Southwest Airlines Co (LUV)

Southwest Airlines Co (LUV) stock plummeted by 14.86% due to Boeing's manufacturing troubles, which will impact Southwest's growth plans. Quality issues at Boeing are causing airlines, including Southwest, to rethink their growth plans. Southwest announced that it is trimming capacity and reevaluating its financial forecasts for the year in response to Boeing's challenges.

• Boeing's Turbulent Ride: Boeing investors have faced a turbulent ride in recent years due to design and quality issues related to its 737 MAX and other airframes. These issues have led to regulatory actions, including groundings and manufacturing slowdowns, impacting Boeing's customers.
• Impact on Southwest's Plans: As an all-Boeing 737 operator, Southwest is particularly affected by Boeing's challenges. Southwest had planned to take 58 737-8s and 21 737-7s this year. However, Boeing advised Southwest to expect just 46 737-8 deliveries. Additionally, the smaller MAX-7 has not yet been certified by the Federal Aviation Administration (FAA), adding uncertainty to Southwest's fleet planning.
• Fluid Delivery Schedule: Boeing's challenges have led to a slower production schedule, impacting Southwest's planning. The airline expects the delivery schedule to be fluid and plans to reduce capacity and reoptimize schedules, primarily for the back half of 2024.
• Reevaluation of Guidance: Southwest is reevaluating its 2024 guidance and plans to provide an updated forecast on April 25, when it expects to release first-quarter results. The airline is adjusting its plans to adapt to the ongoing challenges posed by Boeing's manufacturing issues.

Shares of Southwest Airlines Co (LUV) dropped by 3.83% from $30.31 to $29.15 in the trading on Wednesday, December 13, 2023. The reason why LUV down today is due to the company's revised outlook for unit revenues in the fourth quarter. Southwest Airlines now anticipates its unit revenues for the fourth quarter to be down by 9%-10%, compared to the prior outlook of a decline ranging from 9%-11%.