Southwest posts record revenue despite holiday meltdown
By Chris Isidore, CNN
Southwest Airlines’ passengers have finally returned to the airline following its winter holiday service meltdown, enabling record revenue during the first quarter.
The airline said its bookings in March were strong, allowing revenue to soar 22% to $5.7 billion in the quarter. That was up from year-ago results that were still affected by the surge in Covid cases caused by the Omicron variant, and it was also up from the $5.1 billion it reported in the same period of 2019, a year before the pandemic.
The strong demand led to higher fares, as passengers paid 10% more to fly each mile on Southwest during the quarter, compared to a year ago, and 12% more than they were paying in the same period of 2019.
It wasn’t all good news: The lingering impact of massive service problems caused Southwest Airlines to report a first-quarter loss, as the airline warned would happen three months ago. Weak bookings in January and February caused a $325 million hit to revenue in the quarter. Excluding special items, Southwest posted a loss of $163 million, or 27 cents a share, a bit worse than the 23 cent a share loss forecast by analysts.
The airline also warned that Boeing’s delayed deliveries of 737 Max jets would require it to trim its capacity by 1% below its previous plan. It’s also concerned about the chance of drop in demand due to macroeconomic issues.
“Travel demand remained strong thus far, but we remain mindful of the uncertain economic environment,” said CEO Bob Jordan, in a midday call with investors.
That warning, and the bigger-than-forecast loss in the first quarter, sent shares of Southwest down more than 5% in midday trading.
American Airlines also reported strong demand early Thursday, posting record first-quarter revenue of $12.2 billion. That’s up 37% compared to a year earlier, and 8% from the first three months of pre-pandemic 2019. The amount passengers paid to fly each mile on American rose 21% from a year earlier.
The strong revenue allowed American to post a narrow profit of $33 million, excluding special items, meeting Wall Street forecasts.
American CEO Robert Isom said the outlook is strong for the US airline industry, despite the massive losses incurred during the pandemic and the issues facing the overall economy currently.
“Our industry has been through the biggest crisis in its history and is now on the other side,” he said. “Airlines have navigated a lot over the last few years, concerns about the economy and demand recovery, the banking crisis, the interest rate environment, supply chain issues and yet, here we are.”
Shares of American gained 2% in midday trading.
The-CNN-Wire
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