Southwest Airlines Reports Q122 Results

LONDON – On April 28, the United States-based carrier Southwest reported its first quarter (Q1) 2022 financial results.

The figures…

Today Southwest Airlines Co has reported a total net loss of $278 million or $0.47 loss per diluted share during its first quarter of 2022.

Excluding special items, the net loss totals $191 million or $0.32 loss per diluted share.

However, subject to their net losses, the airline did report an operating revenue of $4.7 billion, but this is still 8.8% lower than compared to their Q1 2019 results.

They also had $1.1 billion in cash provided by operations, as well as the liquidity of $16.7 billion which is in excess of their current debt outstanding at $10.7 billion.

As the Omicron variant still rages in the US, January and February for Southwest saw fewer bookings as well as an increase in passenger cancellations. Especially as January’s cancellations resulted in a $50 million negative impact on their overall operating revenues.

However, despite the slow start to the year, April for Southwest is already seeing a significant increase in bookings for spring and summer travelers, however, they are expecting April to still be 30% down compared to April 2019.

Thankfully, May and June should still see improvements as the summer season begins to fully kick in.

Southwest’s Chief Executive Officer Bob Jordan has said, “While the impact from the Omicron variant in January and February disrupted our anticipated profit recovery in first quarter 2022, we returned to strong profitability in March 2022 on surging travel demand.”

However, despite the slow start to the year, March and April for Southwest are already seeing a significant surge in bookings for spring and summer travelers.

However, they are expecting April to still be 30% down compared to April 2019.

Thankfully, May and June should still see improvements as the summer season begins to fully kick in.

Jordan continued, “Our operational performance improved during February and March 2022 following acute staffing challenges experienced in January due to the Omicron variant.”

“We have made great progress against our hiring plans for this year, increasing our headcount by approximately 3,300 in first-quarter 2022, alone, net of attrition.”

“We remain intensely focused on our hiring and training efforts as we work diligently to restore our network and position the company for future growth.”

It is evident that Southwest is not shying away from its recruitment drive, despite a slow start to the year and they remain confident that the remainder of the year will be significantly better with the carrier becoming much more profitable.

Jordan added, “Based on current plans and expected continued strong bookings, we continue to expect to be solidly profitable for the remaining three quarters of this year, and for full-year 2022.”

“Barring any unforeseen events and based on current trends, and despite higher fuel prices and managed business revenues and available seat miles remaining below pre-pandemic levels, we expect solid second-quarter 2022 profits and operating margins.”

So far, Southwest’s expected evaluation for Q2 2022 should see an increase in operating revenue by 8% to 12% compared to 2019 as well as a load factor of 85% capacity. They also expect to repay $20 million in debt.

Fleet Management…

Commenting on the airline’s goals for the remainder of the year, Bob Jordan added, “As we focus on the basics, our priorities for 2022 are clear: getting properly staffed and returning to historic operational reliability; restoring our Customer Service advantage; growing our fleet with The Boeing Company’s (Boeing) most-modern, fuel-efficient 737 aircraft; adding flights and restoring our network, especially on shorter-haul business routes; investing in enabling technologies for enhance efficiencies, and producing consistent quarterly profits.”

In terms of its fleet, Southwest ended Q1 with 722 Boeing 737 aircraft, however, is expected to see its fleet grow to 814 by the end of the year. Alongside this, they also expect to retire 28 737-700 aircraft this year.

For fleet orders, Southwest exercised 15 Boeing 737 MAX 8 options for delivery in 2022 and 12 Boeing 737 MAX 7 options for delivery in 2023.

Also, in April, the company had converted 40 of their 2022 Boeing 737 MAX 7 firm orders to the MAX 8 aircraft due to the current status of Boeing’s certification of the MAX 7 aircraft.

Overall…

Following the announcement, it’s fair to say that Southwest’s financial figures are slowly recovering, however, with the recovery from the pandemic still ongoing in the United States, many airlines will still struggle.

However, passenger numbers are on the rise again throughout the US and it is highly likely that we’ll start to see revenue figures from many US airlines begin to rise significantly, especially when carrier growth starts coming back into the picture as well as a further surge in bookings from travelers and the business sector.