Southwest Airlines Forecasts Lingering Losses During The Holiday Season

(CTN News) – In a statement Thursday, Southwest Airlines said it still expects to be profitable this year despite the impact of its holiday meltdown.

Travel chaos pushed up expenses and cost the carrier millions in revenue during what was expected to be one of the busiest travel periods since the pandemic began.

According to Southwest Airlines, flight cancellations and bookings have been declining in January 2023, primarily for January and February travel. This is as a result of operational disruptions in December 2022, the company said in its quarterly report.

According to Refinitiv estimates, analysts had anticipated a first-quarter profit of 19 cents per share.

However, the Dallas-based airline said booking trends looked positive in March, with a forecast of 20% to 24% revenue growth over last year and a 10% increase in capacity. The company also estimated higher fuel and other costs than previously anticipated.

Southwest lost $68 million in the fourth quarter of 2021 compared with a profit of $68 million in the same period. Revenues of $6.17 billion were up over 22% from a year ago.

Southwest’s performance in the fourth quarter was in line with Wall Street expectations based on Refinitiv consensus estimates:

• Loss per share adjusted to 38 cents compared to 12 cents expected.

• Revenue: $6.17 billion compared to an expected $6.16 billion.

The share price of Southwest Airlines fell about 2% in pre-market trading after the company reported its results.

As a result of the mass cancellations, the airline’s pretax results declined by $800 million. This is in line with expectations earlier this month of a drop between $725 million and $825 million.

During the period of December 21 through December 31, Southwest canceled approximately 16,700 flights.

In contrast to rival airlines, Southwest’s technology was unable to handle all the flight changes around Christmas and crews had to call the carrier to reschedule their flights.

In the following days, the carrier decided to cancel most of its flights in order to reset its operations, the company’s CEO announced earlier this month.

There have been tens of thousands of refunds and complex reimbursements processed by the carrier for travelers who booked flights on other airlines to reach their destinations.

A spokesperson for the Transportation Department said late Wednesday that Southwest Airlines holiday schedules were “unrealistic.”

Southwest Airlines reported a $539 million profit for 2022, despite the rocky end to the year. While that’s an improvement over last year, it is still 45% lower than the previous year.

A conference call with analysts and the media will be held by Southwest Airlines executives at 3:00 p.m. ET. Moreover, there is also a likelihood that the delegates will be asked about any additional costs and political fallout that could result from their missteps.

In addition, they will be asked about information about technology updates that could prevent another meltdown from occurring.

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