The airline also cautioned that delays in Boeing's aircraft production will impede its growth until 2025.
The airline had initially planned to expand its capacity by 6% this year, but this has now been revised down to 4%. For the second quarter, the airline anticipates growth of 8% to 9%, but also predicts a revenue decrease of up to 3.5%.
In the wake of this announcement, Southwest's shares fell by over 8% during afternoon trading.
In its quarterly report, Southwest revealed that it now anticipates receiving only 20 Boeing 737 Max 8 planes, a significant decrease from the previously forecasted 46. Consequently, the airline will postpone the retirement of some of its older Boeing aircraft and is implementing cost-cutting measures, including offering staff voluntary time off. The airline predicts that it will conclude the year with 2,000 fewer employees than it had at the end of 2023.
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Southwest also plans to cease operations at several airports, including Syracuse, New York; Bellingham International Airport in Washington; Cozumel International Airport; and Houston's George Bush Intercontinental. Additionally, the airline will reduce its service in Atlanta and at Chicago O'Hare International Airport.
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Southwest's CEO, Bob Jordan, stated in an earnings release, "Achieving our financial goals is an immediate imperative. The recent news from Boeing regarding further aircraft delivery delays presents significant challenges for both 2024 and 2025. We are reacting and replanning quickly to mitigate the operational and financial impacts while maintaining dependable and reliable flight schedules for our Customers."
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The Dallas-based airline, which operates an all-Boeing 737 fleet, is particularly affected by Boeing's aircraft delays, which are a result of its safety and quality crises. Southwest had previously warned that slower Boeing deliveries were hampering its growth.
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The airline is not only reconsidering its network but also its business model. Jordan told CNBC that the airline might abandon its single-class cabin and open seating. While no decisions have been made, this would represent a significant shift, particularly as major competitors like United and Delta are reporting strong revenue growth for premium seats.
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In the first quarter, Southwest lost $231 million, or 39 cents a share, compared to a loss of $159 million, or 27 cents a share, a year earlier when it was dealing with the aftermath of its holiday meltdown.
After adjusting for one-time items, including costs related to labor contracts and fuel, Southwest's loss amounted to $218 million, or 36 cents a share.
Revenue rose nearly 11% to $6.33 billion, slightly below analysts' estimates as compiled by LSEG.
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