Southwest Airlines has reported a first quarter 2023 net loss of $159 million or ($0.27) per diluted share on a year-over-year increase in revenue of 23.5 percent to a record $5.7 billion. The carrier ended the quarter with a total of $12.7 billion in liquidity.
On Thursday (April 27, 2023), Southwest Airlines reported their first quarter financial results for the period ending March 31, 2023. The carrier reported a first quarter net loss of $159 million or ($0.27) per diluted share on a year-over-year increase in revenue of 23.5 percent to $5.7 billion, a quarterly record. Southwest’s first quarter revenue per available seat mile (RASM) increased versus the same period last year by 9.8 percent to 14.99 cents, while cost per available seat mile (CASM) increased 11.7 percent to 15.74 cents. Costs, excluding fuel (CASM-ex) increased 4.5 percent to 11.67 cents. At March 31, 2023, Southwest had $11.7 billion in cash and short-term investments, as well as a $1.0 billion fully available revolving credit line, well in excess of the company’s outstanding debt of $8.0 billion.
In Thursday’s announcement, Southwest Airlines’ President and Chief Executive Officer, Bob Jordan, said,
"As expected, we incurred a first quarter 2023 net loss that resulted from the negative financial impact of approximately $380 million pre-tax, or $294 million after-tax, related to the December 2022 operational disruption. The majority of this impact was driven by a negative revenue impact of approximately $325 million, as a result of cancellations of holiday return travel and a deceleration in bookings for January and February 2023 travel. Despite that, travel demand and revenue trends in March 2023 were strong and resulted in solid profitability for the month and record first quarter revenues.
"Our operational performance was also strong in first quarter 2023. Southwest ranked number two in domestic on-time performance year-to-date through March 2023, as our People successfully navigated nine named storms. During first quarter 2023, we completed our reviews of the December 2022 operational disruption and released the report summary and action plan publicly at www.southwest.com/travel-disruption-action-plan. We expect to meet our goals to complete the action plan by winter 2023. We continue to make operational investments and remain intensely focused on running a safe, reliable, and efficient operation while delivering our legendary Customer Service.
"We recently reached a tentative agreement with the Transport Workers Union Local 550 (TWU 550), representing our Meteorologists, and I commend the spirit of cooperation by both Negotiating Committees. Currently, this brings us to contract ratification or tentative agreement with six workgroups represented by collective bargaining agreements in the past six months. We are glad we can reward our People, and we remain focused on negotiations of the three remaining open contracts.
"While we are mindful of the uncertain economic environment, demand for domestic air travel remains strong, thus far. Our goal remains to manage inflationary cost increases and maintain our competitive cost advantage. Due to recent delivery delays at The Boeing Company (Boeing), we are further reducing planned 2023 aircraft deliveries to 70 from 90, resulting in an approximate one-point decrease in year-over-year planned 2023 capacity. Based on current revenue trends and our cost outlook, which includes market wage rate accruals for all open labor contracts, we expect solid profits in second quarter 2023 and continue to expect solid profits and year-over-year growth in both margins and return on invested capital for full year 2023. We also continue to expect our network to be roughly restored to pre-pandemic levels by the end of this year. We remain confident in our low-cost, low-fare business model and our long-term strategy, which is supported by a robust set of strategic initiatives designed to drive significant financial value. I am very grateful for the tremendous efforts of our Employees and their unwavering focus on delivering Reliability and Hospitality to our valued Customers."
During the first quarter, Southwest received 30 new Boeing 737-8 MAX airplanes and retired seven Boeing 737-700s. The carrier ended the first quarter with a total of 793 aircraft. During 2023, the company expects to retire a total of 26 737-700s, and after deliveries, expects to end the year with a fleet of 814 airplanes.
Southwest’s Q1 2023 CAPEX totaled $1.0 billion, primarily driven by aircraft-related expenses, as well as technology, facilities, and operational investments.
Founded in 1971, Dallas-based Southwest Airlines (NYSE: LUV) has distinguished itself by offering exemplary customer service delivered by over 62,000 team members at 121 airports across 11 countries. Southwest offers a robust point-to-point network with a strong presence across leisure and business markets. During peak travel seasons, the airline operates more than 4,000 daily departures to over 100 destinations across the U.S. and 10 additional countries. Southwest also continues to develop tangible steps toward achieving carbon neutrality by 2050, including offering Customers the opportunity to help the airline offset carbon emissions.
In trading Thursday morning (April 27, 2023), shares in Southwest Airlines Co. (NYSE: LUV) were down 4.55 percent to $29.50/share (11:57 AM EDT).
Source: Southwest Airlines