Southwest Airlines Says its Lost This Much in January Due to the Government Shutdown


 
 
03:46 01/25/2019

Airport delays were seen across the country on Friday as the nation continued to struggle with the government shutdown.

There were at least four major airports suffering flight delays due to air traffic control employees calling in sick.

Thankfully President Trump announced an end to the shutdown today, but it wasn't in time to save money for Southwest Airlines.

Southwest Airlines announced this week that the government shutdown cost it as much as $15 million this month. It was on Thursday that the largest carrier of U.S. domestic passengers, reported financial results and revealed the news.

While revenue impact from the shutdown had been somewhat small for Southwest, it still sent a ripple through the airline industry. It was roughly a week ago that Delta Air Lines said the shutdown cost it roughly $25 million in January.

For the fourth quarter, Southwest reported a profit of $654 million, or $1.17 a share. In the year ago quarter the company had reported $1.75 billion or $2.94 a share.

Analysts were expecting $1.08 a share. Revenue at $5.7 billion was also ahead of what analysts expected.

"Our remaining work is currently suspended until the government reopens and the FAA is allowed to resume normal certification activities," Southwest said in its earnings release. "We are anxious for the government to resolve this shutdown so we can bring low fares and a boost to Hawaii's travel and tourism industry."

“We are anxious for the government to resolve this shutdown,” Chairman and CEO Gary Kelly had stated yesterday.

Shares of Southwest have seen a gain of almost 10% since 2019 started. Kelly said in the company's fourth quarter press release:

"2018 was an incredible year of resilience and achievement. Our Employees persevered through significant challenges, delivering our 46th consecutive year of profitability with strong margins, record cash flows, and $544 million in profitsharing. We finished the year strong, with record fourth quarter net income and earnings per diluted share, excluding special items. This was driven by strong yields, record revenues, and a solid cost performance. Earlier this week, Southwest was again named to FORTUNE's 2019 list of World's Most Admired Companies. I am especially grateful for our People and their unwavering devotion to Southwest Airlines. My thanks and my congratulations to them on these outstanding results despite a very challenging environment.

"We celebrated notable milestones during 2018, including approximately $205 million of pre-tax profits from revenue management enhancements implemented in 2018. These enhancements are expected to drive year-over-year revenue growth in 2019, particularly during the first half of the year. Our Rapid Rewards program revenues continued to grow, as did revenues from our ancillary products. Tax savings from the 2017 tax reform legislation contributed hundreds of millions toward our earnings and record operating cash flow in 2018, and we continued to invest in our People and our Company, while providing $2.3 billion in returns to our Shareholders during 2018.

"Our financial goals for 2019 are to grow profits and earnings per share, expand margins, improve returns on invested capital, and maintain an investment-grade balance sheet," he said of the future.


This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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