Southwest Airlines fourth-quarter profit fell 21% after Boeing 737 Max grounding drove up costs

Business

Ground operations employees load baggage onto a Southwest Airlines Boeing 737 aircraft on the tarmac at John Wayne Airport (SNA) in Santa Ana, California.

Patrick T. Fallon | Bloomberg | Getty Images

Southwest Airlines‘ fourth-quarter profit tumbled more than 21% after the grounding of the Boeing 737 Max drove up the Dallas-based carrier’s costs, it said Thursday. 

Southwest has the most most Boeing 737 Max planes in its fleet and on order than any other U.S. airline. The planes have been grounded since March after two fatal crashes — one in Indonesia in October 2018 and another in Ethiopia less than five months later — killed 346 people.

The financial impact from the grounding isn’t over yet for Southwest, the carrier warned.

Boeing this week said it doesn’t expect regulators to allow the fuel-efficient planes to fly again until mid-year, meaning carriers won’t have the Max in time for the peak summer travel season.

Southwest’s net income fell 21% to $514 million from a year earlier on revenue of $5.729 billion, which was slightly ahead of analysts’ estimates and up 0.4% on the year. The grounding reduced Southwest’s operating income by $313 million in the fourth quarter and $828 million for all of 2019, the carrier said.

Southwest has pulled the planes from its schedules until early June but said Thursday that it expects to make another adjustment based on Boeing’s guidance.

The airline posted per-share earnings of $1.16 a share on an adjusted basis, higher than the $1.09 analysts expected.

This is breaking news. Check back for updates.

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