- 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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