The quarterly Southwest earnings report showed losses tied to its flight cancellation debacle late last year and forecasts more tough times ahead.
During the holiday break from Dec. 21-31, Southwest Airlines canceled nearly 17,000 flights, contributing to sizable losses across the board for the company. Southwest reported an $800 million pretax hit to its earnings on Thursday and a $220 million loss, resulting in an adjusted EPS loss of $0.38.
The U.S. Transportation Department said Wednesday that it was investigating Southwest over claims it had deceived customers by scheduling more flights than it could handle.
Here’s a quick breakdown of what Southwest Airlines reported Thursday:
- Southwest’s Q4 loss compares with a $68 million profit during the same period in 2021.
- The adjusted loss per share was 38 cents vs. an expected loss of 12 cents.
- The total revenue of $6.17 billion barely beat an expected $6.16 billion.
- Southwest reported a $539 million profit for 2022 — down 45% from a year ago.
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“Thus far in January 2023, the Company has experienced an increase in flight cancellations and a deceleration in bookings, primarily for January and February 2023 travel, which are assumed to be associated with the operational disruptions in December 2022,” Southwest said in the quarterly report.
The path ahead is turbulent. Southwest expects the holiday meltdown to force at least three months of further losses, yet still expects to be profitable for the 2023 calendar year.
“I can’t say it enough. We messed up,” Southwest CEO Bob Jordan said. “We have work to do to repair trust, but our customers are very loyal and we’re seeing that loyalty.”
The losses are just a sign of the times as the airline industry still recovers from the COVID-19 pandemic and Southwest specifically tries to pick up the pieces from its cancellation debacle.
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