Southwest Air profit spikes despite 737

Southwest Airlines said Thursday that third-quarter profit rose seven per cent on record revenue, despite taking a hit from the grounding of its Boeing 737 Max aircraft fleet.

CEO Gary Kelly said Southwest is in discussions with Boeing about compensation for damages related to the grounded plane, which has forced the airline to cancel thousands of flights since March.

“We expect the damages to continue to grow into 2020,” Kelly said.

Southwest said the grounding cut operating income by US$210 million in the third quarter, and US$435 million since March.

Southwest had 34 Max jets – more than any other airline – back in March and had expected to receive more by now. Instead, it has removed the Max from its schedule through early February as it waits for Boeing to finish updating the plane and getting approval from federal safety regulators. The airline estimates it will need one to two months for pilot training and other preparation.

Strong travel demand and rising ticket prices helped offset its Boeing issues.

On Thursday, Dallas-based Southwest Airlines Company reported third-quarter profit of US$659 million, or US$1.23 per share. That easily topped Wall Street expectations for US$1.09, according to a survey by Zacks Investment Research.

Revenue rose one per cent to US$5.64 billion, despite a 2.9 per cent reduction in passenger-carrying capacity due to the Max grounding. The revenue was in line with analysts’ expectations.

– AP