Southwest Airlines again cuts jet delivery forecast from Boeing

By Abhijith Ganapavaram

(Reuters) – Southwest Airlines on Tuesday once again cut its forecast for the number of aircraft deliveries it expects from supplier Boeing – causing the largest domestic U.S. carrier to cut its capacity for the second half of 2024.

Southwest is a key Boeing customer, which is under heavy regulatory scrutiny following a harrowing Jan. 5 midair panel blowout that led to probes of the company’s safety and quality standards in its production process.

Boeing has advised Southwest to expect 46 737-8 jets in 2024, down from the previous expectation of 79 737 MAX jets, the airline said in a filing. Southwest had previously switched dozens of MAX 7 orders due for delivery in 2024 to the larger MAX 8 to avoid delays. It is the largest customer of the MAX 7 – which is facing delays due to regulatory curbs on Boeing production.

“Southwest now assumes no 737-7 aircraft deliveries and continues to assume no MAX-7 aircraft are placed into service this year based on the current certification status,” the airline said.

Southwest shares were down 5% in premarket trading, while Boeing was down 1% after the New York Times reported that the recent U.S. Federal Aviation Administration audit of its 737 MAX production found numerous problems.

The Jan. 5 incident has turned into a full-blown safety and reputational crisis for Boeing that is now rippling through the industry, as air carriers confront slowed plane production that will reduce deliveries. Heavy backlogs mean that it is hard for airlines to easily shift orders to rival Airbus.

Airline executives have publicly expressed support for Boeing, which is facing heightened regulatory and legislative scrutiny, but have privately been frustrated with the problems that have started to affect airliners’ ability to meet customer demand.

Southwest’s rival United Airlines has approached Airbus about buying more A321neo jets to fill a potential void left by delays to Boeing’s larger 737 MAX 10, which is expected to be certified after the MAX 7.

(Reporting by Abhijith Ganapavaram in Bengaluru; Editing by Anil D’Silva and Arun Koyyur)