Southwest Airlines will no longer fly out of Bush Airport and 3 other airports after financial lows

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Friday, April 26, 2024
Southwest Airlines to stop flying out of IAH after financial lows
Southwest Airlines announced it will stop flying to Houston's Bush Airport as it copes with weak financial results and Boeing delays.

HOUSTON, Texas (KTRK) -- Soon, you won't be able to take a Southwest Airlines flight out of Houston's George Bush Intercontinental Airport. After expanding to Bush Airport just three years ago, the airline says it's pulling out, leaving Hobby Airport as the only option for Southwest customers.

Southwest Airlines announced it will stop flying to IAH on Aug. 4, 2024, as part of a plan to cope with weak financial results and delays in getting new planes from Boeing.

The announcement comes after the airline reported a $231 million loss in its first quarter.

"We're also taking steps to restore an industry-leading financial performance that enables us to best serve the millions of customers who fly with us each week," the airline said in a statement.

CEO Robert Jordan said the airline was reacting quickly "to address our financial underperformance," including by slowing hiring and asking employees to take time off.

The Dallas-based carrier said it expects to end this year with 2,000 fewer employees than it had at the start of the year.

But money isn't the only bump on the tarmac for the airline.

"Southwest is really struggling with their delivery of aircraft, so that's really a significant struggle for them," Jim Szczesniak, Director of Aviation for Houston Airports, said.

Unable to meet demand, Southwest will also stop flying to three other airports: Cozumel, Mexico; Syracuse, New York; and Bellingham, Washington; and implement capacity reductions in Atlanta, Georgia; and Chicago, Illinois.

The closures will help the airline focus on more profitable locations and deploy a fleet of planes that will be smaller than it had planned. Southwest said it's expecting only 20 new 737 Max 8 jets from Boeing this year, down from the 46 it expected just a few weeks ago. It will offset some of the shortage by retiring fewer planes.

Boeing is struggling with slower production since a door plug blew out of an Alaska Airlines Max 9 in January, and that is frustrating its airline customers.

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Southwest said that its loss, after excluding special items, was 36 cents per share. That was slightly worse than the loss of 34 cents per share that Wall Street expected.

Revenue rose to $6.33 billion, below analysts' forecast of $6.42 billion.

American Airlines also reported first-quarter losses on Thursday. While demand for travel remains strong, including among business flyers, airlines are dealing with higher labor costs and delays in aircraft deliveries are limiting their ability to add more flights.

American said it lost $312 million as labor costs rose 18%, or nearly $600 million. The airline said it expects to return to profitability in the second quarter - a busier time for travel - and post earnings between $1.15 and $1.45 per share. Analysts expect $1.15 per share, according to a FactSet survey.

The first-quarter loss amounted to 34 cents per share, excluding special items, which was worse than the loss of 27 cents per share forecast by analysts.

Revenue was $12.57 billion.

CEO Robert Isom said American is less impacted by Boeing's problems because the airline had already received hundreds of new planes in recent years. American has ordered Boeing Max 10s, a larger model that has not yet been certified by the Federal Aviation Administration, but those planes are not due to start showing up until 2028.

"If they don't get it together, we have also made sure that we're protected," Isom told CNBC. He stopped short of saying American would switch Boeing orders to rival Airbus, saying only, "We'll take care of it."

In premarket trading, Southwest shares were down 9%, while American shares were up 3%.

But the airline isn't leaving Houston altogether.

"Because they have a really strong presence here at Hobby when they had to figure out a way to make their aircraft work with their network, it was one of those things where they decided, hey, we've got to pull out of (Bush) and concentrate on Hobby," Szczesniak said.

This is the airline's second split from IAH. They stopped operations in 2005 and returned just a few years ago in 2021.

Southwest will fully pull out on Aug. 4. Customers with flights after that will be contacted by Southwest to fly out of Hobby or to get a refund.

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The Associated Press contributed to this report.

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