Southwest Airlines to exit these four airports as loss widens and revenue falls short

Southwest Airlines to exit these four airports as loss widens and revenue falls short

Southwest Airlines Co.’s stock tumbled 8.5% Thursday after the airline posted a wider-than-expected first-quarter loss and revenue that lagged estimates.

“While it is disappointing to incur a first-quarter loss, we exited the quarter with healthy profits and margins in the month of March,” CEO Bob Jordan said in a statement.

The company is taking action to return to profitability by cutting costs and boosting productivity. Planned moves include closing operations at Bellingham International Airport in Washington state, Mexico’s Cozumel International Airport, Houston’s George Bush Intercontinental Airport, and Syracuse Hancock International Airport in New York state on Aug. 4, he said.

The company is further planning to “significantly” restructure other markets, mostly by implementing capacity cuts at Hartsfield-Jackson Atlanta International Airport and Chicago’s O’Hare Airport.

“Achieving our financial goals is an immediate imperative,” Jordan said.

“The recent news from Boeing regarding further aircraft delivery delays presents significant challenges for both 2024 and 2025,” he said. “We are reacting and replanning quickly to mitigate the operational and financial impacts while maintaining dependable and reliable flight schedules for our customers.”

The company is expecting delivery of as many as 20 or as few as eight aircraft in 2024, down from prior expectations of 46 to eight. It expects to end the year with about 2,000 fewer employees as it limits hiring and offers voluntary time-off programs, he said.

The company had a net loss of $231 million, or 39 cents a share, for the quarter, wider than the loss of $159 million, or 27 cents a share, posted in the year-earlier period.

Adjusted for one-time items, the company’s per-share loss came to 36 cents, wider than the 34-cent FactSet consensus.

Revenue rose 10.95 to $6.329 billion but also lagged the $6.420 billion FactSet consensus.

The company is now expecting second-quarter revenue per available seat mile to be down 1.5% to 3.5%. It expects available seat miles to be up 8% to 9%.

Fuel costs per gallon are expected to range from $2.70 to $2.90 and to be the same for the full year. The airline’s prior guidance for full-year fuel costs was $2.55 to $2.65. In the first quarter, fuel costs averaged $2.92 a gallon.

Full-year revenue growth is expected to approach the high single digits due to the Boeing delivery delays, down from a prior goal of double-digit growth.

Costs per available seat mile excluding fuel costs are expected to remain high through the year after rising 5% in the first quarter. For the full year, CASM excluding fuel costs is expected to rise 6.5% to 7.5%.

The company ended the quarter with $10.5 billion in cash and cash equivalents and a fully available revolving credit line totaling $1 billion.

The stock has gained 1.5% in the year to date, while the S&P 500 has gained 6%.