Southwest Airlines is cutting several destinations from its network, pushing employee time-off programmes, and considering seating changes after surging costs and Boeing 737 Max delivery delays pushed it to a $231 million first-quarter loss.
The Dallas-based airline has also converted orders for 19 of the uncertificated 737 Max 7 into orders for the same number of larger Max 8s, it said on 25 April.
Southwest has “made the difficult decision to close our operations” at four locations, it says: Bellingham, Washington; Houston George Bush Intercontinental, Texas; Syracuse, New York; and Cozumel in Mexico.
“To improve our financial performance, we have intensified our network optimisation efforts to address under-performing markets,” says Southwest chief executive Bob Jordan.
Southwest flies from Houston Intercontinental to Dallas, Denver, Chicago, Las Vegas, Nashville and Orlando, according to Cirium data. It connects Bellingham to Denver, Oakland and Las Vegas, and flies from Cozumel to Austin, Denver and Houston. From Syracuse, Southwest flies to Baltimore, Orlando and Tampa, Cirium shows.
Jordan says the airline is also “implementing cost-control initiatives, including limiting hiring and offering voluntary time-off programmes”. Additionally, the airline is studying “product preferences and expectations, including onboard seating and our cabin”, Jordan adds.
Southwest’s $231 million first-quarter loss compares to its loss of $159 million in the same period last year. The airline’s operating costs jumped 12% year on year to $6.7 billion, with maintenance expenses surging 50%, and salary, wage and benefit expenses up 19%.
Southwest expects “similar cost pressures throughout the year”, predicting its full-year cost per available seat mile – excluding fuel, special-item and profit-sharing expenses – will be 7-8% higher than the 2023 figure.
Southwest’s operating revenue in the first quarter increased 11% year on year to $6.3 billion.
“The recent news from Boeing regarding further aircraft delivery delays presents significant challenges for both 2024 and 2025,” says Jordan. “We are reacting and re-planning quickly to mitigate the operational and financial impacts while maintaining dependable and reliable flight schedules for our customers.”
Its conversion of deals for the Max 7 to the Max 8 leaves Southwest with 288 Max 7s on order, down from 307.
The Max 7’s certification is already badly delayed. Boeing had hoped to have the jet cleared by the Federal Aviation Administration this year, but in January said the milestone would be delayed again because it needs to redesign the narrowbody’s engine anti-ice system, a project it says will take about one year.
