Why Southwest Airlines Shares Fell in March

Southwest Airlines (NYSE: LUV)This strategic choice coincided with the company's philosophy of focusing on efficiency and keeping things simple. But thismordent (music)The 737 is currently in turmoil, affecting Southwest's growth plans.

According to data provided by S&P Global Market Intelligence, shares of Southwest Airlines fell 14.81 TP3T in March after the company warned Wall Street that it was lowering its guidance due to uncertainty over new aircraft deliveries.

Boeing's struggles hit customers hard

The 737 MAX has become a nightmare not only for Boeing but also for its customers. Starting in 2019, the plane was grounded for 18 months after two fatal crashes, and even after it was put back into service, a series of design and manufacturing issues stalled production.

A recent incident - in which a hatch came off an airplane during flight - led to further monitoring actions, including a production slowdown.

Southwest has been a 737 operator from the beginning, taking advantage of the simplicity that comes from having a fleet comprised of variations of a single aircraft type, and in mid-March, the airline said Boeing had informed it that it expected to deliver only 46 aircraft this year. Southwest originally planned to take delivery of 58 737 MAX 8 jets and 21 737 MAX 7 jets in 2024, but the smaller MAX 7 has not yet been certified by the FAA.

With the FAA closely monitoring Boeing's operations, MAX 7 certification is likely not until 2025.

Fewer planes means Southwest will be forced to adjust its flight schedule, which means fewer flights and less revenue. Southwest said it is re-evaluating its 2024 guidance and plans to provide an updated forecast when it releases its first-quarter results at the end of April.

Is Southwest Airlines stock worth buying?

There is no indication that the 737s currently in operation will be grounded, so the impact on Southwest should only be on its growth plans, not on its ability to carry out its flight schedule until then. While it is unclear how long it will take to resolve the 737 MAX issue, it is possible that Boeing will eventually resolve the issue with the FAA, or that Southwest will look to purchase the aircraft elsewhere.

Southwest Airlines, one of Boeing's most important customers, is likely to be one of the first beneficiaries of faster deliveries.

But Boeing has seen its fortunes deteriorate since the onset of the pandemic, and the timetable for the company's resurgence is uncertain now that it is both searching for a new chief executive officer and contemplating a deal to reacquire one of its major suppliers. Southwest needs patience, and so do its shareholders.

Investors who have been following Southwest Airlines for a long time have no reason to give up on Southwest, but they also have no reason to believe that Southwest will recover quickly. Investors interested in buying Southwest stock would be wise to wait until after Southwest releases its financial results on April 25, when they will have more information about Southwest's 2024 expectations.

Should you invest $1,000 in Southwest Airlines now?

Before buying shares of Southwest Airlines, consider the following:

Motley Fool Stock AdvisorThe analyst team has just named what they believe to be the best value for investors.10Only the stock ...... and Southwest Airlines were not among them. The 10 stocks that made the list are poised to generate huge returns over the next few years.

Stock AdvisorIt provides investors with an easy-to-understand blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. Since 2002, StockAdvisorThe service has more than doubled the return on the S&P 500 Index.

View 10 stocks only

*Stock Advisory Rates as of April 4, 2024

Lou Whiteman does not own any of these stocks.The Motley Fool recommends Southwest Airlines.The Motley Fool has a disclosure policy.

Why Did Southwest Airlines Stock Fall in March?