Shares of Southwest Airlines Co. (NYSE: LUV) were down as much 1.5% in New York trading following published reports that the company grounded 46 planes Saturday due to maintenance concerns. The Dallas-based carrier saw its shares fall to as low as $8.55 just past noon after news broke that the Federal Aviation Administration is investigating the airline's use of unauthorized parts and repairs on its aging fleet of 737-300 and 737-500 jets, manufactured by Boeing Co. (NYSE: BA).An FAA inspector working Friday at a maintenance shop used by Southwest questioned whether some hinge fittings -- used to divert hot engine exhaust from aircraft wings -- installed on the 737 jets were authorized for use. After hasty consultations with the FAA and Chicago-based Boeing, Southwest decided to ground the planes.
Southwest sought to allay concern about the grounding of the jets, which resulted in flight delays of up to four hours on about a third of its flights Saturday. The carrier, known for its quirky service, said there were no risks associated with the parts or repairs.
Helping to keep airlines stocks afloat Wednesday was news that oil prices fell in trading following a report that showed that stores of crude rose last week, signaling that demand has yet to recover.
Oil prices fell 71 cents, or 1%, to $71.34 in trading on the New York Mercantile Exchange.
Like other airlines, Southwest is also battling a soft economy, which has resulted in fewer travelers. Investors are also fretting about the carrier's falling revenues, which dropped nearly 8 percent, to a tick under $5 billion, in the first six months of the year, and whether the company can remain profitable for the year.
Further eroding investor confidence is a failed bid for Denver-based Frontier Airlines, which filed for bankruptcy last year. Southwest CEO Gary Kelly said the airline is considering other acquisitions, although one observer commented that Southwest's wish-list is too narrow to conjure up any other airline.
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