(5MinNewsBreak.com) – Southwest Airlines announced on Thursday that it will eliminate 2,000 jobs and cease operations at four airports, citing escalating costs and a slowdown in revenue growth due to reduced aircraft deliveries from Boeing.
The Dallas-based carrier reported that it would only receive 20 aircraft from Boeing this year, a significant decrease from the 46 initially projected in March.
This reduction stems from ongoing production limitations imposed on Boeing’s 737 MAX, amidst a safety crisis ignited by a cabin panel incident on an Alaska Air flight in January.
“The recent news from Boeing regarding further aircraft delivery delays presents significant challenges for both 2024 and 2025,” stated Southwest CEO Bob Jordan in the company’s first-quarter financial results announcement.
The impacted airports include Syracuse, NY; Cozumel, Mexico; Bellingham, Wash., and George Bush Intercontinental Airport in Houston. Southwest will consolidate its Houston operations at the smaller Hobby Airport.
Furthermore, Southwest anticipates ending the year with 2,000 fewer employees compared to the beginning, The New York Post reports.
This reduction is part of a broader cost-cutting effort to mitigate recent financial setbacks, which includes limiting voluntary time-off programs. The airline’s shares dropped nearly 7% on Thursday, closing at $27.26.
Southwest, which exclusively utilizes Boeing aircraft, now forecasts a 4% increase in total seat capacity for 2024, down from the 6% growth previously estimated.
The company acknowledged that these adjustments would not only dampen revenue growth expectations for this year but also lead to unexpectedly high operating costs.
In response, Southwest is focusing on boosting productivity and curtailing discretionary spending.
In addition to discontinuing service to the above-mentioned airports, the airline will also reduce its presence in markets such as Chicago and Atlanta.
For the first quarter, Southwest reported an adjusted loss of 36 cents per share, slightly below the 34 cents loss anticipated by analysts, according to LSEG data.
Historically, Southwest has differentiated itself as the pioneering low-cost, no-frills airline, maintaining a single economy class and eschewing assigned seating, The Post notes.
The airline has also scaled back its transcontinental flights, which now constitute only 1.3% of its seating capacity, down from 4.4% in 2017.
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