Southwest Airlines updates 1Q2019 outlook, experiences negative impacts from 737 MAX groundings

    Southwest Airlines announced (27-Mar-2019) it expects approximately 9400 services to be cancelled from mid Feb-2019 to 31-Mar-2019. Approximately 3800 of the expected cancellations will be due to weather and other disruptions, approximately 2800 due to unscheduled maintenance disruptions from contract negotiations with the Aircraft Mechanics Fraternal Association and approximately 2800 due to the grounding of the Boeing 737 MAX 8. Due to the cancellations, the airline’s 1Q2019 ASM growth is expected to be approximately 1% year-on-year, down from the previous estimated growth of between 3.5% and 4%. Southwest noted a higher degree of weather and maintenance disruptions than expected, 737 MAX groundings and softness in leisure passenger demand and yields negatively impacted 1Q2019 revenue by USD150 million. The airline also expects the following adjustments to its 1Q2019 guidance:

    • RASM: Up 2% to 4%, compared to previous guidance of up 3% to 4%. Strong year-on-year RASM growth is still expected for 2Q2019;
    • CASM ex fuel and profit sharing: Up approximately 10%, compared to previous guidance of up approximately 6%;
    • Fuel costs: Up approximately USD2.05 per gallon, compared with previous guidance of between USD2.00 to USD2.05 per gallon. [more – original PR]