Major U.S. carriers such as American Airlines and Southwest Airlines have highlighted that delivery delays from Boeing could negatively impact their performance in the coming months. Travel remains strong despite inflation causing leisure activities to become more costly.
American Airlines, which projected a higher-than-anticipated profit for Q2, anticipates receiving 20 planes from Boeing by year-end. CEO Robert Isom expressed concern about possible delays affecting the airline's summer schedule, urging Boeing to resolve the issue.
Southwest Airlines reduced its capacity growth projections due to delays in Boeing's aircraft deliveries. The airline now anticipates receiving 70 737-8 jets this year, down from the originally planned 90, following the revelation of a manufacturing issue with some of the aircraft. As a result, Southwest's capacity in the December quarter, a popular travel period, could be up to 7 percentage points lower than last year.
Southwest CFO Tammy Romo indicated that a more conservative planning assumption was warranted due to Boeing's recent production issues. The airline also mentioned that fewer aircraft deliveries would hamper its efforts to lower non-fuel operating costs this year. Consequently, Southwest's shares fell by about 5% during afternoon trading.
Boeing refrained from commenting on the matter but acknowledged on Wednesday that 737 aircraft deliveries are expected to slow in Q2. CEO Dave Calhoun expressed regret about the negative impact on customers' summer capacities.
Spirit Airlines, an ultra-low-cost carrier, also reported challenges in adding more flights due to jet engine availability and pilot attrition issues.
Despite these challenges, airlines are not struggling to fill seats. Southwest anticipates a "solid" profit in the June quarter due to robust summer bookings. However, CEO Bob Jordan remains cautious about the uncertain economic climate.
Delta Air Lines and United Airlines have also provided optimistic forecasts for summer travel. High inflation, interest rates, job losses, and banking industry turmoil have raised concerns about consumer spending. However, airlines continue to offset higher labor and fuel costs through strong demand.
Some analysts question the longevity of the travel boom, but airlines report resilient demand, with international bookings surpassing domestic travel. American Airlines plans to increase its long-haul international capacity by 82% in the current quarter compared to a year ago.
CEO Robert Isom remains confident in the strong demand environment this summer and its continuation in the future.
