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April 25 (UPI) -- A first-quarter financial loss has prompted Southwest Airlines to suspend service to four cities, the carrier announced Thursday. The company will ground flights in both smaller and major markets including Bellingham, Washington International, Mexico's Cozumel International Airport, George Bush Intercontinental Airport in Houston, and Syracuse Hancock International Airport in New York.
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"To improve our financial performance, we have intensified our network optimization efforts to address underperforming markets," Southwest CEO Bob Jordan said in a statement alongside the company's earnings.
Southwest, which only flies Boeing 737 aircraft, has said persistent production slowdowns at Boeing are unrelated to the financial hit and announced its service suspensions in an earnings call.
Boeing in February said it was reducing deliveries of its 737s this year due to safety inspection issues with the fuselage following the January incident on an Alaska Airlines filght that saw a door plug blow out mid-flight leading to an emergency landing.
Jordan said the company will do what it can to "adapt to aircraft delivery constraints and adjust to slower than planned growth for this year and next."
"The network actions have really nothing to do with the Boeing delay. We are taking network actions regardless," Southwest CEO Bob Jordan told CNBC. "Now, the Boeing delays are very painful. They cause us to replan, they hurt us on the revenue front, they cause us to be inefficient, and we're working all of that."
Despite reporting a $6.3 billion dollar first-quarter profit, Southwest reported a loss of $231 million in the first four months of 2024, substantially more than the $159 million it lost in the same quarter last year.
Boeing has been under intense scrutiny for its safety culture following two deadly crashes of its 737-MAX aircraft, and specifically, a control system known as MCAS that overrode pilot instructions, causing the plane to dive. MCAS was identified as a culprit in the fatal crashes of Lion Air Flight 610 in Oct. 2018 and Ethiopian Airlines Flight 302 in March 2019. Those air disasters killed 346 people. Analysts have said Boeing rushed its production of the 737 to market amid fierce competition from its competitor, Airbus.
Because of the heightened scrutiny, Boeing has been in the unique position of having to tighten its safety standards while still trying to meet customer demand for additional aircraft.
That incident led to the temporary grounding of nearly 200 Max 9 planes, another production slowdown, and additional scrutiny over Boeing's safety culture and quality control.
Southwest historically has bought its planes only from Boeing, a move that has hamstrung it amid an uptick in travel. Many of Southwest's competitors buy their planes from Airbus.
Southwest was anticipating receiving 20 new Boeing jets this year, down from 46 it previously expected. The timing of the deliveries will depend on the Federal Aviation Administration, which has limited Boeing's production while it addresses the quality control issues.
U.S. Transportation Secretary Pete Buttigieg has said Boeing will not be permitted to increase its production until the company addresses the safety issues.
"The recent news from Boeing regarding further aircraft delivery delays presents significant challenges for both 2024 and 2025," Jordan said in a statement.
The airline said it would also limit hiring and end the year with 2,000 fewer employees than it started with. Southwest will also put fewer planes out of service than it previously planned, it said.
