Southwest Airlines posts quarterly profit despite 737 MAX blow


FILE PHOTO: A number of grounded Southwest Airlines Boeing 737 MAX 8 aircraft are shown parked at Victorville Airport in Victorville, California, U.S., March 26, 2019. REUTERS/Mike Blake/File Photo

(Reuters) – Southwest Airlines Co (LUV.N) squeezed out a small profit in the second quarter as it struggled with the grounding of Boeing MAX jets, the carrier said on Thursday, extending its suspension of flights on the planes till Jan. 5.

The U.S. airline said it took a $175 million hit to its operating income from the MAX problems in the quarter, but added that customer demand remained strong.

The grounding and resulting capacity decline put pressure on second quarter unit costs, which rose 7.5% and the airline said it expects higher costs in the second half of 2019.

Earlier this month the company said it was removing the 737 MAX jets from its flight schedule till early November.

Southwest forecast 2019 capacity to fall between 1% and 2%, compared with its earlier forecast of nearly 5% growth.

The world’s largest 737 MAX operator with 34 jets and dozens more on order, said net income rose to $741 million, or $1.37 per share, in the second quarter ended June 30, from $733 million, or $1.27 per share, a year earlier.

Total operating revenue rose 3% to $5.91 billion.

Based on the delays in returning the MAX jets to service, Southwest said it was ceasing operations at the Newark Liberty International Airport.

The No. 4 U.S. airline has canceled more than 10,000 flights since the 737 MAX was grounded worldwide in March following two fatal crashes in Ethiopia and Indonesia that killed 346 people in a span of five months.

Reporting by Tracy Rucinski in Nerja, Spain and Sanjana Shivdas in Bengaluru; Editing by Shounak Dasgupta

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