Losses of Southwest cast heavy shadows on US airliners

Southwest Airlines reported deeper losses than Wall Street’s dimmer expectations predicted, throwing heavy shadows on the reporting season for US major air carriers.

Earlier on Thursday, Southwest and American Airlines reported their Q4 results, with Southwest losing an adjusted 38 cents a share, compared with consensus adjusted losses of around 7 cents a share.

Upon the obvious slowdown in January bookings as well as late December, Southwest canceled thousands of flights due to winter storms amid which other airlines could operate their flights. In light of February bookings, Southwest does expect additional loss for 2023’s first quarter.

Quarterly losses are not a surprise, but the weaker bookings lead to an important question whether last month’s operational disruptions may have temporarily impacted customer perceptions. The airline earlier this month warned of a hit between $725 million and $825 million; the final impact came at $800 million.

American Airlines topped Wall Street expectations and showed no surprises from its upbeat outlook earlier in January.

Passenger revenue outperformed across all regions, with the largest outperformer being Latin America, with revenue 47% above 2019. Earlier in January, United Airlines Holdings reported Q4 results which analysts hailed as impressive. Delta, the first major U.S. carrier to report, also earned accolades.

The two earlier reports stoked hope that the U.S. airlines will continue to reap the benefits of pent-up demand for flying, and see a recovery in business travel.