Southwest pulls 737 MAX until March, nearly a year after grounding

CHICAGO/WASHINGTON (Reuters) – Southwest Airlines (LUV.N) said on Friday it is extending Boeing 737 MAX cancellations until March 6, 2020, just shy of the one-year anniversary of an Ethiopian Airlines crash of the jet that led to a worldwide grounding.

FILE PHOTO: A number of grounded Southwest Airlines Boeing 737 MAX 8 aircraft are shown parked at Victorville Airport in Victorville, California, U.S., March 26, 2019. REUTERS/Mike Blake

Southwest, the world’s largest 737 MAX operator which has bet its entire growth strategy on Boeing’s newest single-aisle aircraft, had previously canceled all its 737 MAX flights until Feb. 8. But Boeing Co (BA.N) is facing increasing hurdles in obtaining approval to return the plane to service before the end of this year as it has targeted.

The airline cited “continued uncertainty around the timing of MAX return to service” in its decision to extend cancellations by another month, the longest delay for any U.S. carrier.

United Airlines (UAL.O) and American Airlines (AAL.O), the other two U.S. 737 MAX operators, have thus far canceled flights into January, although they may yet have to extend that time frame.

Reuters reported this week that U.S. and European regulators will need to return to a Rockwell Collins facility in Iowa to complete an audit of Boeing’s software documentation after regulators found gaps and substandard documents. Boeing has confirmed it must submit revised documentation.

That has thrown into question when Boeing would be able to complete a certification test flight. The Federal Aviation Administration has said it would not unground the planes until 30 days after that flight occurs.

The 737 MAX, Boeing’s best-selling plane, has been grounded since March after crashes in Indonesia and Ethiopia killed 346 people.

Two U.S. officials told Reuters it is extremely unlikely – if not impossible – that Boeing will be able to win approval to return flights to service before the end of December.

Southwest said that any changes to current estimates of the 737 MAX’s return to service could lead to flight cancellations beyond March 6, as well as further delays in aircraft deliveries and additional financial damages.

As of now, the company is cancelling about 175 weekday flights out of a peak daily schedule of over 4,000. Southwest had 34 MAX jets at the time of the March 13 grounding and was expecting delivery of another 41 jets this year.

It said on Friday it still hopes to receive seven MAX deliveries in the current quarter, with the remaining shifting into 2020.

Operating a slimmer fleet, Southwest has scaled back or canceled routes, leading to a decline in annual capacity. The carrier had targeted capacity growth this year as it expands into Hawaii. Without clarity on the MAX timeline, it said it could not update a previous forecast for first-quarter capacity to grow between 2% and 3%.

Southwest Chief Executive Gary Kelly has said he is “not happy” with the MAX situation. The airline is discussing compensation with Boeing, but no agreement has been reached.

Reporting by Tracy Rucinski in Chicago and David Shepardson in Washington; Editing by Leslie Adler and Bill Berkrot

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