Southwest trims first quarter outlook after 737 Max groundings

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

(Reuters) – Southwest Airlines Co on Wednesday was the first major airline formally to cut its financial outlook in the wake of the recent groundings of Boeing 737 MAX planes.

Shares of Southwest, the largest operator of Boeing’s 737 MAX 8 with 34 jets, were down 2.5 percent to $48.8 in premarket trading after it said its operating revenue per available seat mile (RASM) would grow by a full percentage point less than previously forecast.

The revenue indicator is a closely followed measure of airline performance and had been forecast to grow by 3 percent to 4 percent before the crash of an Ethiopian Airlines jet on March 10 caused the grounding of 737 MAX planes globally.

Air Canada and United Airlines had both previously warned of negative impacts on business due to the groundings, with the Canadian carrier suspending its 2019 financial forecasts.

Several airlines are also reconsidering Boeing orders.

Reporting by Rachit Vats and Sanjana Shivdas in Bengaluru; Editing by Arun Koyyur and Patrick Graham

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