Southwest Airlines, the world’s largest operator of the 737 MAX, has announced today that it will not fly the aircraft again until next year. During their second-quarter earnings call, the airline revealed that the MAX has been removed from schedules until January 5th, 2020. They will also cease operations at Newark Liberty Airport, in a bid to strengthen and consolidate their presence at LaGuardia.
The grounding of the 737 MAX has affected Southwest Airlines more than most. Following on from fellow US airlines American and United’s scratching of the MAX until November, Southwest have taken their ban of the aircraft a step further, removing it from schedules until January 5th, 2020.
Announced during their second-quarter earnings call, the low-cost carrier also revised its capacity outlook in light of the current situation. Where it had expected capacity growth of 5% over 2019 compared to last year, they are now predicting a contraction of 1-2% by the end of the year.
Despite this, Southwest’s earnings for the second quarter were remarkably strong. Their quarterly operating revenues of $5.9bn were a record for the company, and their net margin of 12.2% was strong.
Managing expectations over the holidays
Southwest’s removal of the MAX from schedules until January means that they and their passengers face the prospect of cancellations, reduced services and higher fares across the busy holiday period. Chief executive, Gary Kelly, said in their press release that,
“Based on the most recent guidance from Boeing, we currently are assuming regulatory approval of MAX return to service during fourth quarter 2019. With this in mind, we will proactively extend the MAX-related flight schedule adjustments through January 5, 2020, to provide reliability of our operation and dependability for our Customers booking their fall and holiday travel.”
Kelly went on to explain that, although Boeing has mooted a likely return to service of the 737 MAX in the fourth quarter of 2019, it would take Southwest one to two months to comply with FAA directives including all pilot training required.
Although a further delay of the MAX’s return to service will be disappointing to Boeing, it sounds like Southwest are planning well to manage expectations of their passengers. After all, it’s far better to know now that certain flights won’t operate over the holidays than to find out days before travel is due that a flight has been canceled.
Pulling out of Newark
As well as removing the MAX from schedules until January, Southwest also revealed that they will end services at Newark Liberty International airport. From November 3rd, the airline will no longer operate from Newark, focusing instead on consolidation of their operations at LaGuardia. Gary Kelly said of this,
We will cease operations at Newark Liberty International Airport and consolidate our New York City presence at New York LaGuardia Airport, effective November 3, 2019. The financial results at Newark have been below expectations, despite the efforts of our excellent Team at Newark.”
He noted that employee at Newark would be given the opportunity to relocate to another Southwest hub, saying that they are ‘top priority’.
The report also noted good results from the launch of their Hawaii services, although they also noted how a lack of 737 MAX had led to delays in planned expansion. However, they plan to announce the next phase of Hawaii growth next month, which could be either a Sacramento or a San Diego to Hawaii service.
Kelly also said Southwest has plans to offer more services to Mexico, specifically to Cozumel International Airport. Subject to governmental approval, they are hoping to launch Cozumel as their fourth Mexican destination in the first quarter of 2020.