Southwest’s service meltdown cost it $75 million

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This is one of the hurdles facing the discount airline. Southwest warned Thursday that it believes it will lose $100 million in revenue this quarter from the impact of Covid growth due to the Delta version — even though bookings have improved recently, Especially during the upcoming holiday travel period. About $40 million of that hit is expected in October.

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Still, it’s an improvement from the revenue hit in the third quarter, when the airline believes it lost $100 million in sales in August alone and $200 million in September as flying reduced due to Covid growth. Went.

Overall the airline reported third-quarter revenue reached $4.7 billion, up 161% from a year ago, but down 17% from the third quarter of 2019 before the pandemic.


The company reported a loss in the third quarter, excluding special items, of $135 million. It was slightly smaller than analysts’ forecast. The company posted net income of $446 million in the quarter, including $763 million received from the most recent round of federal aid.

Southwest (LUV) Florida blamed the service slowdown in early October on a combination of bad weather, a brief problem with air traffic control in the area, and a lack of staff available to accommodate those problems. It has acknowledged that the lack of staff was causing service problems even before hundreds of passengers were stranded on thousands of canceled flights, many of them angry.

“We have improved our capacity plans to adjust to the current staffing environment, and our on-time performance has improved,” CEO Gary Kelly said. “We’re aggressively hiring toward a goal of about 5,000 new employees by the end of this year, and we’re currently more than halfway toward that goal.”

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American Airlines

American Airlines (came) Excluding special items, it lost $641 million in the quarter. Like Southwest, it was slightly below analysts’ forecast. American also reported net income of $169 million, including $992 million in federal aid.

Revenue in the US reached nearly $9 billion, up 183% from a year earlier, but it was still down 25% from where it was before the start of the pandemic in the third quarter of 2019.

The third quarter included a period of summer travel, which became stronger for most airlines before the rise of Covid, forcing people to cut travel.

Airlines were also counting on a rebound in more lucrative business travel after Labor Day, when many businesses were expected to reopen their offices. But the surge has delayed many businesses reopening those offices, which stymied a massive rebound in business travel.

Yet airlines are reporting that bookings remain strong during the holiday travel season, which is one of the busiest times of the year.

Both Southwest and American were slightly higher in pre-market trading on Thursday.


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