A bird flies by within the foreground as a Southwest Airlines jet is available in for a landing at McCarran International Airport on May 25, 2020 in Las Vegas, Nevada.
Ethan Miller | Getty Images
Southwest Airlines lost $159 million in the primary quarter because the financial impact of its holiday meltdown stretched well into 2023.
The carrier canceled greater than 16,000 flights in the ultimate days of December when staffing software couldn’t keep pace with scheduling changes during coast-to-coast storms. The incident resulted in a $325 million revenue impact for the primary quarter, Southwest said.
The corporate had warned of a loss for the quarter in January and said it logged a rise in customer cancellations early this yr.
Southwest shares were down greater than 4% in early-afternoon trading after releasing results.
Here’s how Southwest performed in the primary quarter, compared with Wall Street expectations based on Refinitiv consensus estimates:
- Adjusted loss per share: 27 cents vs an expected lack of 23 cents.
- Total revenue: $5.71 billion vs an expected $5.73 billion.
Revenue rose greater than 21% from a yr ago to $5.71 billion. Southwest’s net loss for the period of $159 million is likewise an improvement over the identical period last yr, when it lost $278 million.
The Dallas-based carrier said it expects revenue headwinds into the second quarter but said it expects a profit for the three months ending June 30.
Revenue per available seat mile, a measure of how much an airline is generating for a way much it flies, is anticipated to be down 8% to 10% within the second quarter from last yr, with capability up 14%, Southwest said.
The carrier said its sales outlook was impacted by about $300 million “breakage revenue” due to a “higher-than-normal amount related to flight credits issued in the course of the pandemic that were set to run out unused.” Southwest said it eliminated expiration dates on flight credits last summer.
Southwest expects second-quarter costs, excluding fuel, to be up 5% to eight%, a value outlook that features wage accruals for labor contracts which are currently under negotiation, including for its pilots and flight attendants.
CEOs of each Southwest and rival American Airlines said that aircraft deliveries from Boeing are delayed, hindering their growth plans.
Southwest said it expects to receive only 70 of Boeing’s 737 Max planes this yr, down from 90, and CEO Bob Jordan said the airline is being “prudent” about its plans given repeated delays from the manufacturer. Southwest said it can hit its capability plan by one percentage point for 2023.
“You intend way prematurely to set your schedules, to set your capability, and also you’re fallacious. It’s just really difficult to vary that close in,” Jordan said in an interview with CNBC’s “Squawk on the Street” following the report.
He said the corporate may also should “moderate” its hiring plans from a net 7,000 people this yr due to Boeing delays.
On Wednesday, Boeing said it plans to ramp up output of 737 Max planes to 38 a month this yr from a current rate of about 31 a month, a long-planned increase that was delayed by supply chain problems and labor shortages.
