American Airlines Cuts Revenue Forecast Due to Boeing 737 MAX Issues
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American Airlines said Tuesday that its revenues for the first quarter of 2019 would be lower than expected, partially due to the grounding of the Boeing 737 MAX planes in its fleet.
The airline said in an investor release that it has been forced to cancel 1,200 flights in the first quarter as a result of complying with the global grounding of the imperiled MAX planes. In the filing, American says it now expects its first quarter total revenue per available seat mile — a key industry metric for measuring profits — to be flat to up 1% year-over-year, down from previous projections of flat up 2%.
In addition to the MAX groundings, American said that the government shutdown and the removal of 14 Boeing 737-800 aircraft for interior work also had an impact on the lower revenue projections.
Earlier this week, the carrier said it has extended its MAX flight cancellations until June 5, which is sure to affect the airline’s earnings as it is the beginning of the peak summer travel season.
American Airlines flies the second-largest fleet of 737 MAX 8 planes in the US, trailing behind Southwest Airlines’ 34 of the jet variant. Wall Street analysts downgraded Southwest’s stock Monday as a result of the ongoing MAX groundings. Southwest predicted it will lose at least $150 million in the first quarter due to the MAX issues and a dispute with its mechanics.
The Boeing 737 MAX plane was grounded around the world after two similar fatal crashes occurred just five months apart. A total of 346 people died in both of those accidents, which happened on Ethiopian Airlines Flight 302 and Lion Air Flight 610. Investigators believe that a computer system that automatically pushed the plane’s nose down to avoid a stall caused both deadly incidents.
Featured photo by Joe Raedle/Getty Images.