Southwest Airlines reported its first quarterly operating profit since the start of the pandemic. Still, when excluding the financial help it received from the government, Southwest reported another full-year loss.
The airline reported it earned $85 million in the quarter, far better than the $23 million forecast by analysts surveyed by Refinitiv. Revenue increased to $5.1 billion, up 150% from a year earlier – but still down 11% from where it was in the fourth quarter of 2019, ahead of the pandemic.
“We ended 2021 on a high note,” said CEO Gary Kelly. “While we continue to manage through an incredibly challenging operating environment, we made much progress in our recovery in 2021 and are well-positioned for future growth with our industry-leading balance sheet.”
But the company lost $1.3 billion for the year, excluding the $2.7 billion in federal help it received as part of government support provided to US airlines in 2021. It marked the second straight annual operating loss at Southwest (LUV), after a string of 47 years of annual profits that ended in 2020.
Southwest expects losses to return early this year, saying it will lose money in January and February. Those are typically some of the slowest months of the year for US air travel, and it’s been made worse this year by the surge in Covid cases and a rise in fuel prices.
Staffing shortages have also forced the airline to extend incentive pay through February of this year to keep flights fully staffed. And it has also increased its starting pay as it seeks to hire 8,000 new employees this year.
But like other airlines, Southwest said its bookings suggest a strong spring travel season starting in March.
And it gave more bullish guidance than some of its rivals, saying it expects to be profitable in March and in the final three quarters of the year, allowing it to report a full-year profit in 2022.
The US airline industry enjoyed a strong holiday travel season, although all airlines struggled with canceling a large number of flights due to lack of staffing caused by the Omicron surge coupled with bad winter weather.
Still the strong demand for leisure travel allowed both Southwest and Delta Air Lines (DAL) to report fourth quarter profits, even as industry leader American Airlines and United reported another quarter of losses. But no major US airline has reported a full-year profit for 2021.
Southwest wasn’t the only airline to report a profitable fourth quarter Thursday. Alaska Air (ALK), one of the few carriers to report a third-quarter profit, posted adjusted income of $31 million in the final three months of the year. It too reported a full-year loss when excluding the impact of federal help.
JetBlue (JBLU) reported an adjusted quarterly loss of $116 million, though it was slightly smaller than forecasts.
Southwest has long been one of the most profitable US airlines, reporting profits in the wake of Sept. 11, 2001, and throughout the Great Recession, even when other airlines reported losses. It is the only major US airline not to have filed for bankruptcy at some point in this century.
Shares of Southwest, JetBlue and Alaska were all little changed in premarket trading on their reports.