(Reuters) – Southwest Airlines said on Thursday it anticipates less than half of the new aircraft deliveries it had previously expected from Boeing in 2024 and will take measures to tighten costs, such as voluntary time off programs, as a buffer.
The airline will also limit hiring and now expects to end the year with about 2,000 fewer employees compared to 2023.
Southwest, a loyal Boeing customer, expects to receive 20 aircraft this year, compared with its previous estimate of 46, pressuring the budget carrier’s plans to expand capacity to tap into a robust demand environment.
It had originally planned on receiving 85 jets in 2024, but has slashed those estimates thrice, including this latest cut.
Reuters had exclusively reported the delivery cuts earlier this month.
Boeing has been under heavy regulatory scrutiny following a Jan. 5 Alaska Airlines mid-air panel blowout that led to probes into the manufacturer’s safety and quality standards in its production processes.
The U.S. FAA has also barred Boeing from expanding the production of its bestseller 737 MAX jet, while uncertainty looms over the certification timelines for its MAX 7 and 10 models.
“The recent news from Boeing regarding further aircraft delivery delays presents significant challenges for both 2024 and 2025,” Southwest CEO Bob Jordan said on Thursday.
The carrier also trimmed its operating revenue expectations for 2024 and now expects a high-single digit growth, compared with its previous expectation of double-digit growth in operating revenues compared with last year.
Southwest reported a loss of $231 million, or $0.39 per share for its first quarter ended March 31, compared to $159 million, or $0.27 per share a year earlier.
The airline will also close operations at four airports to address cost and capacity headwinds.
It has cut its annual capacity forecast and now expects available seat miles to be up about 4%, compared with its previous estimate of about a 6% growth.
Southwest Airlines’ operating revenue rose 10.9%, to $6.33 billion, compared with last year.
(Reporting by Shivansh Tiwary in Bengaluru; Editing by Pooja Desai)
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