Southwest Airlines has reported a third quarter net income loss of $135 million, ending the third quarter of 2021 in excess of debt outstanding of US$11.2 billion.
The US airline reported that its third quarter operating revenues increased by 161 per cent, year-over-year, to US$4.7 billion – a decrease of 17 per cent compared with the third quarter of 2019.
Its third quarter 2021 operating revenue per available seat mile (RASM) was 12.07 cents, a decrease of 15.7 per cent compared with the third quarter of 2019, which Southwest said was primarily driven by a passenger revenue yield decrease of 15 per cent and a load factor decrease of 2.8 points.
Southwest Airlines’ chairman of the board and chief executive Gary Kelly said: “Third quarter 2021 was a challenge for us, operationally. Despite the deceleration of traffic in August and September due to surging Covid-19 cases, the third quarter 2021 demand and revenue performance was quite strong and a dramatic improvement from a year ago.”
Based on current trends and reduced capacity plans, the company predicts that its fourth quarter 2021 operating expenses, excluding fuel and oil expense, special items, and profit-sharing, will be comparable to fourth quarter 2019 levels.
However, with fourth quarter 2021 capacity expected to remain below fourth quarter 2019 levels, based on its current cost outlook, Southwest says it does not expect to be profitable in the next quarter.
“While there are lingering effects from the summer Covid-19 surge and recent operational challenges, we are encouraged with renewed momentum in leisure and business traffic, revenues, and bookings—especially over the holidays,” said Kelly.
“Except for higher fuel prices, [the] fourth quarter results are trending better than third quarter 2021. We made good progress in our pandemic recovering in third quarter 2021, and I expect more in the fourth quarter. We have reined in our capacity plans to adjust to the current staffing environment, and our on-time performance has improved, accordingly.”
Southwest estimates that its fourth quarter revenues will be down 15 to 25 per cent compared to fourth quarter 2019.