DALLAS (CBSDFW.COM) – Profits tumbled more than 21% for Dallas-based Southwest Airlines, but the company still plans on sharing more than $650 million with employees.
The sharp drop in fourth-quarter profits were a direct result of the grounding of the Boeing 737 Max jet. grounding. Southwest had more Max jets in their fleet than any other airline — at 34 — and was scheduled to add more than 40 additional planes at the end of 2019, and another 38 in 2020.
The Max jets were grounded in March after two fatal crashes that killed a total of 346 people.
Earlier this month Southwest announced that they were delaying putting the 737 Max back on their schedule until at least June and just this week Boeing said it doesn’t expect the planes to get approval to fly again until at least the middle of 2020.
Each week the company removed about 330 flights from its schedule because to the grounding.
In a press release statement Southwest CEO Gary Kelly said, “We continue to incur financial damages in 2020, and we will continue discussions with Boeing regarding further compensation. No estimated settlement amounts relating to financial damages beyond 2019 have been factored into our 2020 outlook.”
On Thursday, Southwest reported fourth-quarter profits of $514 million, or $0.98 per share. Profits were below Wall Street forecasts of $1.09 per share. The airline said the Max grounding cut its income by $828 million in 2019.
But Southwest increased profit-sharing payments to employees by some $97 million and expects to give $667 million back to employees for 2019.