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Southwest Airlines has an airplane problem.
Boeing can’t deliver the planes the airline has ordered, which will slow its growth in 2024. That’s something CEO Bob Jordan talked about during its fourth-quarter earnings call.
“We also made rapid adjustments to capacity for both 2023 and 2024 and put in place significant network adjustments in response to changing demand patterns. These changes reduced our planned 2024 year-over-year capacity increase to roughly 6%, all of which is carryover from 2023 network restoration. So there will be no net new additional capacity in 2024 as we work to mature our route network,” he said.
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Jordan admitted that Boeing’s (BA) issues with being able to deliver the planes Southwest has ordered has caused the airline problems.
“Moving into 2024, there is continued uncertainty around the timing of expected Boeing deliveries and the certification of the MAX 7 aircraft. Our fleet plans remain nimble and currently differs from our contractual order book with Boeing,” he added.
When you can’t get all the planes you have ordered and must retire older planes in your fleet, that impacts your capacity to grow. Southwest Airlines (LUV) faces that issue in 2024, but it does have a potential solution.
Southwest Airlines adds a new kind of flight
When an airline can’t get more airplanes, it only has one way to grow — adding more flights using its existing planes. That’s something Southwest has inched toward doing.
Southwest does not currently offer redeye flights. A redeye flight leaves at night and arrives at its destination the next morning. In most cases, the flight does not last long enough for passengers to get a full night’s sleep.
It’s a brutal way to fly, but it has some advantages. A redeye flight generally costs less, and it does get you to your destination early in the morning.
Southwest has not yet started offering redeye flights but it has added flights that involve overnight layovers at six airports — Baltimore, Denver, Las Vegas, Phoenix, Chicago Midway, and Oakland. The airline has not added any flights. It’s simply allowing passengers to book flights that arrive at an airport late with connections that leave the next morning.
In general, those are itineraries customers will want to avoid, but the airline has made them available for passengers who want them.
Southwest Airlines adding redeye flights
While it’s not happening immediately, Southwest does plan to offer redeye flights. That will help with its fleet utilization, but it’s going to take some time.
“You’d think they might rush redeyes to grow flying since Boeing delays mean they’re aircraft constrained. They don’t have more planes, but they could add flights. However, Southwest Airlines is two years away from offering redeye flights,” View From the Wing reported.
Ultimately, the airline plans 50 overnight flight routes per day, but it has “labor and technical” issues to work out before that can happen, according to a social media post from Southwest Chief Commercial Officer Ryan Green.
Until then, Southwest does have plans to grow capacity despite Boeing’s struggles.
“After finalizing our 2024 plans and refining capacity levels to better reflect the current environment, we now expect full-year 2024 capacity to be up about 6% year over year. And our 2024 capacity plans do not currently include any MAX 7 flying, so a certification of that aircraft continues to push out our 2024 capacity plans will not be impacted,” Jordan said.
Redeye flights would allow the airline to increase capacity without adding more airplanes. Overnight flights generally cost less than daytime flights, but they allow an airline to use its planes more effectively.
The airline’s CEO has not commented on redeye flights, but he is confident about Southwest’s plans for 2024.
“With some major milestones behind us, such as restoring our network, becoming fully staffed, fully utilizing our fleet, and so much more, our sites are set on expanding margins and covering our cost of capital in 2024,” he added.
Southwest shares were down 0.8% to $28.45. They’re off 1.5% so far in 2024 after falling 14.2% in 2023.
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