For the quarter, Southwest reported an adjusted loss per share of $0.27, wider than analyst estimates of a loss of $0.22, resulting in the company losing $159 million in the quarter. Revenue for the quarter came in at $5.73 billion, matching estimates.
“As expected, we incurred a first quarter 2023 net loss that resulted from the negative financial impact of approximately $380 million pre-tax, or $294 million after-tax, related to the December 2022 operational disruption,” Southwest CEO Bob Jordan said in a statement. “The majority of this impact was driven by a negative revenue impact of approximately $325 million, as a result of cancellations of holiday return travel and a deceleration in bookings for January and February 2023 travel.”
Southwest is still feeling the repercussions of the operational meltdown that forced it to cancel more than 16,700 flights around the holidays, costing the airline over $800 million. On Monday the Department of Justice (DOJ) joined an ongoing investigation with the Department of Transportation into Southwest, looking into “whether Southwest engaged in unrealistic flight scheduling which is illegal under federal law and whether Southwest Airlines provided timely refunds and reimbursements to affected passengers as required,” a DOJ spokesperson said.
And just last week hundreds of Southwest flights were delayed and operations were temporarily halted following a “data connection” issue, though the ground stop was soon lifted. According to Flightaware data, 1,820 flights were delayed due to the issue.
Despite these issues, Jordan said travel demand and revenue trends in March 2023 were rebounding, resulting in “solid profitability for the month and record first quarter revenues.”
Looking ahead, Southwest said revenue for available seat mile (RASM), a widely watched airline metric of efficiency, is expected to drop 8%-11% in the 2nd quarter compared to last year as capacity rises 14%.
Looking ahead Southwest anticipates flight reductions in the back half of the year as the airline will only receive around 70 Boeing 737 Max-8 jets this year, as opposed to previous guidance of 90, as Boeing works through a production issue with those jets.