Aircraft delivery delays will cause Southwest to cut fall schedule

Delivery delays of Boeing 737 Max aircraft will cause Southwest to pare down its schedule during the fall and early winter. 

Southwest had planned to take delivery of 90 737-8 Max planes this year, but now anticipates receiving just 70 of those planes, the carrier reported during its first quarter earnings call Thursday. 

The reduction won’t impact flight schedules through the summer, because for now Southwest’s capacity constraint is a lack of pilots, chief commercial officer Andrew Watterson said. But by September, pilot hiring will have caught up with Southwest’s fleet capacity, and the delivery shortfall will begin taking a toll.

As a result, the carrier expects to fly 6% to 7% less capacity in the fourth quarter than previously planned. 

The adjustment follows Boeing’s mid-April announcement that parts supplier Spirit AeroSystems used a nonstandard manufacturing process on fittings near the rear of dozens of 737 Max planes. Deliveries are delayed while that work is inspected and repaired. 

Watterson said that the fall reductions won’t impact Southwest’s plan to resume pre-pandemic frequency levels across its network by the end of the year, nor will the reductions impact flying to Hawaii or the 18 new stations the carrier added during the Covid crisis. However, cities such as Denver and Phoenix, where Southwest plans to fly more than it did pre-pandemic, will have those buildups slowed.

Southwest reports a net loss of $159 million 

For the first quarter, Southwest reported a net loss of $159 million. The carrier’s operational meltdown during the holiday season, which caused lost revenue of $380 million during the first quarter due to cancellations of return flights in January, fueled the loss. Reductions in forward bookings were a factor, too. Chief commercial officer Ryan Green said bookings have since returned to a normal pattern.

Southwest reported revenue for the first quarter of $5.7 billion, up 21.6% from a year ago, but $20 million below analyst expectations, according to the investment website Seeking Alpha. 

Operating expenses were up 23.6%, to $6 billion. 

Green said that during the quarter, Southwest gained 1% of managed business travel market share.

“We’re focused on continuing to remove friction and being easier to do business within the managed travel space,” he said.

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