Southwest Airlines 'absolutely' harmed by MAX grounding
Southwest Airlines has "absolutely" been harmed by the grounding of the Boeing 737 MAX, said CEO Gary Kelly in no uncertain terms Thursday.
The Dallas-based carrier is short 75 MAX jets that it expected by the end of last year, a fact that has forced it to slow growth and cut flights -- even as its competitors continued to grow -- to make up for the lack of new planes, Kelly said during a quarterly earnings call Thursday.
"Sitting here dog-paddling for a year while our competitors grow right past us, is costing us six or seven million customers," he said, adding that there is little Southwest can do about this "until we can get airplanes, until we can grow again."
The airline shrank by 1.6% year-over-year in 2019, something it has seldom had to do in the past. Passenger traffic fell 1.5% during the period.
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Only Delta Air Lines has acknowledged a benefit from the MAX grounding. Earlier in January, CEO Ed Bastian said without elaborating the Atlanta-based carrier had picked up "some marginal revenue" from competitors due to the MAX in 2019.
Delta's narrow-body orderbook only contains Airbus A220, A321 and A321neo models.
American Airlines and United Airlines, two of Southwest's largest competitors, are also hit by the MAX grounding. They have also been forced to cut capacity growth and selectively trim routes to make up for the shortfall in new deliveries.
Southwest does not expect the MAX to return to service until after the summer schedule, executives said Thursday. Boeing anticipates re-certification of the jet by mid-2020, a guidance update that Kelly told Bloomberg surprised him.
Related: Boeing issues new 737 MAX guidance
Southwest has trimmed some of its longer-haul routes while boosting short- to medium-haul ones to make up for the lack of MAX aircraft, said president Thomas Nealon on Thursday. These adjustments aim to provide "quality" connections to customers who would otherwise have flown nonstop.
“In no way are we walking away from long-haul flying," said Nealon. "With the MAX out of service, when we have opportunities to replace profitable but below system average RASM [revenue per available seat mile] long-haul nonstop itineraries with high-quality connecting itineraries, we will do that.”
Among the longer routes that Southwest has suspended are flights between Austin (AUS) and San Francisco (SFO), Houston Hobby (HOU) and Orange Country (SNA), and Los Angeles (LAX) and Pittsburgh (PIT), according to Cirium schedule data for the first quarters of both 2019 and 2020. The airline also ended all service to Newark Liberty (EWR) in November.
Related: Southwest adds 10 new routes in summer schedule rollout
While executives declined to provide capacity guidance for 2020, Nealon said Southwest will continue to grow at its Baltimore/Washington (BWI), Denver (DEN), and Houston bases, and to Hawaii this year.
Southwest has adjusted its fleet plan where it can to make up for the MAX. The airline extended the lives of seven Boeing 737-700s by two years in 2019, and has cut planned retirements of the -700s by at least half to 11 this year, said Southwest chief financial officer Tammy Romo on Thursday.
The airline continues to work to postpone 737-700 retirements where it can, and to acquire used 737-800s, she added.
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There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
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- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.