Southwest Airlines on Thursday said it would limit hiring and pull out of some airports after it posted a loss for the first quarter of 2024.
The Dallas-based operator lost $231 million from January through March, more than the $159 million loss it recorded during the same period in 2023. The airline lost 36 cents per share, slightly below the loss of 34 cents per share that Wall Street had expected. Revenue rose to $6.33 billion, but below analysts’ expectations of $6.42 billion.
Southwest is also taking a hit from delays at Boeing, which has slowed down production of new airplanes while it focuses on quality control issues. Just 20 Boeing 737 Max 8 jets are expected to be delivered to Southwest in 2024, even as the operator retires 35 other aircraft. Southwest had planned to receive 46 new planes this year and retire 49 aircraft.
Southwest Airlines stock plunged almost 8% in pre-market trading on Thursday.
CEO Bob Jordan said in a statement that Southwest has “already taken swift action” to address its underperformance, noting that the company is benefitting from its ongoing cost-cutting plans.
As part of those plans, Southwest is pulling out of four airports: Bellingham International Airport in Washington state, Cozumel International Airport in Mexico, Syracuse Hancock International Airport in New York state, and Houston’s George Bush Intercontinental Airport.
Southwest will also limit hiring people to join its more than 74,000 employees. By the end of the year, the company expects to employ about 2,000 less people. Southwest will also offer employees voluntary time off.
“We are focused on achieving our financial prosperity goals and creating value for our shareholders,” Jordan said, “while we adjust to changes in our aircraft delivery plans, customer travel patterns and preferences, higher fuel prices, and other cost pressures.”
The company’s move to reduce staffing comes just one day after flight attendants overwhelmingly ratified a new contract that includes pay raises of more than 33% over the next four years. Southwest employs about 20,000 flight attendants, who will receive a more than 22% wage hike on May 1.
Jordan said Thursday that the company has ratified agreements with 11 labor unions in the past 18 months, including the flight attendants’ contract.