Southwest Airlines on Tuesday posted its first quarterly loss since 2011 and predicted “no material improvement in air travel trends” this spring as coronavirus devastates demand.
Southwest also announced a public stock offering of 55 million shares, worth around $1.6 billion at Monday’s closing price and said it would issue $1 billion in additional debt, in an effort to shore up funds amid a dismal demand outlook.
The airline said it expects its operating revenues next month to fall as much as 95% from a year earlier but warned it is “unable to reasonably estimate trends beyond May 2020.”
The Dallas-based airline lost $94 million in the quarter on revenue of $4.23 billion, an 18% decline in sales compared with a year earlier, slightly lower than analyst estimates. Its adjusted per-share loss came in at 15 cents, ahead of expectations.
Southwest follows Delta and United in posting a loss for the quarter. Travel is among the hardest-hit industries from the coronavirus and severe measures to stop it from spreading like shelter-in-place orders.
First quarter results reflect when coronavirus and the start of stay-at-home orders in the United States, where Southwest mostly flies. Travel demand was still relatively strong early in the year, but losses are expected to deepen in the spring.
The timing of the coronavirus crisis couldn’t be worse for the sector. The disease and accompanying economic downturn is sapping travel demand during the peak spring and summer travel season, usually airlines’ most lucrative time of year.