Southwest Airlines Beats Q3 Estimates, Expects Not To Be Profitable In Q4

Southwest Airlines Co LUV reported a third-quarter FY21 operating revenue of $4.7 billion, a decline of 17% from Q3 2019, beating the consensus of $4.58 billion. Operating revenue grew by 161% year-over-year.
Adjusted EPS improved to $(0.23) compared to $(1.99) in 3Q20, beating consensus of $(0.27).
The airline reported an operating income of $733 million, compared to a loss of $(1.41) billion a year ago.
Total operating expenses increased by 23.2% Y/Y to $3.95 billion.
Southwest Airlines cash used in operating activities for the quarter was $575 million, compared to $1.05 billion a year ago.
The company ended the quarter with liquidity of $17 billion, well above debt outstanding of $11.2 billion.
The operating revenue per available seat mile was 12.07 cents, a decrease of 15.7%, compared to 3Q19, driven primarily by a passenger revenue yield decrease of 15% and a load factor decrease of 2.8 points.
Based on the current cost outlook, and despite the current momentum in revenue trends, the company does not expect to be profitable in 4Q21.
Q4 Outlook (compared with 4Q19): The company expects Operating revenue to be Down 15% - 25% and a Load factor of 80% - 85%.
The company expects Q4 capacity to remain below 4Q19 levels, estimated to be down ~8%, and currently expects 1Q22 capacity to decrease ~6% compared with 1Q19.
Despite headwinds and based on current bookings, the company's guidance for October 2021 operating revenues remains unchanged.
Price Action: LUV shares are trading lower by 0.44% at $49.25 during the premarket session on Thursday.

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