Southwest Swings to Loss as Rise in Covid-19 Cases Stalls Improvements -- Update

By Dave Sebastian

Southwest Airlines Co. posted a loss for the second quarter after improvements in passenger traffic stalled in July as some states in the U.S. saw a resurgence in Covid-19 cases.

"We expect air travel demand to remain depressed until a vaccine or therapeutics are available to combat the infection and spread of Covid-19," Chairman and Chief Executive Gary Kelly said Thursday.

The largest U.S. domestic carrier posted a quarterly loss of $915 million, or $1.63 a share, compared with a profit of $741 million, or $1.37 a share, in the comparable quarter last year. Excluding special items, the loss was $2.67 a share. Analysts polled by FactSet had expected an adjusted loss of $2.73 a share.

Operating revenue plunged 82.9% to $1 billion for the quarter ended June 30. Analysts were looking for $947.9 million.

The company said leisure travel demand in May and June rose from the troughs of March and April, though bookings softened and trip cancellations increased in July.

Operating revenue per available seat mile, a measure of efficiency, was 5.63 cents for the quarter, down 61.9%. Load factor, or the proportion of seats sold, fell 55 percentage points from the year-ago period.

The company said it had $14.5 billion in cash and short-term investments as of June 30. Southwest has burned about $18 million a day on average in July, according to its estimates. It has trimmed its average core cash burn to $23 million a day for the second quarter from about $30 million a day in April, primarily due to improving revenue. But the company said it is now re-evaluating its August and September capacity plans due to a reversal in revenue trends.

Airlines are trying to stockpile cash to weather a crisis that they have said will likely last years. The $25 billion allocated to U.S. airlines under the $2.2 trillion stimulus package passed in March is set to expire at the end of September.

With the aid, carriers have agreed not to lay off or furlough workers until Oct. 1. But some, including American Airlines Group Inc. and United Airlines Holdings Inc., have already outlined plans that could result i n thousands of workers being furloughed.

Southwest has warned of potential job losses. About 17,000 employees, or more than a quarter of Southwest's workforce, have volunteered for extended emergency time off and separation programs, Mr. Kelly said.

Write to Dave Sebastian at dave.sebastian@wsj.com

(END) Dow Jones Newswires

July 23, 2020 07:46 ET (11:46 GMT)

Southwest Airlines (NYSE:LUV)
Historical Stock Chart
From Mar 2024 to Apr 2024