Southwest says Boeing’s aircraft delays will force the airline to scale back hiring plans

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Southwest Airlines CEO Bob Jordan: We expect a strong profit for the entire year

Southwest Airlines is reducing its hiring targets for this year because of delays in new aircraft from Boeing, the carrier’s CEO Bob Jordan said Thursday.

The Dallas-based airline expects to receive just 70 new 737 Max planes from Boeing this year, down from a previous forecast of 90, which will reduce its capacity growth plans by one percentage point, Southwest said in quarterly filing.

Southwest is one of Boeing’s best customers and operates a fleet of all 737s. It has orders for 564 Boeing 737 Max planes through the end of the decade, according to the quarterly report. Those aircraft are more fuel-efficient and will both replace older jets and help the company grow.

Jordan told CNBC’s “Squawk on the Street” following its quarterly report that the company planned to add a net 7,000 people to its staff this year, but will now have to “moderate” its targets.

The company didn’t respond to a request to elaborate on how much it will need to reduce its hiring plans.

Boeing employees sign a banner in front of a 737 MAX 8 produced for Southwest Airlines as Boeing celebrates the 10,000th 737 to come off the production line in Renton, Washington, U.S. March 13, 2018.

REUTERS/Jason Redmond

Jordan said the company is trying to be “prudent” about its expectations for deliveries, which have repeatedly been delayed.

“You plan way in advance to set your schedules, to set your capacity, and you’re wrong. It’s just really difficult to change that close in,” Jordan told CNBC’s Phil LeBeau in the interview.

The carrier plans to reduce flight plans in the last few months of the year because of the delays, COO Andrew Watterson said on the quarterly call on Thursday.

On Wednesday, Boeing said it plans to ramp up output of 737 Max planes to 38 a month this year from a current rate of about 31 a month, a long-planned increase that was delayed by supply chain problems and labor shortages.

American Airlines CEO Robert Isom also complained about delivery delays when the rival airline reported quarterly results on Thursday.

“In terms of the aircraft manufacturers, both Boeing and Airbus, they have to do a better job,” Isom said in an interview with CNBC’s “Squawk Box” following that report. “When we don’t receive a delivery on time, guess what? We’re going out and having to cancel flights. That affects thousands of customers.”

“We’ve got to hold them accountable,” Isom said.

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