Southwest sees higher Q2 unit revenues, and costs, due to 737 MAX groundings

Southwest expects higher unit revenues, and costs, in the second quarter than previously forecast due to the ongoing grounding of Boeing’s 737 MAX aircraft, which has led to more than a hundred flight cancellations per day. The global MAX grounding, which followed two deadly crashes in Indonesia and Ethiopia, has meant that airlines have fewer seats to sell, even though costs remain. But because planes are flying near capacity, airlines can charge more for available seats, driving up the closely-watched metric of revenues per available seat mile, or unit revenues. Southwest last week joined larger rival American Airlines in extending its removal of the MAX planes from its schedules until the start of September. The carrier said in a regulatory filing it now expects Q2 unit revenues to increase in the 6.5% to 7.5% range compared with its previous forecast of 5.5% to 7.5%. It sees unit costs, excluding fuel and profitsharing expenses, rising 11.5% to 12.5% versus previous guidance for 10.5% to 12.5%.<br/>