Southwest Airways posts greatest loss ever as coronavirus slam demand fades
A Southwest Airlines jet leaves Midway Airport in Chicago, Illinois.
Scott Olson | Getty Images
Southwest Airlines posted its biggest loss ever on Thursday after the coronavirus pandemic hit the summer travel season.
Revenue decreased 68% from $ 5.6 billion a year ago to $ 1.79 billion. The Dallas-based airline lost $ 1.2 billion in the three months ended September 30, compared to a profit of $ 659 million last year. Adjusted for one-time effects, Southwest’s loss per share was $ 1.99, above analysts’ expectations for a loss of $ 2.35 per share.
Bookings have improved in recent months, the airline said, but warned that a recovery is still a long way off.
“We are encouraged by modest improvements in recreational passenger traffic trends since the demand slowdown in July,” said CEO Gary Kelly in an earnings announcement. “However, until we have widespread vaccines and herd immunity, we expect passenger traffic and booking trends to remain fragile.”
Southwest reduced its cash burn to an average of $ 16 million per day for the three months ended September 30, from $ 23 million in the second quarter. According to Southwest, operating revenues would have to rebound to 60 to 70% of 2019 levels, double the third quarter revenue, to break even.
Here’s how Southwest performed compared to Wall Street’s expectations, based on Refinitiv’s average estimates:
- Adjusted earnings per share: a loss of $ 1.99 versus an expected loss of $ 2.35 per share.
- Revenue: $ 1.79 billion versus $ 1.7 billion expected.
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