It isn't just Boeing that's bleeding billions — major US airlines are hemorrhaging cash too

Kwan Wei Kevin Tan
Updated ·3 min read
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It isn't just Boeing that's bleeding billions — major US airlines are hemorrhaging cash too

  • It's not just Boeing. Airlines are facing big losses as well.

  • Southwest Airlines and American Airlines posted losses in the first quarter of 2024.

  • Southwest Airlines CEO Bob Jordan said Boeing's aircraft-delivery delays were "very painful."

Boeing isn't the only company grappling with turmoil in the aviation industry.

On Thursday, Southwest Airlines and American Airlines reported losses in their quarterly earnings calls.

Southwest Airlines said it would be ceasing flights to four airports —Bellingham International Airport, Cozumel International Airport, George Bush Intercontinental Airport, and Syracuse Hancock International Airport — from early August after a $231 million loss in the first quarter of 2024.

Southwest Airlines CEO Bob Jordan told CNBC the decision to cease flights had "nothing to do" with Boeing's aircraft-delivery delays. But the delays, Jordan said, did hurt Southwest in other ways.

"Now the Boeing delays are very painful. They cause us to replan, they hurt us on the revenue front, they cause us to be inefficient, and we're working all of that," he told CNBC on Thursday.

Besides reducing flights, Southwest also said it would cut down on hiring. The airline said it expected to end this year with about 2,000 fewer employees than at the end of 2023.

American Airlines, meanwhile, posted a loss of $312 million in its first quarter amid growing labor costs.

American Airlines CEO Robert Isom told CNBC on Thursday that while the company would receive about seven fewer aircraft from Boeing because of the delays, the reduction in capacity wouldn't have a "material impact" on the airline.

But Isom did express his disappointment at Boeing during his company's earnings call.

"I've talked to everyone at Boeing that I can possibly address, and the message is the same: Get your act together," Isom told investors on Thursday.

When asked about Isom's remarks, Boeing pointed Business Insider to a comment made by its chief financial officer, Brian West, on March 20 at the Bank of America Global Industrials Conference. West told conference attendees then that Boeing was "in regular, very transparent communications" with its clients.

"The most important thing we do is communicate with them. And they have been supportive of everything we're trying to do to enhance safety and quality for the industry," West said.

Representatives for Southwest Airlines and American Airlines didn't immediately respond to a request for comment from BI sent outside regular business hours.

Boeing has come under fire recently following repeated lapses in quality control. On January 5, a door plug flew off a two-month-old Boeing 737 Max 9 during an Alaskan Airlines flight from Oregon to California.

Boeing said during its earnings call on Wednesday that it had burned through $3.9 billion in cash in the first quarter of the year. The company also posted a net loss of $355 million in its latest quarter.

"Near term, yes, we are in a tough moment," Boeing CEO Dave Calhoun said in a letter to employees on the same day.

"Lower deliveries can be difficult for our customers and for our financials," he continued. "But safety and quality must and will come above all else."

Read the original article on Business Insider