|Southwest Airlines Experiencing Cancellations, Pullback in Leisure Travel|
Dow Jones Newswires September 09, 2021 07:07:00 AM ET
Southwest Airlines Co. said it continued to experience softness in bookings and elevated trip cancellations, as it reports a pullback in leisure travel amid the rise of Covid-19 cases and the spread of the Delta variant.
The airline Thursday said the softness in leisure bookings has continued for September and October, though managed business bookings are estimated to remain relatively stable compared with August. It said it saw higher-than-anticipated cancellations for Labor Day travel, partly due to the effect of Hurricane Ida.
Southwest said it expects to cancel nearly 2,700 flights in the third quarter because of to Hurricane Ida. It said it is currently adjusting its published flight schedules and capacity for the remainder of the year.
"The company continues to believe the recent negative effects of the pandemic on August and September revenue trends will make it difficult for the company to be profitable in third quarter 2021, without taking into account the benefit of temporary salaries and wages cost relief provided by payroll support program proceeds," Southwest said.
The company said it expects fourth-quarter capacity to rise about 60% from a year earlier and fall about 5% from the same quarter in 2019. It previously guided for fourth-quarter capacity to rise about 68% from a year earlier and to be comparable versus the same quarter of 2019.
The company said the duration of the dent to operating revenue is unknown, though it estimates that the effects through October are less severe than the prior waves of rising Covid-19 cases.
Southwest said August managed business revenues fell about 64% from August 2019, with operating revenue for the month at the lower end of its guidance range. It expects operating revenue, compared with 2019, to fall 25% to 30% for September, 20% to 30% for October and 18% to 20% for the third quarter.
The company said it had about $16.2 billion in cash and short-term investments as of Sept. 7.
United Airlines Holdings Inc. on Thursday also said customer bookings were slowing due to the Delta variant's spread, dimming its profit outlook.