'Optimistic' deliveries will surpass the 2025 target


South -West (Luv) Shares fell by 5% last week after higher costs shaded progress on the company's turning plans.

Many of the stock losses were the result of the airline that costs were about to accelerate in the first half of the year – echoing similar concerns raised by Jetblue (Bled) Earlier in the week – with earnings and margins expected to remain well below peak levels.

Despite some of the close-term challenges that pest lower cost carriers, Southwest CEO Bob Jordan remains optimistic about the company's recovery strategy-partially boiled by growing confidence in his fleet partner, Boeing (Ba).

I spoke to Jordan following the results of the airline earlier this week, and told me he saw “much progress” at the manufacturer following the company's recent strike decision, although he acknowledged that production restrictions could take ” years ”to be fully solved.

A constant improvement at Boeing is vital to Southwest business, as the airline operates an all-beeing fleet. For the past year, delayed delayed delivery has forced south west to reduce capacity, move schedules, and spend more to maintain its current-mater fleet that has “hamstrung” not only the low-cost carrier but the industry is General, according to the flight of a consultant Michael Boyd.

Looking ahead, the outlook seems to be improving. After walking the Planemaker factory floors earlier this month, Jordan expressed confidence in Boeing's ability to ramp up 737 of production. Jordan estimates that deliveries will exceed his current target of 38 aircraft this year, with the potential to reach up to 55.

That would mark a remarkable step on to Boeing, which has been blown by a series of obstacles over the past year, including the fall after a door plug panel blows off a maximum 737 hub and a nearly eight weeks stopping work by The International Union of Engineers Association (IAM).

Analyst Bank of America, Ron Epstein, echoed Jordan's optimistic attitude on Boeing in a client note.

“The company has not shared its FY25 forecast as it focuses on fully improvement after the effects of IAM work and rebuilding trust. Production of 737, which resumed at 4Q, is expected to increase gradually, with deliveries Already on the rise, “Epstein wrote.

On the company's earnings call, Boeing CEO Kelly Ortberg told analysts that “things are looking encouraging so far” and said he sees the company possibly exceeding its target of producing 38 737s per month and reach speeds of 42 a month by the end of the year.

“It is about adhering to our stable safety management and factory system as measured through agreed key performance indicators,” Ortberg said. “It's an early innings on the production ramp, and we need to stay disciplined on maintaining a stable production system.”





Source link

Leave a Reply

Your email address will not be published. Required fields are marked *