Southwest Airlines is ceasing operations at Newark Liberty International Airport because of the continued grounding of the Boeing 737 Max.
The airline announced Thursday that Boeing’s (BA) “extensive delays” in getting its 737 Max plane back in service, Southwest has to stop flying in and out of the New Jersey airport starting November 3. Southwest called it a financial decision, saying its financial results at the airport have fallen below expectations, and it had to “mitigate damages and optimize our aircraft.”
The 125 Southwest employees at Newark will be offered positions at other airports. Passengers booked on flights past the end date will be offered “options and flexibility” for new flights.
The airline operates 20 flights per day from Newark to 10 cities, including Phoenix, Austin and Chicago. Southwest (LUV) will still continue to fly from two New York area airports including LaGuardia and Islip on Long Island.
The 737 Max grounding is hurting other parts of Southwest’s business. The Dallas-based airline is extending cancellations on flights that had planned to use the aircraft until January 5, 2020. Southwest has 34 of the 737 Max planes in its fleet, the most of any US airline. Southwest recorded a $175 million operating loss because of the grounding, Southwest revealed in its second-quarter earnings report, released Thursday.
CEO Gary Kelly said in a release that it has held “preliminary discussions” with Boeing for compensation for the 737 Max grounding.
“We have not reached any conclusions regarding these matters, and no amounts from Boeing have been included in our second quarter results,” he said.
The airline said its capacity would grow only 2% because of the Max grounding, less than its planned 5% capacity expansion in 2019.
The 737 Max was grounded worldwide in March following the crash in Ethiopia that killed everyone on board. It was the second fatal crash involving that type of plane in under six months.
American Airlines (AAL) also released its second-quarter earnings Thursday. The Fort Worth-based carrier said it will take a $400 million profit hit because of the prolonged 737 Max grounding. The airline, which has 24 Max planes, announced it’s extending cancellations until November 2.