What's going on?

Major US carrier Southwest Airlines warned investors on Wednesday that its first-quarter revenue would be $150 million lower than expected, with grounded Boeing planes partly to blame�

What does this mean?

Boeing�s new 737 MAX 8 model was recently involved in two fatal crashes, prompting aviation authorities around the world to ground the aircraft pending an investigation. Southwest flies only 737s, with MAX 8s making up 5% of its fleet. This, combined with severe weather disruption and disputes with mechanics, has led to the airline struggling for planes � it�s canceled nearly 10,000 flights so far this year.


As Boeing�s wings are clipped, arch-rival Airbus is ready to take off: on Tuesday, the company secured an order from China for 300 planes, worth an estimated $34 billion. With China on the cusp of overtaking the US as the world�s biggest aviation market, Airbus�s wing in the door is a major blow for Boeing.

Why should I care?

For markets: What�s bad for the goose may be good for the gander.

Southwest�s investors had probably seen some sort of downgrade coming, and the reality might not have been as bad as feared. 3% of rival American Airlines� fleet and 2% of United Airlines� are MAX models; their earnings are likely to be less badly affected by the grounding. All three carriers, along with fellow traveler Delta (which doesn�t fly any MAX planes), saw their share prices ascend 2% on Wednesday.

The bigger picture: China�s not back on its feet yet.

Promised tax cuts and other government help can�t come soon enough: data on Wednesday showed Chinese industrial companies� profits fell at the fastest rate in a decade through January and February � down 14% on last year (tweet this). The slowdown was mainly due to falling prices in key sectors like oil and steel; trade war with the US has taken a toll on Chinese factory activity and exports. Still, analysts expect the government�s support measures to steady the economic ship later in 2019.