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Southwest Cuts Boeing 737 MAX Delivery Expectations Again

Southwest Airlines assumes Boeing will not deliver a single 737 MAX 7 during the year.

In its latest update to investors, Southwest Airlines has outlined that Boeing told the airline it should expect 33 fewer aircraft deliveries in 2024, which included other 737 MAX models, such as the 737 MAX 7. As a result, the carrier will have to reevaluate its full-year guidance for 2024.

Fewer 737 MAX deliveries

In a Securities and Exchange Commission (SEC) filing on March 12, 2024, Southwest Airlines said that Boeing informed the airline that it should expect 46 Boeing 737 MAX 8 aircraft to be delivered in 2024. Previously, the carrier expected 79 737 MAXs to join its fleet during the year, including 78 737 MAX 8 aircraft.

However, Boeing is still struggling to certify the 737 MAX 7 amid ever-increasing scrutiny over its quality management at its sites, as well as at Spirit AeroSystems, a Tier 1 supplier for the 737 MAX program. As such, Southwest Airlines said it now does not expect to receive a single 737 MAX 7 in 2024.

Guidance reevaluation

Subsequently, Southwest Airlines stated that it has been reevaluating its full-year 2024 guidance, including the expected capital expenditure on aircraft. It expects to provide an update on the year’s outlook on April 25, 2024, when the airline announces its Q1 2024 results.

For now, the carrier provided an update on the first quarter of the year, saying that so far, its performance during the first three months of the year has been strong, with no flight cancelations being much lower than in Q1 2023. As such, its capacity should grow by 11%, compared to the previous estimate of 10%. Both metrics are Year-on-Year (YoY).

Meanwhile, it had to lower its Revenue Per Available Seat Mile (RASM) guidance from growth of 2.5%-4.5% to either flat or up 2% YoY. Southwest Airlines noted that around 1% of the decrease is due to higher-than-expected completion factors in February and March, with the remaining numbers being attributed to lower-than-expected leisure passenger volume.

Looking forward to Q2 2024, the carrier said that bookings are ahead of seasonally normal trends, which could result in record operating revenue during the next quarter. Furthermore, it expects that its RASM should continue growing throughout 2024.

Other 737 MAX delays

The airline has joined several carriers, such as Allegiant Air, Ryanair, United Airlines, and others, which expect significant aircraft delivery delays from Boeing, including for the uncertified aircraft programs, the 737 MAX 7 and 737 MAX 10.

In an interview with Bloomberg, Ed Bastian, chief executive officer (CEO) of Delta Air Lines, stated that he expected Boeing to deliver its first 737 MAX 10 to the airline in 2025. According to Bastian, that timeline has shifted by a year or two.

Article and image originally appeared on Simple Flying

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