Why Southwest Airlines Shares Are Diving Tuesday
Portfolio Pulse from Nabaparna Bhattacharya
Southwest Airlines (NYSE:LUV) shares dropped in premarket trading after the company revised its Q1 2024 guidance downwards, citing lower-than-expected leisure passenger volumes and a reduction in Boeing (NYSE:BA) 737 MAX aircraft deliveries. The revised forecast includes flat to 2% RASM growth, a decrease in expected aircraft deliveries from 79 to 46, and an increase in CASM-X by approximately 6%. Additionally, Southwest anticipates a Q1 net loss but expects profitability in March. The company also plans to reduce its workforce by the end of the year.
March 12, 2024 | 1:29 pm
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NEGATIVE IMPACT
Boeing advised Southwest Airlines to expect a reduction in 737 MAX aircraft deliveries from 79 to 46 for 2024, impacting Southwest's capacity plans.
The reduction in aircraft deliveries to Southwest Airlines could reflect negatively on Boeing's operational capabilities and order fulfillment, potentially affecting its stock price.
CONFIDENCE 85
IMPORTANCE 75
RELEVANCE 80
NEGATIVE IMPACT
Southwest Airlines revised its Q1 2024 guidance downwards, expecting flat to 2% RASM growth, a Q1 net loss, but profitability in March. The company also plans workforce reductions.
The downward revision in guidance, especially the expected net loss for Q1 2024 and the reduction in workforce, is likely to negatively impact investor sentiment and the stock price in the short term.
CONFIDENCE 90
IMPORTANCE 90
RELEVANCE 100