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Monday, May 16, 2022

Southwest Airlines warns of hit from latest Covid-19 surge

Citing the drag from the Delta variant of the coronavirus, Southwest Airlines on Wednesday warned of weaker revenues in the current quarter as bookings slow.

Southwest, a domestic-focused US carrier, said its third-quarter revenue outlook had “worsened by an estimated three to four points” compared with the one it released last month.

“The Company has recently experienced a deceleration in close-in bookings and an increase in close-in trip cancellations in August 2021, which are believed to be driven by the recent rise in COVID-19 cases associated with the Delta variant,” Southwest said in a securities filing.

Southwest projected that August revenues would be down 15 to 20 percent compared with the 2019 period. It previously estimated a decline of 12 to 17 percent.

On the positive side, Southwest said travel demand for the Labor Day weekend, which traditionally marks the end of summer, “remains healthy.”

The new forecast highlights the fluid impact of Covid-19, which has seen a resurgence in infections in recent weeks in Florida, Texas and other states with low vaccination levels.

On July 22, Southwest Chief Executive Gary Kelly had said there was “no indication anywhere” of an impact from the Delta variant on customer behavior.

But Kelly told analysts on a conference call that he was “worried” about such an impact, adding that the carrier needed to be “very nimble and very flexible” in case consumers restrict travel due to the virus.

Shares of Southwest were volatile Wednesday, opening lower but rising 0.2 percent to $51.21 in mid-morning trading.

Southwest flies to both of Costa Rica’s major airports (SJO and LIR) with routes from Houston, Denver and the Washington, D.C. area.

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