Global News Desk:
Southwest's shares are
experiencing a decline in Tuesday's premarket trading following the airline's
announcement of intentions to lower capacity and reassess its full-year
financial projections. This decision comes in response to anticipated delays in
aircraft deliveries from its supplier, Boeing.
Southwest Airlines said in a
regulatory filing that Boeing expects to deliver 46 737-8 planes this year. The
company previously anticipated 79 737 Max aircraft deliveries, which included
58 737-8 planes.
In addition, Southwest said that
it now assumes there will be no 737-7 aircraft deliveries, and it continues to
assume no -737-7 planes will be placed into service this year based on the
current certification status with the Federal Aviation Administration.
For the first quarter, Southwest
now foresees operating revenue per available seat mile being flat to up 2%. Its
prior forecast was for the metric to be up 2.5% to 4.5%. The company predicts
economic fuel costs per gallon will be in a range of $2.95 to $3. That's higher
than its previous estimate of $2.70 to $2.80.
Boeing has been facing mounting
pressure lately. The company is facing multiple government investigations. On
Monday Transportation Secretary Pete Buttigieg said that Boeing needs to make a
“serious transformation” around its safety and manufacturing quality.
The comments came one day after
Buttigieg said the aircraft builder is under “enormous” scrutiny by his
department since a panel blew off of a Boeing 737 Max jetliner in midflight.
Over the weekend, The Wall Street
Journal reported that the Department of Justice launched a criminal
investigation into the Jan. 5 blowout on an Alaska Airlines jet. That followed
the company’s admission that it couldn’t find records that the National
Transportation Safety Board sought for work done on the panel at a Boeing
factory.
The Federal Aviation
Administration, part of Buttigieg’s department, is also investigating Boeing.
Last week, Boeing, which is based
in Arlington, Virginia, came under withering criticism by National
Transportation Safety Board Chair Jennifer Homendy over the missing work
records on the Alaska jet. She told a Senate committee that Boeing had
repeatedly rebuffed her agency’s attempts to get information ever since the
blowout. Boeing disputed some of Homendy’s claims; NTSB stood by her testimony.
The FAA has barred Boeing from
boosting production of Max jets and gave the company 90 days to come up with a
plan to fix quality-control issues. Southwest's stock is down more than 8%
before the market open.