Southwest first airline to cut outlook after Boeing 737 MAX groundings
About 2,800 groundings are due to unscheduled maintenance and the 737 MAX saga; Boeing stock has tumbled 12.3% since the Ethiopia crash
Bengaluru — On Wednesday, Southwest Airlines became the first major airline to formally cut its financial outlook for the year after being forced to pull its new fleet of 34 Boeing 737 MAX planes out of service. The Texas-based airline, which has struggled with maintenance problems and a harsh US winter, estimates it will have canceled 9,400 flights between mid-February and March 31, reducing growth in its number of available seats to just 1% compared to a year ago. This compares with a forecast of about 3.5% to 4% in late January. The reduction also led it to cut growth in another closely watched measure — revenue per available seat mile (RASM) — by a full percentage point. Overall, it estimates it will lose $150m in revenue in the quarter compared to previous expectations. “[We] experienced softness in passenger demand and bookings related to the government shutdown, resulting in an estimated $60m negative revenue impact in first quarter 2019,” Southwest said. “Trends have also be...
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