Southwest Airlines (NYSE:LUV) shares slipped in Wednesday trading on Wednesday after the low-cost carrier trimmed its revenue forecast following the grounding of its Boeing (NYSE: BA) 737 Max planes.
The Dallas-based airline expects its revenue per available seat mile, a key industry metric of how much an airline generates for each seat it flies a mile, to grow 2% to 3% compared with an earlier forecast of as much as 4% growth.
The U.S. Federal Aviation Administration grounded Boeing 737 Max planes earlier this month following two fatal crashes. Investigators have said there are "clear similarities" between an Ethiopian Airlines crash of a 737 Max on March 10 and another deadly crash of that model of plane in Indonesia in October.
Southwest operates an all-Boeing 737 fleet, and has 34 737 Max 8 planes in its fleet of about 750 aircraft.
Southwest said its operating costs, excluding fuel, in the quarter will likely rise 10% from a year ago, up from a previous forecast of a 6% year-over-year increase.
The carrier expects to lose $150 million in revenue in the first quarter of 2019, up from a February estimate of $60 million, due to weather-related cancellations, maintenance issues, weak leisure-travel demand and the Max groundings.
It is a small amount compared with the $5.3 billion in revenue analysts expect Southwest to generate in the first three months of 2019, but investors are focused on how the suspension of the 737 Max planes will financially impact airlines.
Shares took on $1.24, or 2.5%, to $49.99
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