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  Southwest Airlines

  IATA/ICAO Code:

  WN/SWA

  Airline Type:

  Low-Cost Carrier

  Hub(s):

  Baltimore/Washington International Thurgood Marshall Airport, Dallas Love Field, Denver International Airport, Harry Reid International Airport, Hartsfield-Jackson Atlanta International Airport, Houston Hobby Airport, Los Angeles International Airport, Midway International Airport, Oakland International Airport, Orlando International Airport, Phoenix Sky Harbor International Airport

  Year Founded:

  1967

  CEO:

  Robert Jordan

  Country:

  United States

US low-cost giant Southwest Airlines published its first-quarter results for 2022 earlier today. Among the key figures for the Dallas-headquartered budget carrier was a $278 million net loss, equating to nearly half a dollar per share. Nonetheless, the airline is confident in projecting clearer skies for the rest of the year.

The key figures

The $278 million net loss in question includes special items, and specifically equates to a $0.47 loss per diluted share. These figures drop to $191 million and $0.32 per diluted share when excluding special items. Of course, Southwest has faced acute coronavirus and staffing-based challenges in Q1 of 2022.

Using 2019, the last full year of pre-covid 'normality,' we can see that Southwest is getting back on track in terms of operating revenues. Indeed, the $4.7 billion sum that it accrued for this metric is just 8.8% lower than the same period three years ago. The airline's liquidity stands at $16.7 billion, which comfortably outweighs its $10.7 billion of debts. Southwest CEO Bob Jordan stated:

"While the impact from the Omicron variant in January and February disrupted our anticipated profit recovery in the first quarter of 2022, we returned to strong profitability in March 2022 on surging travel demand. First-quarter 2022 operating revenues per available seat mile (RASM, or unit revenues) increased slightly compared with the first quarter of 2019."

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Bouncing back

Regarding Jordan's last point, he proudly notes that Q1 saw Southwest's "first quarterly RASM increase relative to respective 2019 levels since the pandemic began." This is an encouraging sign for the airline, whose operational performance levels also improved in February and March following a difficult January.

As well as making financial steps forward, Southwest has also wasted no time in growing its team ahead of what it surely hopes will be a busy summer. Indeed, In Q1 alone, the carrier welcomed 3,300 new employees. Southwest is also well-positioned to defend itself from the issue of rising fuel prices. Jordan explains that:

"We remain intensely focused on our hiring and training efforts as we work diligently to restore our network and position the Company for future growth. While we are experiencing inflationary pressure from higher jet fuel prices, our fuel hedge is providing significant protection against rising oil prices."

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Eyeing a profitable rest of the year

Southwest's strong end to Q1 means that, although it made a net loss for that particular period, it is well-placed to transition back into profitability for the coming quarters and the year as a whole. Regarding this, Jordan notes:

"Based on current plans and expected continued strong bookings, we continue to expect to be solidly profitable for the remaining three quarters of this year, and for the full year of 2022."

In fact, the airline even expects to exceed pre-pandemic performance by some metrics. For example, it is estimating that Q2 operating revenues will be 8-12% higher than in 2019, although available seat miles will still be 7% lower than pre-pandemic. As far as load factors are concerned, Southwest is eyeing 85% in Q2.

What do you make of Southwest's first-quarter results? Have you flown with the airline this year? Let us know your thoughts and experiences in the comments.