Southwest Airlines is ceasing operations at four airports and reducing flights from others in an effort to cut costs after its growth plans were limited by fewer than expected plane deliveries from Boeing.
The airline, which only flies Boeing 737 planes, said Thursday that delays at the beleaguered plane maker were behind its problems. Southwest reported a first-quarter loss of $231 million, worse than analysts expected, sending its stock price down 10 percent in early trading.
To cut costs due to its restricted growth plans, Southwest said it would cease operations at four airports starting in early August: Bellingham International Airport in Washington state, Cozumel International Airport, George Bush Intercontinental Airport in Houston and Syracuse Hancock International Airport. It would also “significantly restructure” its flights from other airports, notably reducing flights at Hartsfield-Jackson Atlanta International Airport and Chicago O’Hare International Airport.
The airline’s problems were another ripple effect from the Jan. 5 incident, when a panel on a Boeing 737 Max 9 plane exploded in midair during an Alaska Airlines flight. The event led to the temporary suspension of the popular plane model and a slowdown in production as Boeing has faced increased regulatory scrutiny over its quality control.
Southwest said it expected to take delivery of 20 new Boeing planes this year, up from the 46 it had previously planned. The delivery schedule depends on the Federal Aviation Administration, which has limited Boeing production while monitoring quality problems.
“Boeing’s recent news of further aircraft delivery delays presents significant challenges for both 2024 and 2025,” Southwest CEO Bob Jordan said in a statement.
The airline said it would limit hiring and end the year with 2,000 fewer employees. It also said it planned to take fewer planes out of service than it had previously planned.
On Wednesday, Boeing reported a first-quarter loss of $355 million, a sharp setback that was smaller than analysts expected.
Travel demand remains strong, and while other airlines are trying to manage the production slowdown at Boeing, Southwest appears harder hit than its rivals, many of which also buy planes from Airbus.
American Airlines on Thursday reported a quarterly loss of $312 million, but provided a better-than-expected profit forecast in the current quarter and maintained its growth target for the year.
Alaska Airlines and United Airlines recently reported smaller-than-expected losses in the first three months of the year and said they would have reported profits if the Boeing 737 Max 9 had not been grounded. Delta Air Lines was the only major airline to report a profit in the first quarter.