DALLAS- Southwest Airlines (WN) anticipates continued delays in aircraft deliveries from Boeing due to an ongoing worker strike and prolonged efforts to increase production.
CEO Bob Jordan told Bloomberg on Wednesday (November 14, 2024) that 2025 deliveries may fall below original expectations.
Southwest Boeing Delivery Timeline
“I wouldn’t be surprised if our deliveries from Boeing in ‘25 are lower than we originally thought,” he said, indicating that Southwest foresees receiving fewer planes than Boeing currently projects.
Delays stem from multiple setbacks at Boeing, including a January incident when a door-sized panel detached from a 737 MAX mid-flight. Consequently, Southwest had to reduce its 2023 plane deliveries to 20 jets, down from its initial target.
Southwest’s 2025 order book initially scheduled 86 aircraft, but the airline has reduced that figure to 73. Jordan said Southwest’s projections accounted for a four-to-five-week strike.
Still, the walkout extended beyond seven weeks, and Boeing now faces a 30 to 60-day recovery to return to normal production.
Jordan expects Boeing’s production constraints to continue into 2024. If production falls further, Southwest may need to adjust its operational capacity.
Southwest plans to expand flying capacity by only 1% to 2% annually over the next three years as it revamps its business model to address financial challenges. The airline remains committed to receiving all planes scheduled through 2031 and plans to sell older aircraft if demand decreases.
“There is a lot of value in each aircraft in the order book,” Jordan told Bloomberg. “If we don’t need them, we will sell older aircraft into the market.”
Voluntary Separation Scheme
Southwest Airlines is addressing overstaffing at select airports by offering voluntary separation to certain employees in ground operations, cargo, and provisioning roles. The overstaffing, resulting from aircraft delivery delays, impacts nearly 20 major airports and some positions at Southwest’s headquarters.
The staffing adjustments were first reported by aviation analyst JonNYC. In a staff update, Chris Johnson, Vice President of Ground Operations, along with Vice Presidents Cole McGuire and Wally Devereaux, explained that the voluntary separation program, VSP 24, was introduced to realign staffing with the airline’s reduced capacity due to delayed aircraft deliveries.
The VSP 24 applies to contracted and non-contracted employees, including customer service agents, ramp agents, cargo agents, and provisioning agents, as well as roles like operations agents, ramp supervisors, provisioning supervisors, assistant managers, and operations managers.
This voluntary separation initiative coincides with Southwest’s planned reduction of over 300 pilot and flight attendant positions in Atlanta by April 2024, as the airline continues to adjust its workforce to meet current demand levels.
Southwest is also facing revenue-increase pressures from Elliott Investment Management, a major shareholder with a 10% stake in the airline. In response, Southwest made recent board changes as requested by Elliott, appointing Rakesh Gangwal, co-founder of India’s low-cost airline IndiGo (6E), as its new independent board chair.
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