Airline Shares Affected by Exposure to Boeing's 737 MAX -- Update
July 25 2019 - 5:43PM
Dow Jones News
By Akane Otani
The grounding of Boeing's 737 MAX fleet is continuing to have
ripple effects in the air-travel industry.
Southwest Airlines Co. said early Thursday that it would end
flights at Newark Liberty International Airport this fall. The
reason: The airline, which has the largest exposure of U.S.
airlines to Boeing Co.'s 737 MAX, is dealing with a reduced
capacity for flights while the jets are grounded.
American Airlines Group, which along with Southwest reported
earnings before the opening bell Thursday, delivered more bad news
for the industry. It said the Boeing grounding would likely shave
$400 million off its pretax earnings in 2019, up from earlier
estimates of $350 million. American's shares fell 8.4%
Thursday.
The dual reports sent many airline stocks lower, with the U.S.
Global Jets exchange-traded fund -- which includes U.S. companies
such as Southwest, American and United Airlines Holdings Inc.,
along with foreign airlines -- falling 1.7%.
Southwest shares, which initially dropped, ended the day up 0.3%
after executives stressed that they would use the planes they were
flying into and out of Newark in markets like Hawaii that tend to
be more lucrative.
Shares of Boeing, which said Wednesday it might have to halt 737
MAX production if the grounding dragged on, dropped 3.7%.
Investors aren't as heavily punishing airlines that don't
greatly rely on Boeing's troubled model.
JetBlue Airways Corp. initially jumped past the S&P 500
Thursday, flirting with a record before closing down 0.2%. It is
one of the airlines that had no plans to fly Boeing's 737 MAX in
the coming months, meaning the continuing grounding has had no
effect on its bottom line.
Write to Akane Otani at akane.otani@wsj.com
(END) Dow Jones Newswires
July 25, 2019 17:28 ET (21:28 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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