One of the USA’s major airlines, Southwest, has said it is in damage limitation mode due to the financial fallout of delayed deliveries from Boeing, and needs to reduce wages and stop serving underperforming routes.
With $231 million lost over 2024’s first quarter, according to the carrier’s latest “disappointing” earnings report, the news led Southwest’s CEO, Bob Jordan, to attempt to reassure investors. He spoke of action “to mitigate the operational and financial impacts” of new aircraft certification and manufacturing delays at Boeing, “while maintaining dependable and reliable flight schedules.”
What’s going on at Boeing?
Boeing’s issues are by now well-known. Whistleblower claims of rushed manufacturing processes and skipped safety checks have coincided with a series of stock market losses and unfortunate headlines about mid-flight technical issues, including noses and wheels falling off planes, engines catching fire, and sealed doors blowing out mid-air.
Amid all this, the manufacturer’s production of Max 9s was halted and increased oversight and checks by the FAA is causing delays neither the supplier nor its clients can afford.
Southwest “focused on controlling what we can”
Sure enough, Boeing’s recent announcement of further aircraft delivery delays “presents significant challenges for both 2024 and 2025,” Jordan added. Southwest is therefore “focused on controlling what we can control and have already taken swift action to address our financial underperformance and adjust for revised aircraft delivery expectations,” he said.
That means closures, with the aim of minimising losses from underperforming markets.
Which airports is Southwest pulling out of?
For the first time since 2019, the Texas-headquartered carrier is pulling operations from three US airports: the Bellingham International Airport in Washington; the Syracuse Hancock International Airport in New York; and George Bush Intercontinental Airport in Houston (though it will retain operations at Houston’s William P. Hobby Airport).
In addition, it is slashing schedules in half at Hartsfield-Jackson Atlanta International Airport and Chicago O’Hare International Airport will lost more than 30% of flights.
Overseas, Southwest is also withdrawing from Cozumel International Airport in Mexico.
Over 2,000 jobs “gone”
Southwest is also following in United’s footsteps with other cost cutting measures, such as a hiring freeze on new pilot recruitment, and asking employees to take unpaid leave – strategies it says will achieve cuts in employee numbers of around 2,000, without the need for any furloughs or layoffs.
The company is also considering boosting its efficiency and capacity figures through creative cabin management, with Jordan telling CNBC, “We’re looking into new initiatives, things like the way we seat and board our aircraft.”
