Southwest Airlines Co. today reported its first quarter 2022 financial results:
• Net loss of $278 million, or $0.47 loss per diluted share
• Excluding special items1, net loss of $191 million, or $0.32 loss per diluted share
• Operating revenues of $4.7 billion, down 8.8 percent compared with first quarter 2019
• Cash provided by operations of $1.1 billion
• Liquidity2 of $16.7 billion, well in excess of debt outstanding of $10.7 billion
Bob Jordan, Chief Executive Officer, stated, “While the impact from the Omicron variant in January and February disrupted our anticipated profit recovery in first quarter 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 first quarter 2019, representing our first quarterly RASM increase relative to respective 2019 levels since the pandemic began.
“Our operational performance improved during February and March 2022 following acute staffing challenges experienced in January due to the Omicron variant.
“We have made great progress against our hiring plans for this year, increasing our headcount by approximately 3,300 in first quarter 2022, alone, net of attrition.
“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.
“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 full year 2022.
“Barring any unforeseen events and based on current trends, and despite higher fuel prices and managed business revenues and available seat miles (ASMs, or capacity) remaining below pre-pandemic levels, we expect solid second quarter 2022 profits and operating margins, excluding special items3.
“As we focus on the basics, our priorities for 2022 are clear: getting properly staffed and returning to historic operational reliability; restoring our Customer Service advantage; growing our fleet with The Boeing Company’s (Boeing) most-modern, fuel-efficient 737 aircraft; adding flights and restoring our network, especially on shorter-haul business routes; investing in enabling technologies for enhanced efficiencies; and producing consistent quarterly profits.
“Among our primary goals is to return to pre-pandemic levels of productivity as we plan to restore the majority of our route network and better optimize our operations by the end of next year.
“I am grateful to our People for continuing to demonstrate their resilience and superb Teamwork after more than two years of managing through the pandemic.
“While it has been an incredibly challenging period, we are greatly encouraged by the progress we are making and believe we are well-positioned for future growth and long-term success with our point-to-point network, low cost and low fare business model, industry-leading balance sheet, and the best Employees and Leadership Team in the industry.”
|2Q 2022 Estimation|
|Operating revenue compared with 2019 (a)||Up 8% to 12%|
|ASMs compared with 2019||Down ~7%|
|Economic fuel costs per gallon1,4||$3.05 to $3.15|
|Fuel hedging premium expense per gallon||$0.05|
|Fuel hedging cash settlement gains per gallon||$0.61|
|ASMs per gallon (fuel efficiency)||76 to 78|
|CASM-X (b) compared with 20195||Up 14% to 18%|
|Debt repayments (millions)||~$20|
|Interest expense (millions)||~$90|
|ASMs compared with 2019 (c)||Down ~4%||No change|
|Economic fuel costs per gallon1,4||$2.75 to $2.85||$2.25 to $2.35|
|Fuel hedging premium expense per gallon||$0.04||$0.05|
|Fuel hedging cash settlement gains per gallon||$0.54||$0.28|
|CASM-X (b) compared with 20195||Up 12% to 16%||No change|
|Debt repayments (millions)||~$650||~$455|
|Interest expense (millions)||~$360||No change|
|Aircraft (d)||814||No change|
|Effective tax rate (e)||24% to 26%||23% to 25%|
|Capital spending (billions) (f)||~$5.0||No change|