Southwest Airlines Posts Quarterly Profit as It Tries to Shake Off Omicron Woes

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The New York Times
The New York Times
 
A Southwest Airlines aircraft at Ronald Reagan Washington National Airport in Arlington, Va., Oct. 15, 2021. (Stefani Reynolds/The New York Times)

Southwest Airlines on Thursday reported a $68 million profit for the final three months of last year as it struggled to shake off setbacks caused by the omicron variant of the coronavirus, which has delayed the travel recovery and is expected to drag the airline to a loss in the first three months of this year.

Now, with cases falling, “the worst appears to be behind us,” Bob Jordan, Southwest’s executive vice president, who will take over as CEO next week, said in a statement.

 

The company had reported quarterly profits earlier last year, but the fourth quarter was the first in two years in which Southwest achieved a profit without the support of government aid. The airline received $2.7 billion in federal grants to help pay workers in 2021, helping to lift it to a full-year profit of $977 million.

Despite the quarterly profit, omicron dealt Southwest and its peers a blow at the end of last year and into this one, as high rates of workers calling in sick, coupled with bad weather, forced carriers to cancel tens of thousands of flights over the Christmas and New Year’s holidays.

Southwest was particularly hard hit, canceling thousands of flights, or about 9% of scheduled trips, in the two weeks starting Dec. 25. Only one other U.S. carrier issued more cancellations: SkyWest Airlines, which operates regional flights for several other carriers.

 

The problems continued this month. Southwest said it has canceled more than 5,600 flights in January, taking a $50 million toll on operating revenue for the month. Omicron also weighed on ticket sales and led to an increase in customer cancellations. The airline now expects to report a loss for the first three months of 2022.

“Despite our fourth-quarter profit, we had a challenging start to 2022 as we continue to recover from the pandemic,” Jordan said. He added that the airline had also pared flight plans for the first half of the year to “provide additional buffer to the operation.”

Still, Southwest expects operating revenue in the first quarter of 2022 to be down only about 10%-15% from the same period in 2019. The airline also said it hoped to restore most of its route network and return to typical productivity levels by the end of next year.

 

Despite the challenges, Southwest hired about 5,000 people last year and expects to hire an additional 8,000 this year as travel continues to recover. To remain competitive, the airline raised its minimum wage to $15 an hour on Aug. 1. It is in discussions with its unions for another increase to $17.

Southwest was the only one of the nation’s largest airlines to report a profit for the final quarter of last year. Delta Air Lines lost more than $400 million, United Airlines nearly $650 million and American Airlines more than $930 million. On Thursday, Alaska Airlines said it had eked out an $18 million profit for the quarter, while JetBlue Airways reported a $129 million loss.

This article originally appeared in The New York Times .

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