Nothing will spook investors quite like a large posted loss, lowered growth forecasts and forced cuts to expansion plans and jobs.
At an Aril 25 earnings call, Southwest Airlines (LUV) announced a wider-than-expected loss of $231 million, or 39 cents a share, in the first three months of 2024 and a lowered growth capacity of 4% instead of the 6% it announced last year. Year-over-year, the airline’s loss sits at $159 million.
Related: Spirit lost a staggering amount of money during the summer period
None of this was good for company stock which fumbled nearly 10% at the time the news was announced and was down 7.67% at $27 as of Thursday afternoon.
Southwest Airlines has not had a profitable quarter in 2024.
Image source: Kevin Dietsch/Getty Images
This is how much money Southwest Airlines lost last quarter
“While it is disappointing to incur a first-quarter loss, we exited the quarter with healthy profits and margins in the month of March,” chief executive Bob Jordan said in a statement on the earnings.
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To get back onto the path of profitability and “reaching financial goals,” Southwest announced that it would be laying off more than 2,000 employees ranging from pilots to airport ground staff and ceasing operations at four airports across the country entirely — New York’s Syracuse, Washington’s Bellingham, Houston’s George Bush International Airport and Cozumel Airport in Mexico.
The airline also blamed some of its problems with further growth on the fact that production issues with Boeing 737 Max 8 (BA) planes mean that it can expect to only get 20 planes instead of the 46 it had initially hoped for in the near future — this, in turn, will prevent Southwest from running many of the routes it had as part of its growth plans.
‘Achieving our financial needs is an immediate imperative’
“Achieving our financial goals is an immediate imperative,” Jordan said further. “The recent news from Boeing regarding further aircraft delivery delays presents significant challenges for both 2024 and 2025. We are reacting and replanning quickly to mitigate the operational and financial impacts while maintaining dependable and reliable flight schedules for our customers.”
While the airline brought in $6.33 billion in revenue (up 11% from a year ago), the costs of operations as well as the problems with Boeing deliveries all contributed to an unprofitable quarter. Jordan said that the decision to exit the four airports was made independently of one season’s earnings or the problems with Boeing as flying out of them was proving unprofitable on a wider scale.
“We are focused on controlling what we can control and have already taken swift action to address our financial underperformance and adjust for revised aircraft delivery expectations,” Jordan told investors.
Also on Thursday, American Airlines (AAL) posted a first-quarter loss of $312 million or 46 cents per share. The airline expects to earn between $1.15 and $1.45 per share in the second quarter but the fall from $10 million in profit during the same quarter a year ago reflects similar pressures that Southwest is facing.
“While we aren’t satisfied with our first-quarter financial results, we have a strong foundation in place, and we remain on track to deliver on our full-year financial targets,” American Airlines CEO Robert Isom said in a statement.
