Southwest Airlines announced that business travel bookings improved in its second quarter, marking the first profit month for the airline since the outbreak of Covid-19.
Southwest Airlines reported that it had $3.6 billion of passenger revenue during the quarter and $4 billion total operating revenues. This is more than twice the amount of operating revenues for the second quarter 2019. While business travel recovery has been slow, Southwest Airlines President Tom Nealon stated in an earnings call.
Revenues from managed business travel fell 80 percent in April compared to 2019. This was down to 77% from 2019, and it fell further to 69% in June.
Nealon stated, “Keep in Mind that we reported in our Q1 conference that our business revenues had fallen 88 percent.”
Corporate travelers have also paid lower fares due to the reduced volume, but this has “shown improvement,” Nealon stated. He said that both the volume and fare increases should be continued as corporate clients return to work and relax travel restrictions. Nealon stated that he was “very encouraged” by the information he has heard from Southwest’s corporate partners regarding travel plans. He also noted that the majority of the largest corporate clients are now travelling again.
Southwest expects operating revenue to fall between 10 and 15 percent in July and 12 to 17 percent in August, as leisure travel continues its recovery.
Southwest posted a net profit of $348 millions for its second quarter. This included $724 Million from the Payroll Support Program, and other proceeds to offset payroll costs. Southwest lost $206 million in the second quarter, excluding these and other items.
Chairman and CEO Gary Kelly stated that cash flow increased to $4million per day in June and that the carrier made a profit for the entire month, even though it did not have payroll support. This is the first time this has occurred since March 2020 when the pandemic began.
Kelly says that Southwest will be profitable in the third quarter and fourth quarter, “based upon our current trends” and “based on cost outlook.”
Southwest Q1 Earnings
Publited at Thu 22 July 2021, 20:36.29 +0000