Southwest Airlines suffered its largest loss ever in the third quarter as it continued to burn cash while the coronavirus pandemic kept travelers off planes.
The Dallas-based carrier on Thursday blamed its $1.2 billion net loss for the July-to-September quarter on the virus keeping demand for air travel in a chokehold that’s not likely to loosen any time soon.
While there’s been a modest improvement in leisure passengers since July, passenger traffic and booking trends are expected to “remain fragile” until a COVID-19 vaccine becomes widely available, Southwest CEO Gary Kelly said.
But Southwest didn’t end the quarter as deep in the red as Wall Street thought it would. The company’s net loss of $1.96 per share and revenues of $1.8 billion beat analysts’ expectations for a $2.57-per-share loss and about $1.7 billion in revenues, according to Bloomberg data.
Southwest’s average core cash burn for the quarter also improved from some $23 million a day in the prior quarter to roughly $16 million a day, a number the company expects to fall to about $11 million in the final three months of the year.
Southwest shares climbed as much as 5.3 percent to $41.98 Thursday before paring the gain to 4.8 percent as of 1:51 p.m.
Southwest plans to start filling middle seats on its planes again in December after keeping them empty for months as a social-distancing precaution. The change was made based on scientific research showing the risk of breathing in COVID-19 particles on an airplane is “virtually non-existent,” Kelly said.
“This practice of effectively keeping middle seats open bridged us from the early days of the pandemic, when we had little knowledge about the behavior of the virus, to now,” Kelly said in a statement.
Customers on fuller flights will still have the option to re-book their ticket if they want, Kelly added.
Southwest announced plans for pay cuts earlier this month aimed at staving off the mass furloughs like those imposed by rivals American and United after the expiration of federal payroll aid. Kelly said the airline would not be able to “maintain full pay and employment” without another round of support from the government.
President Trump and House Speaker Nancy Pelosi have expressed support for lending airlines another hand, but it’s unclear whether Congress will pass a new stimulus bill before the November presidential election.
With Post wires
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