Southwest to depart Newark Airport service over MAX, profitability

Southwest Airlines, which has the largest fleet of 737 MAX jets in the US, is pulling out of Newark Liberty International Airport because it doesn't expect the grounded aircraft to return to service this year.

The airline is reassigning critically short planes to more profitable routes serving Hawaii and Mexico from California and Texas. Other airlines have canceled flights or purchased older, less fuel-efficient planes, to make up for capacity lost to grounded MAX jets. Southwest has canceled flights and now is moving planes where demand is high.

"Effective Nov 3, we will cease operations at Newark and consolidate our New York City presence at LaGuardia Airport, where we are experiencing strong customer demand," the airline said on Thursday in its second-quarter earnings report. "The financial results at Newark have been below expectations."

Southwest has as many as 20 daily departures a day from Newark compared with 200 from Midway Airport in Chicago, its busiest hub.

Southwest flies 34 MAX jets with orders for hundreds more, including 41 scheduled to arrive this year. The carrier said Thursday that it won't plan to fly the MAX again this year, extending planned cancellations through Jan 5. 

Southwest said the MAX grounding will reduce capacity by 1 or 2 percent this year compared with 2018. The company warned that could erode earnings because it planned to increase capacity by about 5 percent. Airlines worldwide, including those in China, have said they will seek compensation from Boeing for lost revenue.

American Airlines also said Thursday that it now expects the grounding to reduce pretax earnings this year by $400 million, up from the $350 million impact it previously anticipated.

Boeing MAX jets were grounded worldwide following crashes March 10 in Ethiopia and Oct 29, 2018, in Indonesia that killed a total of 346 passengers and crew.

Boeing said it expects MAX jets to resume commercial flights in the fourth quarter, but some analysts believe the plane will remain grounded until 2020.

Boeing has sent a software update for the anti-stall device implicated in the crashes to the US Federal Aviation Administration for review, but it's unclear when it will be approved.

On Thursday, Boeing withdrew from bidding on a $60 billion Pentagon contract to replace US land-based nuclear missiles a day after CEO Dennis Muilenburg said the company was a good fit for the job. Northrop Grumman is now the sole bidder for the project.