Southwest CEO: Boeing's delivery delays have big consequences

13.03.2024 - 06:49 / travelweekly.com / Bob Jordan

Boeing delivery delays have forced Southwest to reduce its capacity expectations for this year and to "actively and urgently" focus on cost reductions, CEO Bob Jordan said Tuesday.

The carrier has already halted hiring of customer service staff, and pilot and flight attendant hiring will freeze by early April. Overall, Southwest has reduced its hiring expectations for the year by 50% for pilots and 60% for flight attendants, Jordan said.

Southwest now expects its 2024 flying on a year-over-year basis to be 1 to 1.5 percentage points below earlier guidance, with most of the reduction coming after the peak summer season.

"This is not business as usual. We are being very aggressive in controlling what we can control," Jordan said during a presentation at the J.P. Morgan Industrials Conference.

Southwest's quick pivot follows notification from Boeing of the latest round of delivery delays as the aircraft manufacturer addresses quality-control failures amid increased federal scrutiny and oversight. Boeing has advised Southwest to expect 46 deliveries of the 737 Max 8 this year, down from the 58 planes that Southwest had previously been expecting.

At the beginning of this year, Southwest also had expected deliveries of 21 of the smaller 737 Max 7, which has yet to be certified. But with Boeing having since withdrawn its request to the FAA for a safety standard exemption that would have cleared the aircraft for flight operations while Boeing works on an engineering fix for the plane's de-icing system, Southwest has removed the Max 7 from its 2024 plans.

Jordan said he won't be surprised if the Boeing ultimately delivers fewer than 46 planes to Southwest this year.
What's more important, he said, is that the manufacturer take the time needed to fix its quality-control failings.

• Related: United will pause pilot hires, citing Boeing delays

"We need Boeing to be strong five years from now, 10 years from now. That takes precedent over delivery delays," Jordan said. Southwest operates an all-Boeing fleet.

Despite the delivery delays, Jordan said Southwest will not back from its emphasis on expanding profit margins. Last year, Southwest posted net income of $498 million.