Like its brethren, Southwest Airlines (LUV) - Get Report posted a first-quarter pandemic-induced loss on Tuesday, though the loss was narrower than expected, and it also said it cut its crucial second-quarter cash-burn rate to about half of what it expected.
The Dallas-based airline posted an adjusted loss of $77 million, or 15 cents a share, vs. profit of $387 million, or 70 cents, in the same period a year ago. Analysts polled by FactSet had been expecting a per-share loss of 24 cents. Revenue slid 24% to $24.7 billion from $31.3 billion, in line with analysts’ forecasts.
Southwest said it expects its crucial "cash-burn rate" - a closely watched figure that gives a snapshot into how much money an airline is spending to maintain operations without a profit - to be in the range of $30 million to $35 million in the second quarter of 2020, roughly half of the $60 million to $65 million it had expected.
“The U.S. economy has been at a standstill, and the current outlook for second quarter 2020 indicates no material improvement in air travel trends,” CEO Gary Kelly said in a statement. “Trip cancellations remain at unprecedented levels, though they have receded from their peak in March. As such, we have significantly reduced our published flight schedules through July 2020.”
The company said it had received $3.3 billion under the Payroll Support Program (PSP), consisting of $2.3 billion in direct payroll support and $948 million in the form of an unsecured 10-year term loan.
Through April 24, Southwest said it has bolstered its cash on hand by $6.8 billion, including $1.6 billion of PSP proceeds, with a remaining $1.6 billion of PSP proceeds expected to be received by July 2020.