Source: Southwest, Investor Relations
Southwest Airlines said it has seen a significant rise in ticket cancellations and decline in traffic due to the coronavirus epidemic, which has caused airlines across the world to cut flights and implement cost controls.
The company said it thinks revenue per available seat mile, a key sales indicator for airlines, could decrease year-over-year in the first quarter after previously anticipating at 3.5 to 5.5% gain. The virus outbreak is estimated to negatively impact operating revenue by $200 million to $300 million. On the plus side, Southwest lowered its first-quarter costs per available seat mile (CASM) growth guidance to 5% to 7% from 6% to 8%, as its estimate for fuel costs per gallon are now expected to be $1.90 to $2.00, down from $2.05 to $2.15.
Southwest’s recent 8-K filing reads: “[we] experienced healthy passenger booking and revenue trends for the first two months of 2020, with year-over-year increases in operating revenue per available seat mile (RASM, or unit revenues) that were in line with the Company’s expectations. However, in recent days, the Company has experienced a significant decline in Customer demand, as well as an increase in trip cancellations, which is assumed to be attributable to concerns relating to reported cases of COVID-19.”
Southwest CEO Gary Kelly and American Airlines CEO Doug Parker met with President Donald Trump on Wednesday at the White House to discuss the impact of the outbreak on business. Trump said the executives did not ask for any financial assistance to make up for the hit to their businesses.
The company’s stock was up 3.8% at the time of post.
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Source: Equities News
