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Southwest incident may delay expansion

The carrier may need to focus on its aging aircraft if widespread problems are found, analysts say.

April 05, 2011|Hugo Martin and W.J. Hennigan

As Southwest Airlines Co. scrambles to find and repair cracks in its older planes, it may have to put off immediate expansion plans to focus on fixing and replacing its aging aircraft, analysts said.

But there probably will be no major drop in Southwest's passenger traffic or long-term financial repercussions resulting from Friday's incident because it did not result in severe injuries or deaths and the airline acted quickly to ground its older planes for inspections, industry experts said.

"There is no doubt that in the short term there will be some kind of impact," said Standard & Poor's aviation analyst Betsy Snyder. "But I don't think it's going to be a long-term impact."

Wall Street also seemed to take the incident in stride. Southwest's stock dropped 21 cents, or 1.66%, to close at $12.46 Monday.

For The Record
Los Angeles Times Thursday, April 14, 2011 Home Edition Main News Part A Page 4 News Desk 2 inches; 68 words Type of Material: Correction
JetBlue fleet: An article in the April 5 Business section on how a fuselage crack on a Southwest Airlines jet could delay the company's expansion plans said the incident drew attention to the heavy reliance on older planes by low-cost airlines such as Southwest, JetBlue and others. In fact, JetBlue has one of the youngest domestic fleets of all major airlines, with an average age of 5.4 years.

Southwest said it doesn't expect Friday's incident to have any effect on its expansion plans.

Snyder and other analysts said the incident, in which a Southwest plane made an emergency landing after a 5-by-1-foot section of the fuselage burst open on a flight from Phoenix to Sacramento, was not as severe as other recent safety scares involving other airlines.

Southwest canceled about 300 flights each day over the weekend -- or about 9% of its daily flights -- to conduct inspections.

American Airlines grounded nearly half of its fleet in 2008 and canceled 3,300 flights because of missed inspections.

The Southwest plane landed safely in Yuma, Ariz., with a flight attendant sustaining minor injuries. It involved one of the airline's oldest models, the Boeing 737-300, which represents 31% of the airline's fleet of 548 jetliners.

By Monday, the airline said it had discovered cracks in three other planes and was making repairs.

Southwest, the nation's most popular domestic air carrier, said it was putting back into service those aircraft in which no defects were found and expects to complete all inspections and return to normal operations by Tuesday.

"Most likely, the impact will be brief and not devastating to Southwest's reputation or bottom line," said George Hobica, founder of the travel website

In 2009, Southwest put the brakes on fleet expansion as ticket demand dropped during the recession.

But Southwest announced in December plans to buy 20 of its first 737-800s, which have more seats and are more fuel efficient than the carrier's current 737 models.

The airline also announced in December the addition of 10 nonstop flights out of Newark Liberty International Airport beginning this summer.

But Robert Ditchey, an independent airline consultant and former airline executive, said Southwest may have to postpone such expansion plans and reassign its new aircraft to replace the older models that need to be repaired or replaced.

The airline may even have to drop some existing routes, he added.

The crack in the fuselage also drew attention to the heavy reliance on older planes by low-cost airlines such as Southwest, JetBlue Airways Corp. and others to keep costs and fares low.

Southwest typically puts more hours and more flights on the 737-300s than most other airlines in the industry, said Scott Hamilton, an aviation industry consultant in Issaquah, Wash.

"As long as the aircraft is getting routine maintenance work, it should operate just fine," he said. "A 15-year-old aircraft is middle-aged by aviation standards."

The 737-300 is mostly flown on shorter domestic routes and is extremely popular among carriers worldwide, Hamilton said.

Of the 1,113 737-300 planes built by Boeing, about 900 are still in service, according to Fairfax, Va., aerospace research firm Teal Group Corp.

"This is a common aircraft type," said Richard Aboulafia, aviation analyst at Teal. "Southwest works them hard, but it is a robust aircraft. They've been built for this sort of job."

Chicago-based Boeing Co., which manufactured the 737, declined to comment about the Southwest incident, except to say that it was cooperating with the National Transportation Safety Board investigation.

If the cracks in the fuselage are serious, Ditchey said, Southwest can replace the aluminum skin that wraps around the frame of the aircraft or replace the planes with newer models.

If the problem is widespread throughout the fleet, he said he expects Southwest will replace those planes in need of repairs. If the problem is limited to a few aircraft, Southwest will likely make the necessary repairs and put the planes back in the air, Ditchey said.


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