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- Southwest Airlines (LUV) announced a $0.27 per share loss in the first quarter of 2023, which was more than expected.
- The dismal statistics reflect the lasting effects of the airline's operational problems in December 2022.
- Southwest shares fell 3% on April 27 as a result of the dismal earnings report.
Southwest Airlines (LUV) reported a larger-than-expected first-quarter loss as the carrier's Christmas breakdown continued into the new year. The stock price has plummeted.
Southwest reported a net loss of $159 million, or $0.27 per share, which was $0.04 lower than expected. Sales increased 21.6% to $5.71 billion, falling short of expectations.
According to CEO Bob Jordan, the dismal results were due to operational problems in December 2022, when Southwest was forced to cancel more than 16,000 flights during the lucrative Christmas travel season due to schedule adjustments induced by winter storms. Jordan went on to say that the interruptions resulted in a $325 million revenue impact in the first quarter due to consumers postponing Christmas return travel and a drop in reservations in January and February. However, he said that demand and sales recovered in March.
Nonetheless, Southwest anticipates revenue per seat mile (RASM) to fall 8% to 11% in the current quarter, while Jordan said that the airline expects "solid profits" in the quarter and for the year. Despite the uncertain economic backdrop, he maintained that demand for domestic air travel remained robust, and Southwest's mission is to "manage inflationary cost increases and maintain our competitive cost advantage."
Southwest Airlines stock fell 3% on April 27 and is down 11% this year.
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