Southwest Airlines posts $68 million 4Q profit, but expects losses with higher costs – CBS Dallas/Fort Worth

DALLAS (CBSDFW.COM/AP) — Boosted by full-time flights over the holidays, Dallas-based Southwest Airlines posted a tight $68 million profit for the fourth quarter. But the airline warned on Thursday that it expects to lose money in the first three months of 2022.

The emergence of the ommicron variant of COVID-19, along with a bad bit of winter weather, will lead to losses in January and February, but the airline predicted it will be profitable for the rest of the year.

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Robert Jordan, who will take over as CEO on Feb. 1, said the ommicron variant of the virus has delayed an improvement in ticket sales Southwest had expected in early 2022.

Newly reported cases of COVID-19 cases remain extremely high, but started to decline last week. Referring to that trend, Jordan said, “The worst seems to be behind us and we are optimistic about current bookings and revenue trends for March.”

Delta, United and Fort Worth-based American have previously warned that ommicron will slow the recovery in travel demand. Delta forecasts this month that bookings will increase around the President’s Day holiday weekend in late February.

Southwest tried to grow faster than other U.S. carriers when passenger numbers bounced back last year, but the strategy backfired as staff shortages contributed to the high number of canceled flights last summer and fall.

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When other airlines started canceling flights around Christmas due to employees on the road with COVID-19, Southwest wasn’t hit as hard. Helane Becker, an analyst with financial services firm Cowen, said Southwest appeared prepared – it has slashed its December schedule to a more manageable size after its own struggle with cancellations and delays earlier in 2021.

At an investor event last month, Southwest executives pledged to improve reliability and grow the company back to growth, which has shrunk in recent years due to the grounding of its Boeing 737 Max aircraft and the pandemic.

Fourth quarter profit was the opposite of a $908 million loss a year earlier. Excluding special expenses, Southwest earned 14 cents a share. Analysts expected adjusted earnings of 7 cents a share, according to a survey by FactSet.

Revenue more than doubled to $5.05 billion, ahead of analysts’ forecast of $4.97 billion.

Labor and fuel costs rose in the fourth quarter, as Southwest raised wages for employees to pick up extra work. Southwest, which shrank by thousands of employees in 2020, entered service last year and expects to add another 8,000 employees this year.

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(© Copyright 2022 CBS Broadcasting Inc. All rights reserved. Associated Press contributed to this report.)

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