Shares of Southwest Airlines (NYSE:LUV) slipped again on Tuesday – after a drop of more than 2% on Monday — in the wake of two apparently unrelated emergency landings over the weekend. Inspections on a significant segment of the airline’s all-Boeing 737 fleet resulted in cancelling as many as 600 flights.
Boeing (NYSE:BA) shares also dipped slightly on Monday, but were back in the green on Tuesday.
In the first and most serious incident, metal fatigue-induced cracks caused a 1 x 5-foot tear in the ceiling of a 737 model 300 on Friday while the jet was flying at more than 34,000 feet. In the second incident, another 737-300 en-route from Oakland to San Diego with 142 people onboard was forced to land in Los Angeles after a burning electrical smell was detected in the cabin.
It is the first incident that is deemed most serious. That plane lost cabin pressure, but managed to land safely at a military base in Arizona without major injuries to any of the 118 passengers and crew onboard. The National Transportation Safety Board reportedly is considering whether to impose stricter inspection requirements on Southwest as a result of the event.
In the wake of the tear and subsequent decompression, Southwest immediately removed 79 of its 737-300s for inspection and found cracks in the fuselages of three planes. The model 300 accounts for about 170 planes in the airline’s all-737 fleet of nearly 550 aircraft. The Federal Aviation Administration subsequently ordered an inspection on older 737s.
While it’s too early to conclude what the real impact will be on Southwest or on Boeing, here are three questions that federal authorities likely will want answers to as they dig deeper into the incidents:
1. Are older 737s like the model 300 more vulnerable to potential metal fatigue cracks than other aircraft? With nearly 300 of this model currently in operation by U.S. operators alone – and more than 900 in service worldwide, Boeing says there is no evidence that a “fleetwide action” to ground the model is warranted.
2. Are Southwest’s own inspection and maintenance processes robust enough for older aircraft, like this 737-300, that have gone through high numbers of pressurizing cycles? Southwest has been particularly efficient in its turnaround of aircraft, one of the reasons for its profitability. The plane that suffered Friday’s decompression reportedly had undergone 39,000 pressurization cycles. While the FAA does not consider that number excessive, frequently pressurizing and de-pressurizing planes before takeoff and after landing can cause cracks.
3. Does the FAA need to require more rigorous inspections to identify metal fatigue and cracks? Boeing already plans to issue a “service bulletin” advising operators of 737-300s with similar numbers of takeoff and landing cycles to immediately inspect their planes for cracks.
As of this writing, Susan J. Aluise did not hold a position in any of the stocks named here.
