Southwest Airlines manages slight Q2 profit despite grounding of Boeing MAX 737s

“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,” according to a July 25 statement from Gary C. Kelly, Southwest Airlines chairman of the board and chief executive officer.

“Our employees did a heroic job managing approximately 20,000 flight cancellations under operationally difficult circumstances, while delivering excellent customer service,” Kelly also said.

The grounding of the Boeing 737 MAX aircraft hurt the airline’s capacity levels during the second quarter, Kelly said. Along with other airlines around the world, Southwest grounded its 34 Boeing MAX jets in March.

Two newly delivered Boeing 737 MAX 8 airplanes crashed within five months – Lion Air Flight 610 in October 2018 and Ethiopian Airlines Flight 302 in March 2019 – killing all 346 people aboard both flights.

Southwest officials expect airplane capacity to decrease around 1 to 2 percent, compared with original plans to expand seating capacity by 5 percent. 

The carrier expects the Boeing 737 MAX to return to service in the fourth quarter. However, it has cancelled 737 MAX flights through January 5, 2020.

Starting on November 3, Southwest will no longer operate from Newark Liberty International Airport and instead will consolidate operations at New York City’s LaGuardia Airport.

“The financial results at Newark have been below expectations, despite the efforts of our excellent team at Newark,” Kelly said.

Southwest Airlines shares were trading up around 1.6 percent at $55.58 after its July 25 earnings report. The stock had a 52-week high of $64.02 and a 52-week low of $44.28.