The largest U.S operators of Boeing Co's 737 MAX aircraft on Thursday said that the healthy travel demands is cushioning results for the two airline groups. They also raised their concern on losing customers as the 737 MAX jets still remain parked in a global grounding.
American Airlines Group and Southwest Airlines Co is Boeing Co's largest operator of the infamous 737 MAX. The aircraft have been grounded ever since the crashes in March. The companies said that they do not have enough crafts to meet the demand that they see in the market.
The airlines canceled their flights till early June citing reasons of the Boeing's regulatory concerns. They continue to operate slimmer fleets but said that they might cancel more flights because of Boeing not winning the regulatory approval for the jets.
Airlines talks about losing customers because of the 737 MAX grounding
Southwest CEO Gary Kelly said the airline is losing 6 million to 7 million customers a year due to the 737 MAX grounding, but said he expects to "aggressively recapture" lost market share once the jets return.
"There's a lot of pent-up demand for traveling on American. We're not going to be able to meet it all," American CEO Doug Parker told CNBC. "It's going to unfortunately go to some of our competitors."
Even without the MAX, both airlines reported solid quarterly profits and pointed to strong first-quarter bookings.Shares of American Airlines gained 2.6% to $28.03 while Southwest shares were up 3.5% at $55.35.
After regulators give the green light, airlines will still need a month or longer to prepare the jets and their pilots.For Southwest, the world's largest 737 MAX operator with nearly 10,000 pilots, the training process will take at least a couple of months more than the 30 days that it initially expected now that Boeing is recommending simulator training rather than just computer based training.
Screening process amid concerns of the new virus
Parker said it was too soon to see any impact from the coronavirus that has emerged from Wuhan, China, but said the carrier is working with U.S. public health officials. In response to the outbreak, passengers are being screened as a precaution at airports around the world.
Southwest does not fly to Asia. For 2020, American said it expects 2020 full-year adjusted earnings between $4 and $6 per share, an estimate some analysts said they thought was conservative. Southwest, which had bet its entire growth strategy on the 737 MAX, did not provide 2020 guidance given continued uncertainty around when the jets will fly again.
Both companies struck partial compensation deals with Boeing over 737 MAX damages in 2019 and said they expect additional settlements this year. Smaller U.S. airline JetBlue also posted quarterly earnings on Thursday that showed it delivering on a three-year cost-cutting drive, sending its shares higher.
(With inputs from agencies)