Southwest Airlines Problems Paint Worrying Picture for Other Companies

Southwest, one of the country's best-known airlines, is dealing with myriad problems as major aircraft manufacturer Boeing continues to face the music over numerous safety incidents on its planes.

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The popular budget carrier announced a slew of operational changes in April after posting poor financial results in the first quarter of 2024. After making a net loss of $231 million, the airline announced it would cease operations at four airports and cut 2,000 jobs. In a previous statement made to Newsweek, a spokesperson for Southwest said the job cuts would be achieved through "attrition and other voluntary programs," and that the company is "not laying off or furloughing employees."

It seems that the issues are primarily down to the aircraft manufacturer Boeing, which has so far in 2024 undergone a Federal Aviation Authority (FAA) audit and a temporary grounding of all its 737 MAX 9 airliners—not to mention the monumental reputational damage done to one of the world's biggest aircraft producers.

"The recent upheaval at Boeing is sending shock waves through the airline industry," Matt Spooner, industry thought leader at Kinaxis, a supply chain management solutions firm based in Canada, told Newsweek.

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Aviation, supply chain and business experts have told Newsweek that the problems at Boeing and Southwest could be an ominous sign for other airlines. Some of the problems go back decades in Boeing's case, with airlines now paying for arguably over-relying on a single manufacturer to fulfill orders.

Boeing's Safety Record

So far, 2024 has been eventful for Boeing. In January, a panel blowout on an Alaska Airlines flight alerted authorities to safety issues in the production of its 737 MAX 9 planes. In March, a Boeing 787-9 Dreamliner bound from Sydney, Australia, to Auckland, New Zealand, experienced a midflight technical issue that resulted in the plane dropping midflight, injuring 50 people on board. Numerous other incidents have also taken place, including fuel leaks, wheels falling off and engine issues.

In 2018 and 2019, Boeing suffered a major blow to its reputation when two of its MAX aircraft crashed within the space of a year, killing a combined 346 crew and passengers. The accidents, which took place in Indonesia and Africa, were near-identical, both being linked to new Maneuvering Characteristics Augmentation Systems (MCAS) installed on board.

The Problem at Hand

The seemingly chronic safety issues are causing widespread problems across several carriers. Boeing has now been ordered by the FAA to produce only 38 of its 737 MAX jets per month—but the actual production number is considerably lower, according to an April report by Reuters.

The ripple effect is tangible. Just this week, American Airlines (AA) announced it would cut some flights to European destinations this year and into 2025 as Boeing is unable to fill an order from the company. The airline now expects to receive three Dreamliners in 2024, down from six.

"Due to the recent delays in Boeing deliveries, our forecasted (flight hours) have been reduced and we are offering our pilots voluntary programs for the month of May to reduce excess staffing," a spokesperson for AA said.

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In early April, United Airlines asked its pilots to take voluntary unpaid leave because of a shortage of aircraft caused by delivery delays from Boeing.

"United Airlines estimates that the grounding of the Boeing 737 Max 9 cost $200 million in the first quarter of 2024. Given that United Airlines incurred a loss of $164 million during the same period, it would have turned a profit had the grounding of the Boeing 737 MAX 9 not occurred," Professor Kivanc Avrenli, a researcher in commercial aviation safety at Syracuse University, told Newsweek.

On March 1, low-cost European carrier Ryanair told investors that it expects 40 of its planned 57 B737-MAX8200 aircraft to be delivered this year. Almost all Ryanair planes are produced by Boeing.

Ryanair's CEO Michael O'Leary has spoken about issues with Boeing before.

"We were finding little things like spanners under the floorboards, in some cases, seat handles missing, things like that," he said in March. "This shows a lack of attention to detail, quality issues in Boeing."

Aviation experts have said the troubles plaguing airlines across the world are twofold: caused in part because of an over-reliance on Boeing, and because of Boeing's flawed Yellowstone Project.

The Yellowstone Project

Chad D. Cummings, an attorney who has previously worked for American Airlines, told Newsweek that Boeing's all-encompassing Yellowstone Project, initiated 25 years ago, which aims to replace aging aircraft like the 737, 777, and 747 with new "clean-sheet" designs, is to blame for today's problems.

Cummings explained that by the end of the 2010s, Boeing shifted its strategy toward incremental improvements rather than entirely new aircraft, leading to models like the 737 MAX, which, for example, retained the original airframe of the 737 but included upgraded avionics and more fuel-efficient engines.

The strategy change was partly influenced by market pressures, including competition from Airbus. However, the "incremental approach" encountered challenges such as supply chain issues and "underestimation of complexity," with aircraft like the 737-10 and 777X requiring significant modifications.

"Not unlike a thread unraveling from a sweater, every change necessitated changes in other systems," Cummings said.

But despite criticism and delays, Cummings said Boeing persisted in pursuing incremental upgrades to balance efficiency gains with the substantial investments needed for new aircraft development.

"Every aircraft brought to market has had its own share of teething issues, and the MAX and 777X are no different. To be clear, there is no suggestion that MAX is inherently unsafe, and this is demonstrated by the number of successful and uneventful flights since the first MAX flight in 2016," he said. "It is not difficult to imagine that Boeing will continue working behind-the-scenes to resolve these issues and regain the public trust."

But Cummings argued that a "course correction" at Boeing is essential, otherwise "the capacity cuts announced by Southwest will continue to be replicated at other carriers, even those airlines that are not Boeing customers.

"This is because Boeing customers are turning to the only other game in town, Airbus, to backfill and compensate for Boeing's inability to deliver aircraft on time, thereby adding to Airbus' already substantial order backlog."

When asked for comment regarding the changes being made at Southwest, a Boeing representative referred Newsweek to its chief financial officer Brian West's comments at the Bank of America Industrials Conference on March 20, which were made prior to Southwest's April announcement.

"We put the customers in [a] tight spot, the most important thing we do is communicate with them," he said. "And they have been supportive of everything we're trying to do to enhance safety and quality for the industry. We are in regular, very transparent communications [with Southwest] and they know precisely where we stand and the progress that we're making and we, at the same time, have to understand what their needs are as they think about their flight schedules and their passengers."

Newsweek has contacted both Boeing and Southwest for updated comment via email outside of normal working hours.

Overreliance on Boeing

While exact numbers for the number of Boeing aircraft being flown by U.S. carriers is not available, many leading carriers rely heavily on the manufacturer to supply planes.

Southwest operates an entire fleet of 815 aircraft made by Boeing. Almost all of United's fleet is composed of Boeing planes, save for a selection of Airbus A319 and A320 models. Delta operates 417 Airbus aircraft, with 519 Boeing planes in its fleet.

"This reliance on one company is unparalleled and is exposing incredible vulnerability across the industry that will likely continue to create challenges as we head into peak travel season," Spooner said.