By Rajesh Kumar Singh and Sanjana Shivdas
(Reuters) – Southwest Airlines Co posted a smaller loss than expected for the third quarter on Thursday and said earnings for the current quarter would remain elusive as rising costs are expected to offset improved travel bookings.
The Texas-based airline had to cancel flights on a massive scale, partly due to staff shortages, after previously adding more flights to its flight schedule in order to benefit from a hoped-for recovery in air traffic as the pandemic restrictions were relaxed.
Such cancellations earlier this month are expected to result in a $ 75 million decline in sales in October.
“The third quarter of 2021 was an operational challenge for us,” said Chief Executive Gary Kelly in a statement.
“We have curbed our capacity plans to adapt to the current workforce.”
Southwest expects its capacity to decrease by about 6% in the first quarter of 2022 from the same period in 2019 before the pandemic.
The company announced it is aggressively hiring new employees, with the goal of having approximately 5,000 new employees by the end of this year.
It expects unit costs to increase by four to five percentage points in the current quarter due to staff increase efforts, cost inflation related to lower productivity and vaccination bonuses. Southwest is also facing higher airport costs.
As a result, total costs for the quarter through December are projected to increase 8 to 12% over the same period in 2019.
After being hit by the Delta variant of the coronavirus, Southwest said revenue and travel bookings have improved since the second half of September.
Still, the company expects a $ 40 million impact on October revenue due to the ongoing effects of the pandemic.
Without items, the Dallas-based airline’s net loss decreased to $ 135 million, or 23 cents per share, for the quarter ended September 30, from $ 1.17 billion or $ 1.99 per share a year earlier.
According to Refinitiv data, on average, analysts expected Southwest to report a loss of 27 cents per share on revenue of $ 4.58 billion for the third quarter.
(Reporting by Rajesh Kumar Singh in Chicago and Sanjana Shivdas in Bengaluru; editing by Vinay Dwivedi and Bernadette Baum)
[ad_1]