Southwest Airlines announced on Thursday (April 25) that it will cut 2,000 jobs and close operations at four airports due to reduced aircraft deliveries from Boeing. The CEO of Southwest Airlines, Bob Jordan, stated in the company’s first-quarter financial report for 2024 that Boeing’s recent news of further delays in aircraft deliveries poses significant challenges for 2024 and 2025.
Headquartered in Dallas, the airline disclosed that they have only received 20 aircraft from Boeing this year, far below the anticipated 46 aircraft expected in March.
According to Reuters, Boeing has faced a series of production, quality, and safety issues recently, leading regulatory agencies to cap the production of the 737 MAX, a threshold that Boeing has yet to meet.
Southwest Airlines plans to temporarily halt flights to Syracuse Hancock International Airport in New York, Cozumel International Airport in Mexico, Bellingham International Airport in Washington state, and George Bush Intercontinental Airport in Houston.
Moreover, due to a first-quarter loss of $218 million in 2024, an increase from the $163 million loss the previous year, Southwest Airlines will have to implement job cuts to control costs. It is estimated that the company’s workforce will decrease by 2,000 employees by the end of the year compared to the beginning.
Southwest Airlines’ stock price fell nearly 7% on Thursday, closing at $27.26.
The airline, operating an all-Boeing fleet, anticipates a 4% year-over-year increase in total seat capacity in 2024, a decrease from the earlier projected 6% growth.
The company mentioned that the reduction in flights will not only lead to slower revenue growth this year but also result in higher-than-expected operating costs. To mitigate the negative impact, the company is working on improving productivity and controlling discretionary spending.
In addition to pausing services at the four airports mentioned, Southwest Airlines will also reduce capacity at airports in Chicago and Atlanta.
Southwest Airlines is known as the first low-cost carrier in the United States, famous for its single-class cabin and no assigned seating policy. While other airlines charge for services like checked baggage, seat selection, and upgrades, Southwest has maintained its policies, with the exception of an additional fee for priority boarding.
Jordan told CNBC that the company is considering revising these policies, stating, “We are exploring new initiatives, such as our seating and boarding procedures.”