The COVID-19 pandemic cost Southwest Airlines (LUV) over $3 billion in 2020, with the company posting its first annual net loss since 1972 as the airline industry reeled from lockdowns and surging infections.
However, on a quarterly basis, the company posted a narrower-than-expected loss, helped by federal funding and a surge in holiday travel. Here are the quarterly results compared to consensus estimates compiled by Bloomberg:
Revenue: $2.01 billion down year-over-year vs. $2.11 billion expected
Adj. earnings loss per share: $1.29 per share, vs. expected loss of $1.66 per share
Liquidity at end of 4Q: $14. 3 billion
Daily average cash burn: $12 million
CEO Gary Kelly says the airline is poised for recovery in 2021, but warned that “travel and tourism industries face an ever-changing environment as the pandemic evolves.”
“We came into the year well prepared with significant financial strength and started the year strong with an outstanding operational performance and solid net income growth, year-over-year, in January and February 2020, combined,” Kelly said in a just released earnings report.
Southwest has already received half of the $1.7 billion congress made available through the $15 billion airline industry Payroll Support Program (PSP) Extension. It was was included in the $900 stimulus signed into law late last year.
As a result, Southwest has been able to avoid layoffs, furloughs and pay cuts for its 60,000 employees, although Kelly said in December that the company was still “overstaffed in many areas.”
Post pandemic recovery
Kelly says Southwest’s cargo team is preparing to play a role as COVID-19 vaccine shipments increase.
“We will be ready to go when we are needed,” he said in a recent “Ask Gary” video. The airline already ships coronavirus testing kits and PPE.
Southwest is also expanding service to more cities. It plans to add Fresno and Santa Barbara to its flight schedule in April and is pursuing passengers, with low cost ticket deals like its recent four day $29 sale, and a current $50 dollar fare program.
The airline expects average core cash burn to rise in the first quarter to $17 million per day, largely due to soft demand and “a seasonally weaker travel period in January and February 2021,” as well as rising fuel prices.
Despite the pandemic downturn, Southwest was just named the #1 U.S. airline in the Wall Street Journal's annual ranking for 2020.
Adam Shapiro is co-anchor of Yahoo Finance Live 3pm to 5pm. Follow him on Twitter @Ajshaps
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