Strong travel demand helped lift Southwest Airlines (NYSE: LUV) revenue and profit in the third quarter, but the low-cost carrier warned the financial hit from the Boeing (NYSE:BA) 737 Max grounding would "grow" into 2020.
The airline is the largest operator of the 737 Max and it had 34 of them in its fleet at the time of the worldwide grounding in mid-March, in the wake of two fatal crashes.
Southwest said the flight ban, the largest ever, cost it $210 million in revenue in the quarter, but sales still rose just over 1% to $5.64 billion, in line with analyst estimates. Net income rose 7% to $659 million, a third-quarter record.
On an adjusted per-share basis, third-quarter earnings came in at $1.23, above analysts’ expectations of $1.08 a share.
Southwest said the grounding cost it $435 million in revenue in the first nine months of the year. The airline added that it expects "the damages to grow into 2020."
The airline removed the plane from its schedules through Feb. 8, later than any U.S. airline.
Southwest’s CEO Gary Kelly warned that even if the Federal Aviation Administration lifts the ban before the fourth quarter, the carrier would need one to two months to complete pilot training and other steps to get planes ready for passengers.
Shares got lift of $2.32, or 4.4%, to $55.56, for Southwest, while shares in Boeing lost 87 cents to $339.63
