Southwest Airlines drops four airports and will cut hiring, citing Boeing delay woes

Southwest Airlines is cutting operations at four airports, including Houston’s George Bush Intercontinental Airport, after losing $231 million in the first quarter.

On Thursday, the Dallas-based airline reported lower expectations, for revenue to be down as much 3.5% and capacity growth estimated to grow 4%, previously 6%. It’s also anticipating aircraft seats available and trip frequency to tighten in the second half of the year.

On Aug. 4, the airline will cease operations at Bellingham International Airport, Cozumel International Airport in Mexico, Houston’s George Bush Intercontinental Airport and Syracuse Hancock International Airport. It’s also implementing capacity reductions in both Hartsfield-Jackson Atlanta International Airport and Chicago O’Hare International Airport. Jordan said these markets weren’t “performing,” which ultimately was the deciding factor.

“While it is disappointing to incur a first quarter loss, we exited the quarter with healthy profits and margins in the month of March,” said Bob Jordan, CEO of Southwest in a release. “We are focused on controlling what we can control and have already taken swift action to address our financial underperformance and adjust for revised aircraft delivery expectations. I want to thank our more than 74,000 Employees ... as we adapt to aircraft delivery constraints and adjust to slower than planned growth for this year and next.”

All employees who were affected by the four airports cut will be offered jobs elsewhere if they choose to stay with Southwest.

The airline is implementing “cost control initiatives,” which include limiting hiring and offering voluntary time off. It expects to end the year with 2,000 fewer employees compared with the end of 2023.

Analysts at Raymond James reported Southwest “appears to be making the right changes.”

“Surprisingly, the 2024 cost outlook is largely consistent with expectations despite MAX delivery shortfall,” the report read. “However, the revenue performance was somewhat disappointing.”

Southwest has also lowered its expectations for aircraft deliveries from plane maker Boeing Co., where it now it expects 20 Boeing 737 Max 8 aircraft deliveries in 2024, when it previously anticipated 46. In March, a regulatory filing reported the airline had lowered its expectations to 46 from 79.

“Achieving our financial goals is an immediate imperative,” Jordan said. “The recent news from Boeing regarding further aircraft delivery delays presents significant challenges for both 2024 and 2025.”

The delay in deliveries follows a series of safety issues plaguing the airplane manufacturer, such as January’s Boeing 737 Max 9 blowout that left a gaping hole in the side of an Alaska Airlines fuselage. The incident continues to make headlines, and the Federal Aviation Administration has opened a formal investigation into Boeing.

Boeing and Southwest entered a supplemental agreement relating to its order for Max 7 and Max 8 aircraft. It’s subject to change based on ongoing discussions with the plane manufacturer.

Boeing has been under fire by U.S. airlines to “become a better company,” as Jordan said last month during the JPMorgan Industrials Conference. Airlines such as Fort Worth-based American Airlines also have called out the plane maker.

Jordan said he visited Boeing in late March and is “encouraged by the comprehensive approach” leadership is taking, despite there being a lot of work to do. Southwest plans to revisit Boeing this summer and is also visiting Spirit Aerosystems.

Southwest also ratified an agreement with its flight attendants this week, the first major airline to do so. The airline has ratified 11 labor deals since Oct. 2022.