Southwest Airlines is to end the year with 2,000 fewer employees than at the end of 2023 as the airline battles worse than anticipated delays for new 737MAX jets from embattled aircraft manufacturer Boeing, CEO Bob Jordan announced on Thursday.
The Dallas-based carrier also said it would slow hiring and offer a variety of voluntary time off programs as it works to contain mounting costs, which pushed Southwest to a net loss of $231 million in the first three months of 2024.
Hoping to take advantage of rampant demand for air travel, Southwest had originally planned to take delivery of 85 new 737MAX jets this year, but increased regulator scrutiny at Boeing following the mid-cabin exit plug blowout on an Alaska flight earlier this year forced Southwest to revise that delivery figure down to 46 planes.
Now, Southwest is once again revising its annual delivery estimate down to just 20 aircraft for the whole of 2024.
“The recent news from Boeing regarding further aircraft delivery delays presents significant challenges for both 2024 and 2025,” Jordan commented on Thursday.
“We are reacting and replanning quickly to mitigate the operational and financial impacts while maintaining dependable and reliable flight schedules for our Customers,” Jordan continued.
In an effort to improve its financial performance, Jordan said Southwest would be forced to completely withdraw from four ‘underperforming markets’ which were identified as Bellingham International Airport, Cozumel International Airport, Houston’s George Bush Intercontinental Airport, and Syracuse Hancock International Airport.
“While costs remain a headwind, we are realizing benefits from our ongoing cost reduction actions and remain focused on enhancing productivity and controlling discretionary spending,” Jordan continued.
“We also have certainty with labor rates, having ratified agreements with 11 of our labor groups in the past 18 months, including the agreement ratified yesterday for our Flight Attendants.”
Matt’s take
It’s no coincidence that Southwest points out that its financial performance will continue taking a hit for the rest of the year despite the airline doing everything in its power to get back on track. That’s because many of Southest’s woes are the result of delivery delays at its sole aircraft supplier, Boeing.
Southwest is by no means alone in taking a hit as a result of Boeing’s cascading problems, and the airline will no doubt be looking for compensation from the beleaguered aerospace giant at some point.
That could involve cash compensation or a further discount on aircraft that have yet to be delivered.
