The grounding of Boeing’s 737 MAX and a contract fight with the Mechanics union, coming on top of unexpectedly high weather-related flight cancellations, have cost Southwest Airlines about $150 million in revenue so far this year.
The projection, which the Dallas-based carrier made in a regulatory filing on Wednesday, exacerbates a $60 million sales loss from what CEO Gary Kelly called a “maddening” government shutdown that hampered flights from the end of December through late January.
Southwest trimmed its flight schedule through April 20 after losing the 737 MAX and is considering future reductions, according to the filing. The unknown duration of the grounding makes it is difficult to forecast the financial impact, which rival carriers say may increase if they’re unable to fly the jetliner in time to meeting rising travel demand during the lucrative summer vacation season.
The Federal Aviation Administration sidelined the best-selling aircraft after two recent crashes overseas that killed more than 300 people, prompting scrutiny of whether a computerized anti-stall system was interfering with takeoff. Southwest was flying 34 of the 737 Max planes, the latest version of an airline industry workhorse, which it’s now moving into storage.
Fort Worth, Texas-based American Airlines, which has 24 of the planes, had been using them on 90 flights a day and said earlier this week that it has canceled that many through April 24. The moves “have caused, and are expected to continue to cause, significant disruption to our customers and financial costs to us,” American said.
United, which owned only 14 of the planes and was using them about 40 times a day, said the initial impact of the grounding on operations and costs was limited but would increase if the jetliner isn’t allowed back into service soon.
Although costly, the upheaval from sidelining the plane is limited because of its newness. While the MAX is the best-selling model in Boeing’s history, generating more than 4,600 orders, deliveries didn’t begin until mid-2017 and just 67 of the aircraft were flown in the U.S.
Committees in both the House and Senate are already looking into the FAA’s original certification of the plane’s use for commercial air travel, with some lawmakers questioning why the agency didn’t pull the aircraft until countries from China to the U.K. had already done so.
In the first of the MAX crashes, which occurred Oct. 29, 2018 in Indonesia, a malfunctioning sensor fed incorrect data on the airliner’s ascent vector to a computer system that attempted to lower the angle at which it was ascending to avoid a stall, officials said.
That prompted a struggle between the new computer software, known as the Maneuvering Characteristics Augmentation System, and the pilot, who ultimately lost control of the aircraft. All 189 people aboard were killed.
U.S. regulators later ordered airlines to update operations manuals on the handling of such issues, and Boeing is installing a mandated software patch by April.
The fact that the patch hadn’t been completed was part of what prompted the high level of concern after the second crash, which occurred March 10 outside Ethiopia’s capital of Addis Ababa, killing all of the 157 occupants aboard an Ethiopian Airlines flight. It wasn’t until data transmitted to satellites from the flight showed climbs and descents during takeoff similar to those before the Indonesia crash that the FAA acted.
The move came just days after the agency had warned Southwest and its mechanics union that their contract dispute, which includes a lawsuit claiming the labor group has sidelined planes by issuing unnecessary repair notices, raised safety concerns.
While the agency is neutral about the labor negotiations, safety is a shared responsibility of the Dallas-based carrier and its mechanics, “irrespective of any ongoing controversy,” Ali Bahrami, associate administrator for aviation safety, wrote to Southwest operations chief Mike Van de Ven and Bret Oestreich, national director for the Aircraft Mechanics Fraternal Association.
In its lawsuit, filed in federal court in Dallas, Southwest accused the mechanics union of urging members to impede its business by writing repair notices for even the most trivial of issues.
The number of write-ups for minor interior parts — such as a missing row number, when the airline is famed for not assigning seats — climbed nearly sixfold after an early February meeting with the National Mediation Board ended with a union representative shouting at a Southwest official and the mediator, then storming out, according to the suit.
