Southwest Pulls Boeing 737 Max From Service: To Quit Newark Over Low Profitability

The continued grounding of Being 737 Max planes has hurt the growth outlook of Southwest Airlines and the budget carrier has announced pulling Boeing 737 Max planes until next year.

Accordingly, the airline will drop Boeing 737 Max planes from its schedules until Jan. 5.

The airline on Thursday announced its pullout from Newark Liberty International Airport from November 3.

Woes of grounding Boeing 737 Max

The airline news signals how carriers are struggling with repeated delays and revenues loss from the grounded Max jets which are not looking to be back in service so soon.

The Boeing 737 Max planes have been grounded since mid-March after worldwide concerns on safety in the aftermath of successive crashes in Indonesia and Ethiopia.

In the South West’s fleet, Maxes dominate. In its portfolio of 750 planes, there are 34 Max planes.

The airlines’ Q2 results revealed it took a hit of $175 million in operating loss from the grounding of Boeing Max planes, per earnings report, released Thursday.

CEO Gary Kelly said it is talking to Boeing and has demanded compensation for the 737 Max grounding.

“We have not reached any conclusions regarding these matters, and no amounts from Boeing have been included in our second-quarter results,” he said.

Southwest Airlines stock fell 5 percent in premarket trading after Q2 revenues of $5.9 billion fell below estimates and the airline slashed capacity outlook for this year.

In the forward guidance, the Dallas-based airline said capacity growth this year would be 2 percent as against the earlier forecast of 5 percent.

It blamed the revised outlook on the “extensive delays” in the Max planes’ returning to normal service.

To quit Newark airport from November

Starting Nov. 3, Southwest will cease to operate out of Newark airport in New Jersey, where the rival United is dominating.

In the new strategy, South West will consolidate New York operations from the LaGuardia Airport in Queens.

Southwest admitted that its Newark operations that started in 2011 have not been profitable and said it got bigger demand at LaGuardia.

This may affect 125 Southwest employees at Newark who will be relocated to other airports.

Southwest had been operating 20 flights a day from Newark to 10 cities, including Phoenix, Chicago, and Austin.

Boeing CEO says 737 max Planes will fly from October

Meanwhile, Boeing sent out mixed signals on 737 Max.

On the one hand, it said it would stop production of the jet completely if grounding continues and regulatory approvals to new fixes are delayed.

Boeing reported the largest quarterly loss of $3.4 billion on Wednesday because of the troubled 737 Max plane.

However, Boeing CEO Dennis Muilenburg exuded optimism that the plane would start flying from October.

“As our efforts to support the 737 Max's safe return to service continue, we will continue to assess our production plans,” Muilenburg told a conference call of investors.

The Boeing CEO also revealed how the aircraft maker is reassuring its end users. He said weekly technical calls with operators of the 737 Max are going on and the modified software has already been tested in 225 flight simulator sessions.