-based carrier said it lost more than $200 million in revenue during the first quarter after canceling more than 10,000 flights because of the worldwide MAX grounding, partial U.S. government shutdown, winter storms and maintenance disruptions.

Southwest has taken the MAX out of its flying schedule through Aug. 5 as it waits for Boeing to submit a software fix and new training guidelines to global regulators for review.

The timeline and eventual cost of getting the MAX back into service is a “prominent wild card” for Southwest, JPMorgan analyst Jamie Baker said, given the possibility of international regulators disagreeing about new training requirements, which could be expensive.

Southwest said it was talking to customers to understand how they feel about the MAX following the crashes. While some passengers may be intimidated to fly for a short period of time, executives said the airline’s brand and operations remained intact.

The low-cost carrier, which launched service to Hawaii in March, expects closely watched unit revenue to grow by 5.5 percent to 5.7 percent year-on-year in the second quarter. It reported only 2.7 percent growth in the first-quarter.

Its shares were up 0.3 percent at $53.14.

Southwest reported first-quarter net profit of $387 million, or 70 cents per share, compared with $463 million, or 79 cents per share, in the year-ago quarter.