25.10.2019 14:21:00

Southwest Airlines Reports Record Earnings Despite 737 MAX Headwinds

The grounding of the Boeing (NYSE: BA) 737 MAX has been extremely costly for a slew of airlines around the globe. As the largest operator of 737s in the world -- and the launch customer for the 737 MAX -- Southwest Airlines (NYSE: LUV) has experienced some of the biggest impacts. The carrier expected to have 75 737 MAX jets operating by the end of 2019, but it will instead have none, having canceled all 737 MAX flights through Feb. 8, 2020.The resulting fleet shortage has already cost Southwest hundreds of millions of dollars, and the tally of damages keeps growing. However, Southwest Airlines has been able to overcome this obstacle and post strong earnings results throughout 2019. That trend continued last quarter.Entering Q3, Southwest Airlines expected adjusted nonfuel unit costs to surge 9% to 11% in the quarter, driven almost entirely by the impact of the 737 MAX grounding. As Southwest's management has noted repeatedly this year, the company's costs are largely fixed once it sets its initial schedule for any period.Continue reading
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