Southwest Airlines Co. said a cascade of cancellations earlier this month cost it $75 million, and the airline said it is planning to throttle back on flying to prevent similar incidents.
Southwest canceled more than 2,000 flights over a few days earlier this month, citing a series of events that was triggered by bad weather and air traffic control issues in Florida, but snowballed due to its thin staffing.
Staffing shortfalls contributed to problems for the airline throughout the summer, and Southwest said Thursday that it would adjust its December schedule as it tries to get a handle on the issue. The airline said it now expects its fourth-quarter capacity to be down 8% from 2019, compared with the 5% reduction it had previously planned. The airline also said its schedule for next year would reflect “more conservative staffing assumptions, as well, all compared to historical norms.”
For most of last year, airlines’ biggest problem was weak demand due to the Covid-19 pandemic. That changed this summer, when travel came roaring back, catching many carriers off-guard. While the spread of the more contagious Delta variant delayed the recovery airlines had hoped would continue to accelerate this fall, airline executives have said in recent weeks that the demand has started to pick up again after what turned out to be a brief pause.
Southwest reported a third-quarter profit of $446 million, but excluding the impact of a last round of government assistance, the airline reported a loss of $135 million.
“While there are lingering effects from the summer Covid-19 surge and recent operational challenges, we are encouraged with renewed momentum in leisure and business traffic, revenues, and bookings—especially over the holidays,” Southwest said in a statement. The airline said it expects the new variant’s impact to lead to a $100 million hit to revenues in the fourth quarter.
American Airlines Group Inc. AAL 1.46% on Thursday reported a $169 million profit including government aid, and a loss of $641 million without it.
“While we don’t like reporting losses, this was our smallest quarterly loss since the pandemic began,” American Chief Executive Doug Parker and President Robert Isom wrote in a letter to employees following the results.
Both Southwest and American Airlines reported smaller losses than anticipated.
Photo: Steven Senne/Associated Press
Both airlines reported revenues that outpaced analysts’ expectations for the quarter and smaller losses than anticipated, as the Delta variant’s impact wasn’t as long-lasting as many had predicted.
Even as their worries about demand ease, carriers are running into new challenges as they grapple with rising costs for fuel and struggle to hire workers they need to avoid the kinds of hiccups many airlines experienced over the summer. Airlines are also still waiting for lucrative business travelers to return after many big companies delayed bringing workers back to offices this fall.
Southwest said Thursday that it is expecting a loss in the final quarter of the year due to inflation in labor rates and airport costs. Delta Air Lines Inc. said last week that rising fuel costs would likely offset rising revenue in the fourth quarter, leading to a loss. United Airlines Holdings Inc. earlier this week reported a loss of $329 million excluding government aid.
Write to Alison Sider at [email protected]
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