Travelers check in on the Southwest Airlines ticket counter in the course of the busy holiday season at Orlando International Airport on December 28, 2022 in Orlando, Florida.
Paul Hennessy | Anadolu Agency | Getty’s paintings
Southwest Airlines said on Thursday it expects its Christmas meltdown to proceed to weigh on its income, but said it still expects profitability this yr.
Southwest shares fell nearly 5% on Thursday, trading around $35.
The airline posted a net lack of $220 million within the fourth quarter after travel chaos spurred expenses and value it hundreds of thousands in revenue in what was expected to be its busiest travel season since pre-pandemic.
“Thus far in January 2023, the corporate has seen a rise in flight cancellations and a decrease in bookings, mostly for January and February 2023 travel, which is probably going related to operational disruptions in December 2022,” Southwest said in a quarterly report. .
Analysts had forecast earnings per share of 19 cents in the primary quarter, based on estimates compiled by Refinitiv.
The Dallas-based airline, nonetheless, said booking trends look positive in March and forecast first-quarter revenue growth of 20% to 24% over last yr with a ten% increase in capability. It has also been estimated that fuel and other costs will probably be higher than previously estimated.
Southwest’s fourth-quarter loss compares to a profit of $68 million for a similar period in 2021. Record revenue of $6.17 billion is up greater than 22% from the prior yr.
Here’s to the southwest done within the fourth quarter in comparison with Wall Street expectations in line with Refinitiv consensus estimates:
- Adjusted loss per share: 38 cents vs expected lack of 12 cents.
- Total income: USD 6.17 billion in comparison with the expected USD 6.16 billion.
The airline said massive flight cancellations cut its pre-tax earnings by $800 million, up from an estimate earlier this month that was between $725 million and $825 million.
Southwest canceled about 16,700 flights between December 21 and December 31 after severe winter weather swept across the USA
While rival airlines largely recovered from the winter weather around Christmas, Southwest’s technology was unable to process all flight changes, and crews needed to call the carrier to get a rescheduling. The airline has decided to shut down most of its flights in the next days to reset its operations, CEO Bob Jordan said earlier this month.
The carrier processes tens of hundreds of returns and complex refunds for travelers who’ve booked flights with other airlines to get to their destinations.
The Department for Transportation is investigating whether Southwest’s holiday schedules were “unrealistic,” a spokesman said Wednesday.
Despite a difficult end to the yr, Southwest posted a profit of $539 million in 2022. Nevertheless, this continues to be a decrease of 45% in comparison with the previous yr.
For the complete yr 2023, it plans to extend the variety of flights by as much as 17%, record one other profit and increase margins, reflecting the optimistic outlook shared by rivals resembling American, Delta and United.
Southwest executives will hold a phone call with analysts and the media at 12:30 p.m. ET. They’ll likely face questions on any additional cost and policy impact from his mistakes, in addition to updates on technology updates to forestall one other meltdown.