Southwest Extends Timeline for 737 MAX Return to January, End Service to Newark Airport

10:43 AM, Jul 25, 2019 — Southwest Airlines (LUV) on Thursday said it would extended its timeline for its Boeing (BA) 737 MAX jetliners to return to service until at least early January and would consolidate service to one of New York’s three major airports.

“Based on the most recent guidance from Boeing, we currently are assuming regulatory approval of MAX return to service during fourth quarter 2019,” Chief Executive Gary Kelly said in a statement. “With this in mind, we will proactively extend the MAX-related flight schedule adjustments through Jan. 5, 2020, to provide reliability of our operation and dependability for our customers booking their fall and holiday travel.”

Shares were down nearly 0.6% in early morning trading while Boeing was off by 3.9%

Kelly said in the statement that the airline would cease operations at Newark Liberty International Airport in New Jersey and consolidate its presence in the New York market at LaGuardia Airport in New York City.

In an interview on CNBC, Kelly said operations at Newark had been underperforming and the company had consolidated operations in other markets where it served multiple airports, such as in Ohio and Detroit. “We have great success in some cities by focusing on one airport,” he said.

Meanwhile, Southwest reported mixed second-quarter results before the market opened. The company said it earned $1.37 per adjusted share in the quarter, up from $1.26 in prior-year quarter and ahead of the Capital IQ consensus for $1.35. Revenue rose to $5.91 billion from $5.74 billion last year. The Street had expected $5.94 billion.

“Our financial and operational performance was remarkably strong considering the impact of the grounding of the Boeing 737 MAX 8 aircraft, which reduced operating income an estimated $175 million in the second quarter alone,” Kelly said in the statement. “We generated record revenues, strong margins and cash flows, a healthy profit-sharing accrual for our employees, and significant returns for our shareholders — all notable achievements.”

Kelly said the company has held “preliminary discussions” with Boeing over compensation for the damages due to the grounding. He added that no settlement has been reached and no amounts from Boeing were included in the results for the second quarter.

Boeing last week said it would take a $4.9 billion charge over the 737 MAX, which it said includes compensation to customers over the worldwide grounding.

The airline said the revenue per available seat mile in the just-ended quarter rose to $14.78 from $13.84 last year, while it reached a record load factor of 86.4%, up from 84.7% last year.

Companies: Southwest Airlines Company
Price: 54.21 Price Change: -0.51 Percent Change: -0.93

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