Southwest Airlines loses $150 million amid Boeing 737 Max 8 grounding and other disruptions
Southwest Airlines’ grounding of its 34 Boeing 737 Max 8 jets has contributed to $150 million in lost revenue for the company, according to a new filing with the Securities and Exchange Commission.
The company also revealed it has cancelled 9,400 flights in the first quarter because of weather, groundings and the recent debacle with the airline’s mechanics union. Most of the cancellations — about 3,800 — were due to winter weather but the company said 2,800 were a result of the Boeing 737 Max 8 grounding and another 2,800 came from the mechanics union spat.
The airline said it was actively managing the cancellation and reaccommodating passengers to avoid disruptions, though as a result of the cancellations estimated first quarter annual growth for 2019 has fallen from 3.5 percent to 1 percent.
Southwest recently reached an agreement with its mechanics union the Aircraft Mechanics Fraternal Association (AMFA) that would give them $160 million in retroactive pay and a 20 percent raise effective April 1 after the airline filed a lawsuit against the union alleging they were engaged in a work slow down.
Aviation authorities worldwide grounded all Boeing 737 Max 8 aircraft after the deadly Ethiopian Airlines crash earlier this month that killed 157 people. Boeing is expected to release a software update for its aircraft this week that would address automated flight control functions suspect in both the Ethiopian Airlines crash and the Lion Air crash that killed 189 in October.
Southwest acknowledged in its SEC filing Wednesday that there is still uncertainty around when the grounding order for the 737 Max aircraft will be lifted by the Federal Aviation Administration, and that further impact on revenue beyond the first quarter is possible. The airline expects 41 more Boeing 737 Max 8 planes to be delivered within the year as of March 13.