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Southwest Airlines first-quarter earnings take a hit from 737 Max groundings, government shutdown

KEY POINTS

  • The carrier has grappled with the prolonged Boeing 737 Max groundings since mid-March.
  • Southwest, which has 34 of the 737 Max jets, extended cancellations through Aug. 5.
  • The Max comprises less than 5% of its fleet.

WATCH NOWVIDEO06:14Southwest CEO Gary Kelly on Q1 earnings, Boeing 737 Max

Southwest Airlines first-quarter earnings took a hit from the prolonged grounding of the Boeing 737 Max jets that forced it to cancel more than 10,000 flights during the quarter. The U.S. government shutdown and maintenance issues also ate into the bottom line, the company said Thursday.

The airline, which has 34 of the Max jets, said it lost more than $200 million in revenue during the quarter as a result. The shutdown and groundings also impacted the company’s revenue per available seat mile by 2 points.

The carrier said it’s extending Max cancellations through Aug. 5. Still, its earnings and revenue were better than expected and its shares rose 2.5% in premarket trading Thursday.

Here’s what the airline reported, versus average analysts estimates compiled by Refinitiv:

  • Adjusted earnings: 70 cents vs 61 cents per share forecast
  • Revenue: $5.15 billion vs $5.12 billion forecast

The 737 Max has been grounded since mid-March after the jet’s anti-stall software was implicated in two fatal crashes in Ethiopia and Indonesia.

Southwest CEO Gary Kelly said the company was an “all-Boeing carrier” but it didn’t mean the airline would use the 737s in “perpetuity.”

“We’re not happy about this Max situation obviously, who is. Two tragic accidents,” he said on CNBC’s “Squawk on the Street. ” “Our negotiations and our relationship with Boeing is something I’ll take up with [the company] privately.”

At the same time, he said he’s happy with how Boeing is handling the crisis and thinks the carrier’s “great historic partnership” will continue in the future.

“When we launched Max airplane, we felt like it was the best single-aisle airplane in the world, and we still feel that way,” he said.

Raymond James downgraded Southwest stock and lowered its earnings projections in April, citing the Max groundings.

It’s unclear when the Max will return to the skies. Boeing, which expects a hit of more than $1 billion from the grounding, said it’s completed 96 flight stotaling over 159 hours of air time with the new Max software fix.

“Flight cancellations are expected to drive unit cost pressure for the duration of the MAX groundings,” Kelly said in a statement. He described the results as “solid” despite several challenges throughout the quarter.

“I am especially proud of our nearly 60,000 employees for the commendable job under operationally difficult circumstances,” he said.

Fuel costs are expected to rise next quarter with second-quarter fuel efficiency to be flat-to-down 1 percent, year-over-year after the removal of its Max jets, which use less fuel than other planes.

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News

United tops Wall Street estimates on first-quarter profit, misses on revenue

GP: San Antonio International Airport

A United Airlines Boeing 737 passenger jet takes off at San Antonio International Airport in Texas.Robert Alexander | Archive Photos | Getty Images

United Continental Holdings, the parent company of United Airlines, reported first-quarter earnings Tuesday that beat Wall Street profit expectations but fell shy of revenue estimates, as the airline grapples with the prolonged grounding of Boeing’s 737 Max jets.

Here’s what the company reported versus what analysts polled by Refinitiv expected:

  • Adjusted earnings per share: $1.15 versus 95 cents expected.
  • Revenue: $9.59 billion versus $9.61 billion.

The carrier, which has 14 of Boeing’s 737 Max jets in its fleet, has grounded the aircraft through early July as Boeing rushes to fix a software problem suspected in two recent fatal crashes.

United shares jumped 2.9% after the markets closed Tuesday.

United’s total revenue rose to $9.59 billion during the first quarter, up 6.2% from $9.03 billion during the same period in 2018, the company said in releasing its earnings report after the markets closed Tuesday.

On an unadjusted basis, the company’s profit more than doubled to $292 million, or $1.09 per share, from $145 million, or 51 cents per share, during the same quarter last year.

United’s revenue for each passenger it flies a mile, a key industry metric, rose 1.1% over the same period last year, falling short of 1.5% projected by analysts.

United reiterated its full-year earnings guidance of between $10 and $12 per share for 2019 and said it expects to earn between $11 and $13 a share, on an adjusted basis, in 2020.

Executives are holding a call with analysts at 10:30 a.m. ET on Wednesday.

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Australia Cambodia Greece Spain

Just back from: Spain, Cambodia, Greece & Australia

Tiles at the Alhambra, Spain

Our travel-mad staff share their recent adventures from enjoying cookery classes in Queensland to exploring architectural beauties in Andalucía and sitting in the shadow of thousands of bats flying out to feast in Cambodia.

Getting a fine-art fix inAndalucía, Spain

Some visitors to North Africa who pick up a bug can shake it after a few days, but the one I’ve acquired is going to stay with me for life. I’ve been infected with something like tile-itus, and now I seem to only be able to plan holidays that involve scouting out those colourful, geometric patterns that adorn everything from mosques and madrassas (Islamic schools) to fountains and flats. These tiles, called zellige in Arabic, spread across the Muslim world, which for centuries included the Andalucía region of southern Spain.

Inside the Moorish palaces of Real Alcázar in Seville and the Alhambra in Granada, where room after room is covered top to toe in tiles and other Islamic adornments, I got a healthy dose of the colourful medicine I now require, and I instantly found bliss wandering in silence amongst those millions of tiny blocks. But now that I’m back, where do I get my next fix?

Lauren Keith, Destination Editor for the Middle East and North Africa. Follow her on Instagram @noplacelike_it.

An army of bats streaking across the sky in Cambodia

Braving the ‘cold’ to see bats in Cambodia

My family and I were in Cambodia this past Christmas. Even though we sweltered in the heat, the Cambodians we met were quick to tell us this was the coldest winter they’d experienced in recent memory. This was fully realised one evening in Battambang, as we sat just down the road from the Killing Caves of Phnom Sampeau. Having scrambled to the mouth of an unmarked cave we lay waiting for the nightly exodus: thousands of bats, awoken from slumber, streaking across the sky in search of their first meal of the day. We checked the time. Any moment now… As the sun started to go down, our guide said, ‘They feel lazy. Maybe it’s too cold tonight.’

When the first bat darted out into the sky, it was barely noticed. Then, all at once, a deluge of them flowed from the mouth of the cave, chirping in unison as if to sing, ‘It may be cold, but a bat’s gotta eat!’ We watched the show against a perfect pinky sunset for half an hour. I don’t think I’d ever seen anything so amazing and so unexpected.

Rucy Cui, Publicity Associate. Follow her tweets @rucycui.

Marvelling at the seemingly impossible in Meteora, Greece

With numerous rock pinnacles rising hundreds of metres from a forest of oak in central Greece, Meteora is one of the most peculiar landscapes I’ve ever seen. What’s even more impressive is how monks have been making their homes on top of these rock giants for centuries – first in natural caves and later in architecturally astounding monasteries. Once a place to be alone with God, these days it’s rarely a place for solitude.

A handful of the two million people who visit each year come in February, and most drive between the best-known monasteries. A more rewarding way to do it is on foot. So we set off from the village of Kalambaka with our guide Christos to hike to one of the less-accessible monasteries. It was an hour-long walk on an unbeaten path through the forest to Ypapanti Monastery. Built into a rock cavity, it’s difficult to spot from ground level, so we wound our way up to the hilltop opposite. From here, the impossibility of how these enormous rocks could be inhabited really struck us.

We walked on until we finally emerged at Varlaam, one of the biggest monasteries. Cloud had begun to form around the base of the rocks, and the meaning of the name Meteora (suspended in the air) became apparent. For a moment, I too felt suspended, in awe of the wonder of nature and resilience of humankind.

Hazel Lubbock, Digital Platform Editor. Follow her on Instagram @hazellubbock.

Cliff with his beautifully presented beetroot three ways

Conquering a cookery class in Noosa, Queensland

The latex gloves were an unusual, slightly off-putting start to the cookery class. ‘To stop your hands getting stained’ was the reason given after my partner in cooking crime and I were told we would be preparing beetroot three ways. Glamorous they might not have looked, but the gloves took one for the team as I followed the recipe and got messy trying to create something that could sit proudly alongside the dishes being prepared by the rest of the class. The chef at Wasabi in Noosa, Queensland, was admirably patient as I chopped, fried, pureed and carefully arranged a variety of different coloured and sized beetroot. ‘Add some saffron flowers,’ he suggested. I sprinkled some on obligingly, turning over the last page of the now red-stained recipe book to check we hadn’t missed anything. We hadn’t. ‘Yours definitely looks the best of the lot,’ the chef said. He might well have said the same to the other pairs as they finished their dishes, but, as I pulled off my latex gloves with a satisfying snap, I didn’t care. Beetroot three ways. Clean hands. Cookery class complete.

Clifton Wilkinson, Destination Editor for Great Britain, Ireland and Iceland. Follow his tweets @Cliff_Wilkinson.

Clifton traveled to Queensland with support from Tourism Events Queensland. Lonely Planet contributors do not accept freebies in exchange for positive coverage.

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News

Boeing CEO says it’s completed 96 test flights with 737 Max software fix

Boeing has completed 96 flights testing the performance of the 737 Max with updated software for the plane’s flight control system.

“Our team has made 96 flights totaling over 159 hours of air time with this updated software,” said Boeing CEO Dennis Muilenburg while speaking Thursday at the George W. Bush Presidential Center in Dallas, Texas. Muilenburg, who went on a 737 Max test flight last week, says the company is making progress developing a plan to fix the aircraft’s MCAS flight control software and improve pilot training, two problems that will need to be resolved before regulators certify the plane to fly again.

“We continue to demonstrate that we’ve identified and met all certification requirements,” he said.

Boeing will conduct additional test flights on 737 Max, says CEO

The test flights are one prong of a broad effort by Boeing to get the Max back in the air. The company is also updating airlines by bringing representatives into flight simulators and showing them how the modified flight control system will feel in the cockpit. Boeing says representatives from two-thirds of the 50 airlines that have the Max in their fleets have tested the new software in a simulator.

“We want everyone to be confident in it and the additional training and educational resources we’re developing and deploying,” Muilenberg said, adding that the last few weeks have been the most “heartwrenching” of his career.

The company will likely submit its plan to fix the Max, which has been grounded since mid-March, to the Federal Aviation Administration and other regulators within the next two weeks, according to people familiar with the matter. Getting those regulators to approve the plan will likely take several more weeks.

“I expect that the airplane is still several weeks away from getting the final seal of approval to be flown again, not so much that the software fix is a problem, but just from an optics standpoint,” said Jeff Guzzetti, former director of the FAA’s accident investigation civision. Guzzetti believes the FAA is stinging from criticism its relationship with Boeing was “too cozy” because the FAA designated Boeing engineers to self-certify parts of the 737 Max before the plane was given final approval in 2017.

Boeing has scrambled to restore faith in its 737 Max after the jet’s anti-stall software was implicated in two crashes in the last five months that killed 346 people and grounded the planes worldwide. The company said it will cut Max production by 20% as it works on a software fix to get the jets running again. They’ve been grounded since mid-March.

Investigators suspect that faulty data feeding into the aircraft’s MCAS flight system played a major role in the Indonesia and Ethiopia accidents. Investigators and lawmakers have scrutinized Boeing’s software system malfunction, from the original design to the training and safety certifications.

When designing the newest Max jets, Boeing allegedly increased the power of the automated system that pushes the plane nose down, making it hard for pilots to regain control of the doomed jets. Changes to the anti-stall system were not fully reviewed by the FAA.

Boeing said Tuesday that deliveries and new orders for all of its 737 jets fell in the first quarter, and earlier in the week, Wall Street analysts downgraded Boeing stock. The company’s shares have have fallen nearly 9 percent in the past month.

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Bosnia and Herzegovina

Awesome Travel Activities in Bosnia and Herzegovina

Underrated and thus relatively undisturbed, Bosnia and Herzegovina is a treasure trove for adrenaline junkies seeking adventure activities in The Balkans. Right now, with still a pretty much under the radar status beyond Mostar, that means epic hikes into crowd free wilderness and white water rafting with friendly price tags.

Sure, the Albanian Riviera is touted as the next big beach destination, and Kotor in Montenegro seems on the path to becoming the next Dubrovnik, yet Bosnia and Herzegovina so far seems to have avoided most of the spotlight. Trust me when I say though, it won’t be long until all of this countries best bits are discovered. I’ve made no secret that BiH is one of my favourite countries in the world, and I really hope you’ll make the visit to discover why.

Ten adventure activities in Bosnia and Herzegovina

Don’t get me wrong, there are many reasons to visit Bosnia and Herzegovina beyond the unspoilt nature, but if you’re an addict for adrenaline or craving fresh mountain air with a touch of history and culture thrown in, then perhaps this Balkan nation should be your next adventure holiday. Here’s what to expect.

1. White water rafting on crystal clear waters

What better place to start your Bosnia and Herzegovina adventure than in my favourite small town of The Balkans; Konjic.

Lining the banks of Konjic are a handful of guest houses and a couple of beautiful Mosques, but just moments away along the Neretva river you’ll find raging white water rapids that then relax into tranquil waters, so clear you can see the bottom and so clean, I’d say it’s drinkable.

Visit Konjic have fast become one of the premier adventure activity suppliers in Bosnia and Herzegovina, and I highly recommend the half day rafting with a BBQ lunch on route. You’ll enjoy a mix of adrenaline and relaxation and the views on the way down the river back to Konjic are seriously dreamy as these photos prove!

2. Skiing without breaking the bank

Bosnia and Herzegovina is, in my opinion, an ideal Ski destination for numerous reasons.

One, the nearest ski resort to Sarajevo, is just over 40 minutes drive away, and secondly, the cost is a lot more palatable here than the likes of central Europe. This makes it appealing for both those who want to hit the slopes and those that just want a snowy mountain air getaway.

The two largest resorts in the county are Jahorina and Bjelasnica, hitting a peak altitude of around 2000 metres.

3. Mountain hiking and ethnic villages

The mountains throughout Bosnia and Herzegovina are stunning, and I found them to be surprisingly devoid of hikers even in the summer.

Sticking to the semi-beaten path is the best idea here though, as landmines are still being discovered in parts of the country, a tragic reminder of the nations relatively recent past. If you want to really work your boots out, hire a local guide to enjoy the best roots.

Again, I went with Visit Konjic along the route through Lukomir, one of the last remaining ethnic villages in the country. Not far from Sarajevo, the simple stones houses and farming way of life in the mountains offers an insight into a more traditional way of life.

4. Cycling across borders and ancient train lines

The CIRO cycling route is an impressive project, and I’m seriously surprised it hasn’t had more coverage in European news.

The old Austria-Hungarian railway, which ran through the country is long gone, but the route it followed now links Mostar with Dubrovnik in neighbouring Croatia. If you don’t want to pedal across the two borders, you should aim to do at least part of the route which takes you past hidden gems and stunning countryside.

My personal favourite part of the route runs through Zavala. You can likely count the population here on one hand, but the old train station has been converted into a boutique B&B and between the monastery on the hill, incredible star gazing, local wine and the Vjetrenica caves, it makes for a great overnight cycle stop.

5. Exploring caves with unique biology

Located in Zavala, the Vjetrenica caves are a must visit if you find yourself travelling nearby.

The Vjetrencia caves are the largest in the country, stretching over 7000-metres into the rock face, but with only around 2000-metres open to the public. The formations of these caves have a few important qualities. Firstly, the chimney like holes throughout the caves creates a micro-ecosystem and constant breeze and wind, while unique wildlife, such as the ‘human fish’ with four legs lives in the caves waters.

6. Canyoning lesser explored lands

During the summer months, the Rakitnica river plays host to groups of adventure lovers who want to head Canyoning into its rocky waters.

Heading off from the village of Kašići, you can float along the angry waves through tiny rocky gaps and canyons. Professional gear and guides are a must here.

The deep rocky gorges, with green mossy sides, makes for an epic setting and while the water is reasonably cold all year round, a wet suit and sense of adrenaline will keep the chills away.

7. Crazy bridge jumping in the name of tradition

The famed Stari Most, the old bridge in Mostar which has been reconstructed, plays host to a pretty unique tradition.

For hundreds of years, young men have taken the nearly 25-metre leap from the top of the bridge, with the intention of impressing girls. Nowadays that tradition has subsided, and you’ll more often see people taking the jump for money, with hat collections taking place before locals plunge into the water below.

For those who are brave enough, you can take on this (dangerous) Mostar bridge jump yourself. The Mostar Diving Club can provide assistance and training before the jump, given some people cause serious injury, and deaths have been reported, doing this under local supervision is obviously recommended. While it will be over in moments, it’s a pretty cool adrenaline rush and story to remember your trip to Mostar by.

8. Mountain Biking epic landscapes

Taking it a level up from the more casual CIRO cycling route, those who want a bit of an adventure challenge can explore the mountains of Bosnia and Herzegovina on more heavy hitting bikes.

There are plenty of places to head Mount Biking, popular locations include Bitovinja and Zlatar, although the route around Bjelašnica and the village of Lukomir I mentioned above is perhaps one of the most scenic in the country and also blends in that cultural and historical touch.

9. Tubing, boating and jet skiing

With so many incredible lakes, rivers and waterfalls in Bosnia and Herzegovina, you can tailor your adventure activities to suit your level of chill or thrill.

Kravica Waterfall provides a relaxing setting to lounge around in the water, while Scit lake, with its monastery in the middle, its a stunning spot to hire one of the few local Jet Skis.

Seriously, road-tripping this country will take you through many unbelievably coloured water spots, so although the coastline of Neum is tiny in Bosnia and Herzegovina, water adventures are most certainly in!

10 Skydiving at Banja Luka

If you fancy taking to the skies and getting an aerial view of Bosnia and Herzegovina, there are a few places you can do this.

One of the most popular is Banja Luka skydiving club, and given the spectacular countryside you’ll be high above, it is not surprising.

The club has been around for decades and was where the first Skydive in Bosnia and Herzegovina took place. Your jump will provide a birds-eye view of the lush green countryside and multi-coloured hues of greens and blues from the many lakes throughout the mountains.

Bonus: Continue the canyon road trip to Montenegro

If you are road tripping through the Balkans, I highly recommend continuing your journey to Montenegro, especially the stunning north of the country.

Shortly across the border is Pluzine, and the route linking the two countries takes in some stunning rafting locations including the impressive Tara Canyon. To find out more about exploring Montenegro, read my Montenegro Road Trip guide.


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Morocco

3 places you need to visit on your next trip to Morocco

Tangier – Café Hafa

In the past when Tangier used to be an international zone without any particular laws, this city in northern Morocco attracted writers, poets and other artists from all around the world. One of the places they went to create is a fascinating café built right on the shore with a beautiful view of the Atlantic Ocean. When you order, make sure you don’t forget the local mint tea. It is delicious.

 

 

Marrakech – Jemaa el-Fnaa

This square became the main center of the desert city of Marrakech. Here, you will find stands with traditional food, cosmetic products, souvenirs but also local street artists and musicians. After strolling around, I suggest to go grab a cup of coffee at one of the local restaurants with a terrace. You will be able to see this stunning place from another perspective.

 

 

Salé – Riad Marlinea

One of the things I love about the Moroccan culture the most is staying in a riad. A riad is a traditional family house where rooms are offered to travelers to stay. Usually, it is a fantastic opportunity to see how people in Morocco live and see how beautiful local architecture can be.

If you find yourself in Rabat or Salé, head to Salé Medina which is charming itself. Deep in the narrow alleys you will find this beautiful house with reasonable prices.