- Southwest Airlines beat earnings expectations Thursday despite being impacted by the grounding of the Boeing 737 Max aircraft.
- The airline has the most exposure to the aircraft of all US carriers.
- Southwest shares were up 2% early Thursday.
- Watch Southwest Airlines trade live.
Southwest Airlines reported first-quarter earnings on Thursday morning that beat Wall Street estimates, sending shares up more than 2% ahead of the opening bell.
The airline posted adjusted earnings of $US0.70 a share, easily beating the $US0.61 that analysts surveyed by Bloomberg were expecting. Revenue of $US1.5 billion was in line with expectations.
Despite the positive surprise in earnings, operating profits fell nearly 18% from a year earlier to $US505 million. A number of factors have impacted the industry with the fallout from the grounding of the Boeing 737 Max topping the list.
This challenge has particularly hit Southwest as the Dallas-based airline has the most exposure to 737 Max aircraft of all US carriers according to research from Stifel Financial.
Governments around the world ordered the grounding of the 737 Max after two crashes of the aircraft in five months. On Wednesday, Boeing announced a $US1 billion hit to earnings as a result of the grounding and was not able to give a firm timeline on a fix.
The 737 Max fallout for Southwest has been significant, and comes amid other challenges for the airline, as highlighted by chairman and CEO Gary Kelly in the company’s earnings release.
“Our People were tasked with minimising disruptions for our Customers due to more than 10,000 flight cancellations arising from the grounding of the Boeing 737 MAX 8 aircraft, unscheduled maintenance disruptions in connection with efforts to reach a Tentative Agreement with the Aircraft Mechanics Fraternal Association, and severe winter weather,” he said.
Southwest shares were up 16% this year through Wednesday, trading near $US53 apiece.
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