Southwest Airlines (LUV) - Get Southwest Airlines Company Report on Thursday reported its first annual loss since the Nixon administration as it struggled under the weight of the coronavirus pandemic.
Shares of the Dallas company at last check were 2.5% higher at $45.25. The fourth-quarter adjusted loss was narrower than expected.
"While vaccine availability should mark the beginning of the end of this pandemic, current passenger booking trends do not indicate significant improvement through March 2021," Gary Kelly, chairman and chief executive, said in a statement.
Southwest Airlines reported a fourth-quarter net loss of $908 million, or $1.54 a share, compared with a profit of $514 million, or 98 cents a share, in the year-earlier quarter.
The latest adjusted loss was $1.29 a share, while analysts surveyed by FactSet were calling for a loss of $1.68 a share.
Revenue totaled $2.01 billion, down 65% from $5.73 billion a year earlier. The FactSet consensus called for revenue of $2.1 billion.
Southwest’s revenue tumbled 60% in 2020 to $9.05 billion from $22.43 billion.
"The covid-19 pandemic devastated the world, and our heart goes out to all those affected," Kelly said. "The airline industry was hit especially hard in 2020, and we incurred our first annual net loss since 1972."
Kelly said the airline saw its largest monthly decline in operating revenue in April, down 92% year-over-year. That was when the pandemic spread and shelter-in-place orders and similar restrictions were implemented throughout the country.
Average core cash burn was about $12 million a day in the fourth quarter, Kelly said. The airline expects average core cash burn of about $17 million a day in the first quarter as a result of continued soft demand and a seasonally weaker travel period in January and February. Also a factor: rising fuel prices.
"While we hope to achieve cash-burn break-even in 2021," Kelly said, "it is wholly dependent upon a substantial rebound in passenger traffic and revenue; and, it is difficult to predict the timing of such a rebound, especially with respect to business travel."
To achieve cash-burn break-even, Kelly added, "we continue to estimate operating revenues will need to recover to a range of 60% to 70% of 2019 levels, which is roughly double current levels."
The airline recently said it would offer employees another round of voluntary leaves as staffing levels outpace demand during the coronavirus pandemic.