Southwest, American Earnings Calls Show Both Ends of 737 Max Crisis

Southwest Airlines and American Airlines both reported third-quarter earnings on Thursday, and both showed the opposite ends of the spectrum that is the Boeing 737 Max crisis.

With the aircraft having been grounded since March after a pair of crashes killed 346 people, Southwest nonetheless exceeded Wall Street’s projections despite it would take a $210 million hit from having its 34 737 Max planes parked for more than eight months now.

American, on the other hand, reported a $540 million loss due to the grounding of its 24 737 Max jets.

Adjusted earnings in 2019 will be airlines-airports/737-max-grounding-costs-american-airlines-540m” target=”_blank” rel=”nofollow noopener noreferrer”>no more than $5.50 a share, down from the previous estimate of as much as $6, American said. To be fair, American has been troubled long before the 737 Max issues and has also been dealing with a mechanics union work slowdown during the summer. The carrier said on-time performance in September was the best in almost two years and the improvement has continued into October.

Southwest Airlines reported a 7.2 percent rise in third-quarter profit, helped largely by strong travel demand and higher fares following the 737 Max flight cancellations.

As much as increased fares hurt travelers, Southwest smartly raised prices on other aircraft that flew at or near capacity.

Airlines have been negotiating compensation with Boeing but Southwest said no settlement has yet been reached and the company did not include any settlement amounts in quarterly results.

Southwest has said it will need one to two months after 737 Max regulatory approval to be ready to fly the aircraft again and retrain its pilots. As of now, it is scheduling without the Max until Feb. 8.

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