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Southwest pleased with Hawaii service, not Max’s grounding

  • ASSOCIATED PRESS / MARCH 23

    A Southwest Airlines Boeing 737 Max aircraft lands at the Southern California Logistics Airport in the high desert town of Victorville, Calif. Southwest Airlines Co. reports earnings.

DALLAS >> Southwest Airlines said it is happy with its Hawaii expansion but acknowledges it is upset with Boeing over the grounding of its 737 Max jetliner, which has caused the airline to cancel thousands of flights.

But airline executives are still standing by the embattled aircraft maker and deny interest in buying planes from its rival Airbus.

Southwest has 34 Max jets — more than any other carrier — and has run up extra costs and lost revenue since they were grounded last month after two deadly crashes. It is not clear when the planes will fly again.

“We are not happy with this situation. Who would be?” Southwest Chairman and CEO Gary Kelly told reporters Thursday.

The airline’s president, Tom Nealon, said he expects some customers will avoid buying tickets on Max flights, at least for a time.

Nealon confidently predicted that the airline will find other passengers for those flights.

“We will fill them up, just like we always do,” he said.

The executives spoke to analysts and reporters after Southwest released quarterly results that showed that higher costs due partly to the Max grounding are more than offsetting rising ticket sales. Its first-quarter profit fell 16% to $387 million.

Southwest said that it canceled more than 10,000 flights in the quarter because of the Max, a labor dispute with its mechanics and winter storms.

The Max currently accounts for less than 5% of Southwest flights, but that would roughly double if, as planned, it takes delivery of 41 more of them later this year.

A silver lining has been the start of service to Hawaii, which began March 17 with a flight between Oakland, Calif., and Honolulu. That was followed on April 7 with an Oakland-Kahului flight. Next up is the first San Jose, Calif., to Honolulu flight, which will take off on May 5.

“Our Hawaii expansion is off to an exceptional start … despite having numerous distractions in the first quarter,” Kelly said. Those distractions included the federal government shutdown that delayed Federal Aviation Administration approval of the Boeing 737-800 aircraft used for the Hawaii flights.

Chief Operating Officer Mike Van de Ven said the Hawaii service has been well received.

“We were still able to launch our Oakland-Honolulu service in the first quarter as planned, and since then we’ve added Oakland-Maui,” he said. “The startup went extremely well, our onboard experience has received high customer marks and we are continuing to add service during the second quarter.”

Nealon said Southwest is gradually increasing its mainland-Hawaii airfare.

“We began our Hawaii flights with very low initial pricing,” Nealon said. “And if you look at where we are today, we are moving up the price to what we consider to be normal pricing levels, and we’re seeing very strong demand in bookings.”

In the meantime, Southwest is checking its customer surveys and consulting outside experts as it crafts a marketing plan to make customers feel comfortable getting on the jets. Executives said it was too early to give details about their thinking.

Boeing leaders said this week that they are close to finishing work on updates to the anti-stall software that has been implicated in accidents in Indonesia and Ethiopia that killed 346 people. Preliminary reports from investigators indicate that in each case the software was activated by faulty data from a sensor and pushed the plane’s nose down, and pilots were unable to counteract the force of the plane. Boeing is making the anti-stall automation less powerful, and it is designing a training course to explain the system to pilots.


Star-Advertiser reporter Dave Segal contributed to this story.


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