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Norwegian and Southwest count cost of Boeing 737 Max grounding

April 26, 2019

 

Airlines Norwegian and Southwest have both revealed big hits to their earnings from the grounding of Boeing 737 Max planes.

 

Southwest said it lost $200m (£155m) of revenue in its fiscal first quarter after cancelling 10,000 flights.

 

Norwegian said "uncertainty" over the issue could cost it up to 500m Norwegian kroner (£45m).

 

Boeing Max aircraft have been forbidden from flying since the Ethiopian Airways crash in March, which killed 157.

 

It was the second crash involving a 737 Max 8 jet in five months, raising concerns there may be issues with the plane's software.

 

"Flight cancellations are expected to drive unit cost pressure for the duration of the MAX groundings," said Southwest chief executive Gary Kelly.

 

The US airline, which has 34 Max jets, said the cancelled flights, along with the US government shutdown and maintenance issues, had hit its revenue per seat in the first quarter.

 

But while the carrier is extending Max cancellations until 5 August, its profit in the quarter was better than expected at $387m.

 

Norwegian, on the other hand, is in the midst of a turnaround plan and said the grounding could now stop it returning to profit in 2019.

 

The airline, which has 18 Max jets, said its losses had widened to 1.49bn kroner (£133.7m) in the first quarter - up from 46.2m kroner last year.

 

While its Max planes remain grounded, it has been rebooking passengers on to other flights and renting alternative aircraft in an attempt to maintain as much of its schedule as possible.

 

Chief executive Bjoern Kjos said: "There is a saying that you should hope for the best and plan for the worst, so we are planning to have [the Max aircraft] on the ground throughout August."

 

All Boeing 737 Max 8 planes have been grounded globally following the Ethiopian Airlines Flight 302 crash near Addis Ababa.

 

Boeing has said it is developing new software for the Max's Manoeuvring Characteristics Augmentation System (MCAS), an anti-stall system which has come under scrutiny since the crashes.

 

On Wednesday, Boeing said a fall in deliveries of the jet had already led to a $1bn drop in revenues.

 

The company also said that uncertainty over when the plane would be allowed to fly again meant it was unable to forecast its profits for 2019.

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