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Highlights
- Southwest Airlines Co’s (NYSE:LUV) operating revenues rose by 161.0% YoY to YS$4.7 billion but fell 17.0% compared with Q3 of 2019 due to the pandemic.
- The company’s operating revenue per available seat mile (RASM) was 12.07 cents, down 15.7% from the same period in 2019.
- CEO Gary C. Kelly said staff shortage and other factors reduced the operational on-time performance targets and created extra cost headwinds in the third quarter.
- Southwest Airlines Co (NYSE:LUV) on Thursday posted lower losses than expected in the third quarter despite a slowdown in air traffic in August and September due to surging Delta variant cases.
Southwest Airlines Co (NYSE:LUV) on Thursday posted higher revenue in the third quarter YoY but down from the 2019 levels as a slowdown in air traffic due to rising Delta variant cases hit bookings.
The company expects profits to “remain elusive” in the current quarter due to mounting costs. However, it said improved travel bookings during the holidays might offset some of the costs.
The LUV stock was down 1.46% to US$48.75 at 11:58 am ET after the results.
CEO Gary C. Kelly said the third-quarter demand and revenue performance dramatically improved from the year-ago period. But he added that staff shortage, along with other factors, reduced the operational on-time performance targets and created extra cost headwinds.
Kelly said the company would hire up to 5,000 employees by the end of this year. Excluding fuel prices, the overall fourth-quarter results should be better than the previous one, he said.
Third Quarter Snapshot
The company’s operating revenue rose by 161.0% YoY to YS$4.7 billion but fell 17.0% compared with Q3 of 2019 due to the pandemic, it said.
The operating revenue per available seat mile (RASM) was 12.07 cents, down 15.7% from the same period in 2019. The rising delta cases negatively impacted the company’s operating revenue collection in August and September by around US$100 million and US$200 million, respectively.
Its third-quarter operating revenue and passenger revenue reached 83% and 87% of the 2019 levels, respectively, suggesting strong pent-up demand for air travel, it said.
Also, revenue and booking trends considerably improved in the second half of September as covid cases declined, which helped beat the company’s previous operating revenue forecast. However, its managed business revenues fell 73% compared with September 2019, it said.
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Source: Pixabay
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Stock Performance
Southwest Airlines’ 52-week highest and lowest stock prices were US$64.75 and US$37.48, respectively. The forward P/E one year is -23.45, and the EPS is US$-2.74.
The company’s current market cap is US$28.78 billion.
Bottomline
The airline industry has been among the wort-hit sectors during the pandemic. Industry observers are hopeful of a better performance in the fourth quarter due to a likely improvement in bookings during the holidays. However, investors should carefully evaluate the stocks before investing.
