Southwest will cancel thousands of flights as Boeing 737 Max's fate remains uncertain
Southwest Airlines will extend cancellations of Boeing 737 Max flights until mid-April, the company said Tuesday, amid ongoing uncertainty about when the aircraft will be allowed to return to service.
Southwest, which is the nation's largest 737 Max customer, will be pulling approximately 300 flights a day from a peak-day schedule in excess of 4,000 flights, the airline said in a news release. Customers who have already booked these flights will be notified and reassigned to other planes. Last week, American Airlines extended its 737 Max cancellations until early April, after the Federal Aviation Administration said it wouldn't approve the aircraft's return for the remainder of 2019.
The 737 Max has been grounded worldwide since March, under scrutiny following two disastrous crashes within five months that killed 346 people. Since the grounding, Boeing has continued producing the jets at a cost of $1.5 billion each month, in hopes the F.A.A. would sign off on their return to use. But Boeing announced Wednesday that it was halting production on the 737 Max indefinitely starting in January, a stoppage that could ripple throughout the economy and jeopardize tens of thousands of manufacturing jobs.
A Southwest spokesman said the decision to extend the Max cancellation was unrelated to Boeing halting production of the jetliner, as the airline has been evaluating the situation on a rolling 30-day basis.
Last week, Southwest reached a confidential settlement with Boeing for some of the financial losses tied to the 737 Max grounding. In October, Southwest reported that the aircraft's grounding had cost the company $435 million through the end of September. The airline has 34 Max jets in its fleet. Gary Kelly, Southwest's chief executive, said the carrier would share a portion of the settlement -- roughly $125 million -- with employees through the airline's profit-sharing plan.
Southwest's pilots union filed a lawsuit against Boeing in October for $115 million in damages, claiming that Boeing "deliberately" misled the group and its members about the safety of the 737 Max. The suit says the grounding resulted in the cancellation of more than 30,000 scheduled flights and financial losses of more than $100 million for the airline's more than 9,700 pilots.
Boeing is the single biggest component of the Dow Jones industrial average. Commerce Secretary Wilbur Ross in August told CNBC that problems with the 737 Max had been big enough to shave 0.4 percent off the entire U.S. gross domestic product for a period this year. Ross said he expected an uptick when the problems were fixed, but it's unclear what the impact might be if production were completely halted.
Boeing's shares were down more than 5 percent in premarket trading.