DALLAS – Southwest Airlines made a narrow $ 68 million profit in the fourth quarter, boosted by the total number of flights during the holidays, but the airline warned on Thursday that it expected to make a loss in the first three months of 2022.
Growth in the COVID-19 omicron version and continued weak business travel will reduce revenue by $ 330 million and lead to losses in January and February, Southwest said. The airline forecasts it to be profitable for the rest of the year.
Southwest said 5,000 employees tested positive for COVID-19 in the first three weeks of January, contributing to roughly 5,700 flights it canceled so far this month, according to FlightAware. The Dallas-based airline says the number of absences has dropped recently.
The surge in viral infections has also slowed ticket sales and led to the cancellation of several routes, but these trends have begun to decline. The new CEO, Robert Jordan, said the airline is optimistic about bookings and revenue in March.
CEOs of JetBlue and Alaska Airlines said travel is expected to pick up this spring and summer, adding to the recent remarks by Delta, United and US executives that omicron is delaying but not preventing the industry from recovering.
Airline executives have said the recovery will be uneven and the new versions could push aside again. Southwest is cutting flights in the first quarter by about 9% than previously planned.
“A year ago, I would never have bet we’d be here in early 2022,” said Gary Kelly, who is leaving Southwest’s CEO position on Feb. 1 after running the airline for nearly 18 years. “I thought the pandemic was lurking behind us, and that’s far from it.”
Last month, Kelly questioned the benefits of wearing a face mask on airplanes because she believes strong airflow and filters from modern jet engines make air travel safer. On Thursday, however, he said that because of the still rising number of viral cases, “now is not the time” to end a federal rule that requires passengers to wear a mask.
At an investor event last month, Southwest executives pledged to improve reliability and restore the company’s growth, which has stalled over the past few years due to the shutdown and epidemic of Boeing 737 Max aircraft.
Southwest’s fourth-quarter profit was reversed from a $ 908 million loss a year earlier. Excluding special costs, Southwest earned 14 cents a share. Analysts expected an adjusted earnings of 7 cents per share, according to a FactSet survey.
Revenue more than doubled to $ 5.05 billion, exceeding analysts ’forecasts of $ 4.97 billion.
Labor and fuel costs soared in the fourth quarter as Southwest raised employee salaries for extra work. Southwest, which shrank by thousands of workers in 2020, started with a big boost last year and expects an additional 8,000 workers this year.
JetBlue Airways posted a loss of $ 129 million. According to the New York airline, the high COVID-19 number in the Northeast led to more flight cancellations and low bookings at the end of 2021, and first-quarter revenue will be 11-16% lower than in the same period before the 2019 epidemic, but shows a decrease. Omicron infections should lead to a profitable second quarter and a strong summer.
Alaska Airlines ’parent company generated $ 18 million in profits, and CEO Ben Minicucci said the Seattle airline is expected to return to full pre-epidemic flight by the summer.
Shares in JetBlue rose 3%, Alaska Air Group rose 1% and Southwest slipped more than 2% in trading on Thursday afternoon.