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Key Takeaways
- Southwest Airlines had a larger first-quarter loss and lower revenue than expected as it warned about the impact of fewer Boeing plane deliveries.
- The carrier will limit hiring and cease operations at four airports to cut costs.
- The news sent shares to their lowest level this year.
Shares of Southwest Airlines (LUV) slumped to their lowest level this year Thursday as the carrier posted worse-than-expected quarterly results, cut its guidance, and took steps to save money as its growth was hampered by problems with deliveries of Boeing (BA) aircraft.
The airline reported an adjusted first-quarter loss of $0.36 per share, wider than forecasts. While total operating revenue was up 10.9% year-over-year to $6.33 billion, that was also worse than estimates.
Chief Executive Officer (CEO) Bob Jordan said that achieving the company’s financial goals “is an immediate imperative.” He added that Southwest has “already taken swift action to address our financial underperformance and adjust for revised aircraft delivery expectations.”
Among the steps underway were a limit on hiring and the ending of operations in four cities: Bellingham International Airport in Washington state, Cozumel International Airport in Mexico, George Bush Intercontinental Airport in Houston, and Syracuse Hancock International Airport in New York state.
Southwest noted that because of production problems at Boeing related to a January midair incident, it expects approximately 20 Boeing 737-8 deliveries and 35 Boeing aircraft retirements this year, compared to its previous plan for approximately 46 737-8 deliveries and 49 aircraft retirements.
Jordan explained that the delay in deliveries “presents significant challenges for both 2024 and 2025.”
Southwest also lowered its anticipated capacity growth this year to about 4% from the previous rise of about 6%.
Shares of Southwest were down 8.5% to $26.82 as of 1:33 p.m. ET Thursday after earlier trading at $26.00, their lowest level of 2024.