Southwest Airlines Lower on Q3 Loss, Says Q4 Will be Red, Too

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Southwest Airlines Lower on Q3 Loss, Says Q4 Will be Red, Too
Credit: © Reuters.

By Dhirendra Tripathi – Southwest Airlines (NYSE: LUV ) stock fell 1.4% on Thursday after the company reported a loss in the third quarter and said it expects the fourth to be no different.

The company expects the current quarter’s capacity as well as January to March’s to stay below comparable quarters in years before the pandemic.

The carrier’s operations were disrupted for at least five days in the second week of this month. Bad weather conditions, staff shortages and air traffic-related disruptions made it the worst-hit airline. About 2,000 Southwest flights were cancelled in that period.

The hit to the airline’s October revenue could be the tune of $75 million because of operational costs and customer refunds, the airline said. Another $40 million hit to the month’s revenue is expected due to the lingering effects of the pandemic.

“We have reined in our capacity plans to adjust to the current staffing environment . . .," Chief Executive Gary Kelly said.

Except for higher fuel prices, fourth quarter 2021's overall results are trending better than third quarter 2021, he said.

The company is experiencing cost increases primarily due to inflation in labor rates and airport costs, the company said. Vaccination incentive pay is also adding to costs.

As a result, overall costs are estimated to rise between 8% and 12% in the quarter through December from 2019-quarter levels.

Excluding items, the Dallas-based airline's net loss narrowed to $135 million from $1.17 billion in the same quarter a year ago. Total operating revenue of $4.7 billion was 161% higher than the 2020-quarter but still 17% lower from the 2019 figure.

Excluding items, American Airlines (NASDAQ: AAL ) posted a third-quarter net loss of $641 million on operating revenue of $8.97 billion.

The adjusted loss at United Airlines (NASDAQ: UAL ) was $329 million and total operating revenue $7.75 billion.

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