Southwest Airlines Sees Q1 Loss, Fewer Deliveries Amid Boeing Issues; Stock Down

(RTTNews) - Southwest Airlines Co., in a filing with the U.S. Securities And Exchange Commission, on Tuesday said it sees a net loss in its first quarter 2024, and trimmed forecast for unit revenues amid challenges with Boeing Co., while capacity outlook was raised.

Further, the airline is now expecting fewer deliveries of new aircraft from Boeing in 2024.

On the New York Stock Exchange, Southwest Airlines shares were losing more than 11 percent to trade at $30.05.

Regarding timing of expected aircraft deliveries, the company said Boeing has advised that deliveries for fiscal 2024 will now be around 46 737-8 aircraft, a reduction from the previous expectation of 79 737 MAX aircraft deliveries, which included 58 -8 aircraft.

Further, the company now assumes no 737-7 aircraft deliveries and continues to assume no -7 aircraft are placed into service this year based on the current certification status.

Amid Boeing's continued challenges, Southwest Airlines expects the delivery schedule to be fluid and, therefore, plans to reduce capacity and re-optimize schedules, primarily for the back half of 2024. This is likely result in at least a one point reduction to the company's full year 2024 capacity plans on a year-over-year basis.

In light of further second half 2024 planned capacity reductions, the company has halted hiring classes for multiple workgroups, including Pilots and Flight Attendants, and now intends to end the year with headcount down on a year-over-year basis, compared with its previous expectation of flat to down, year-over-year.

Regarding the first quarter, the company said the loss expectation is based on current trends, while it still expects a return to profitability in March.

For the first quarter, capacity in available seat miles or ASMs are now expected to be up around 11 percent year-over-year, compared to previously expected growth of around 10 percent.

Meanwhile, unit revenues are now projected to be flat to up 2 percent, compared to previous view of a growth of 2.5 percent to 4.5 percent. The decrease in outlook mainly reflects higher than expected completion factors in February and March, as well as lower than expected close-in leisure passenger volume.

The first quarter 2024 operational performance has been strong, thus far, and flight cancellations have been lower than was expected in late January, the firm noted.

Looking ahead, bookings for second quarter 2024 are currently ahead of seasonally normal trends. The company expects to deliver all-time record operating revenues for the quarter, as well as positive year-over-year RASM trends to continue throughout the year.