Dallas, Texas – Southwest Airlines announced a revision in its outlook due to delivery delays caused by ongoing production issues at Boeing. American Airlines also faced challenges, citing concerns over rising fuel prices. However, Delta Airlines provided a more positive update by maintaining its outlook.
According to reports, Boeing informed Southwest Airlines that it could only deliver 48 out of the 58 737 MAX 8 aircraft that were originally promised for 2024. This led to Southwest Airlines reevaluating its full-year 2024 guidance, including capital spending expectations.
As a result of the delays, Southwest Airlines anticipates reporting a loss in the first quarter, with a projected return to profitability in March. The airline also adjusted its revenue per available seat mile expectations for the first quarter.
Southwest Airlines noted better-than-expected performance in the first quarter, with low cancellation rates. The airline also increased its capacity estimate for the quarter.
Analysts predict that Southwest Airlines will report a loss of 6 cents per share in the first quarter, an improvement from the previous year. Revenue growth is expected to accelerate, reaching $6.49 billion, marking the second consecutive quarter of growth.
Following the news, Southwest Airlines’ stock dropped nearly 13% in early trading. Yet, some analysts remain optimistic, with Argus upgrading Southwest shares to a buy rating.
In contrast, American Airlines provided a more pessimistic outlook due to escalating fuel prices. The company now expects higher fuel costs in the first quarter, impacting its adjusted earnings estimates.
American Airlines maintained its capacity outlook for an increase in available seat miles. However, the airline revised its total revenue per available seat mile growth forecast.
Delta Airlines, on the other hand, made only minor adjustments to its outlook, with a positive change in revenue expectations for the first quarter. The Atlanta-based airline remains optimistic about its full-year earnings and free cash flow projections.
Overall, airline stocks experienced some turbulence in early trading, with Delta Airlines working towards a buy point in a cup base. With ongoing challenges in the industry, airlines are closely monitoring production issues and fuel price fluctuations to navigate the uncertainties ahead.