- Southwest Airlines (LUV) reported a worse-than-anticipated loss of $0.27 per share for the first quarter of 2023.
- The negative results reflect the lingering impact of operational disruptions suffered by the airline in December 2022.
- The disappointing earnings news sent Southwest shares down 3% on April 27.
Southwest Airlines (LUV) posted a bigger-than-expected first quarter loss as the fallout from the carrier's holiday meltdown carried over into the new year. Shares tumbled.
Southwest reported a net loss of $159 million, or $0.27 per share, $0.04 below forecasts. Sales rose 21.6% to $5.71 billion, also short of estimates.
CEO Bob Jordan said that the negative results were related to operational disruptions in December 2022, when Southwest was forced to cancel more than 16,000 flights during the busy holiday travel season because the airline couldn't adjust to schedule changes caused by winter storms. Jordan added that those disruptions led to a negative $325 million revenue impact in the first quarter because of customers canceling holiday return travel and a slump in bookings in January and February. However, he said that demand and sales bounced back in March.
Still, Southwest is predicting that revenue per seat mile (RASM) in the current quarter will be down 8% to 11%, although Jordan indicated that the airline expects "solid profits" in the quarter and for the full year. He argued that, despite an uncertain economic environment, demand for domestic air travel remains strong, and Southwest's goal is to "manage inflationary cost increases and maintain our competitive cost advantage."
Southwest Airlines shares lost 3% on April 27 and are 11% lower this year.