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Southwest grounds 737 Max until 2020, cuts out NYC-area airport

By Danielle Haynes
Southwest grounds 737 Max until 2020, cuts out NYC-area airport
A Southwest Airlines 737 Max 8 is parked at Gate 40 at St. Louis-Lambert International Airport in St. Louis, Mo., on March 13. Photo by Bill Greenblatt/UPI | License Photo

July 25 (UPI) -- Southwest Airlines made two significant announcements Thursday -- that it won't fly its fleet of Boeing 737 Max 8s until at least next year, and delays related to the plane have led it to shut down routes at one of the New York City area's busiest airports.

The Dallas-based carrier extended its grounding of the aircraft through Jan. 5, just one week after announcing a November extension. It revealed the schedule changes in its second-quarter earnings report.

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Southwest CEO Gary Kelly said the airline expects regulatory approval of the 737 Max toward the end of 2019.

"With this in mind, we will proactively extend the Max-related flight schedule adjustments through January 5, 2020, to provide reliability of our operation and dependability for our customers booking their fall and holiday travel," he said in a statement.

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"Following a rescission of the Federal Aviation Administration order to ground the Max, we estimate it will take us one to two months to comply with prospective FAA directives, including all necessary pilot training."

Kelly said Southwest's financial operation during the second quarter was "remarkably strong considering the impact of the grounding of the Boeing 737 Max 8 aircraft." The company reported quarterly operating revenues of $5.9 billion and a net income of $741 million.

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The carrier said delays related to the 737 Max, however, have forced it to take cost-saving action, including ceasing operations at Newark Liberty International Airport in New Jersey. Southwest said it had projected a 5 percent growth in capacity this year, but 737-related delays have turned that into a projected loss of 1 or 2 percent.

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"As such, we are taking necessary steps to mitigate damages and optimize our aircraft and resources," Kelly said. "The financial results at Newark have been below expectations."

Southwest said it will consolidate New York operations at LaGuardia International Airport. Newark handled a record 46 million passengers in 2018.

Southwest also reported a $4.9 billion after-tax charge related to the groundings. Kelly said the company is working with Boeing to discuss possible compensation for the damages. Boeing revealed its largest quarterly loss in history Wednesday, aided by a $5 billion charge related to the 737 Max.

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