Southwest Airlines Reports First Quarter 2021 Net Loss of $1.0 Billion on 52 Percent Revenue Decline
Southwest Airlines has reported a first quarter 2021 net loss of $1.0 billion on a 52 Percent year-over-year revenue decline to 2.1 billion. The carrier ended the first quarter with total liquidity of $15.3 billion and outstanding debt of $10.8 billion.
On Thursday (April 22, 2021), Southwest Airlines reported a first quarter net loss of $1.0 billion or ($1.72) per diluted share on a 52 percent year-over-year revenue decline to $2.1 billion. If $1.2 billion in wage and benefit subsidies under the U.S. Cares Act Payroll Support Program extension (PSP Extension) funds are included, the carrier shows a net profit of $116 million or $0.19 per diluted share. At March 31, 2021, Southwest held approximately $15.3 billion in liquidity and total net debt of $10.8 billion.
In Thursday’s announcement, Southwest Airlines’ Chairman of the Board and Chief Executive Officer, Gary C. Kelly, said, in part,
“In first quarter, we benefited from temporary cost relief as a result of PSP Extension proceeds, which offset a portion of salaries, wages, and benefits expenses, resulting in first quarter 2021 net income of $116 million, or $.19 per diluted share. We remain grateful for this much-needed federal payroll support on the heels of substantial losses in 2020, and ongoing non-GAAP losses in first quarter 2021. The payroll support from the federal government has allowed Southwest to preserve its 50-year history without involuntary layoffs or furloughs, an achievement unprecedented in the U.S. airline industry.
“ Excluding the benefit of PSP Extension proceeds and other special items, our first quarter 2021 net loss was $1.0 billion, or $1.72 loss per diluted share. While the pandemic is not over, we believe the worst is behind us, in terms of the severity of the negative impact on travel demand. Vaccinations are on the rise, and COVID-19 hospitalizations in the United States are down significantly from their peak in January 2021. As a result, we are experiencing steady weekly improvements in domestic leisure bookings, which began in mid-February 2021…”
Southwest’s first quarter operating expenses decreased year-over-year by 57.3 percent to $1.9 billion. Excluding special items, the carrier’s operating expensed were down 23.5 percent compared to the first quarter of 2020 to $3.3 billion. The carrier’s cost per available seat mile (CASM) for the quarter declined 34.9 percent year-over-year. With special items excluded, CASM decreased 16.7 percent versus Q1 2020. Excluding fuel costs (CASM-ex), the carrier’s operating expenses for the quarter declined 60.2 percent compared to the first quarter of 2020.
Southwest continues to operate fewer, less efficient, Boeing 737-700s, which resulted in a 4.7 percent improvement in fuel efficiency for the quarter. At March 31, 2021, Southwest Airlines had approximately $14.3 billion in cash and short-term investments, as well as a fully-available revolving secured credit facility of $1.0 billion. Additionally, the airline has unencumbered assets valued at approximately $11 billion.
The carrier ended the first quarter with a fleet of 730 aircraft, including 61 Boeing 737-8 MAX aircraft. During the first quarter, Southwest took delivery of 20 MAX 8s, comprised of 12 owned and 8 leased aircraft. Southwest also returned eight leased 737-700s during the quarter and expects to retire up to nine more 737-700s this year. Southwest is in the process of returning their stored 737-700s to service to support schedules in summer 2021 and beyond. As a result of reduced demand due to the pandemic, 59 of the carrier’s Boeing 737-700s were in temporary storage as of March 31, 2021. In April, the carrier temporarily removed 32 Boeing 737-8 MAX aircraft due to Boeing electrical system production issue. Southwest's current order book with Boeing includes a total of 349 MAX firm orders (200 MAX 7 and 149 MAX 8s) along with 270 options for delivery from 2021 through 2031.
Celebrating their 50th year of service, Dallas-based Southwest Airlines (NYSE: LUV) has distinguished itself by offering exemplary customer service delivered by over 56,000 team members. Southwest offers a robust point-to-point network with a strong presence across leisure and business markets, and in 2019 served 130 million passengers. During peak travel seasons, the airline operates more than 4,000 daily departures to 101 destinations across the U.S. and 10 additional countries. According to the U.S. Department of Transportation, based on the number of originating passengers boarded, Southwest has been the largest U.S. domestic carrier since 2003.
Source: Southwest Airlines