Southwest Loses $135m in Q3
It was a big day for Q3 earnings reports with multiple airlines, including Southwest, putting forth their numbers. For Southwest, it wasn’t a great quarter, but the bigger question is what lies ahead in Q4.
The airline had a net loss excluding special items of $135 million. It said it was profitable in July and would have been for the rest of the quarter if it hadn’t been for those meddling kids the Delta variant which hurt the airline by about $300 million. This beat Wall Street’s already-lowered estimates.
Q3 revenues were $4.7 billion, 17% below 2019 numbers but a very impressive-sounding, if completely irrelevant, increase of 161% over 2020. The airline has $17 billion in liquidity with most of that being reserved as a parting gift for outgoing CEO Gary Kelly.
Q4 may be a rough one for the airline. It estimates there is another $100 million impact from the Delta variant spilling over, but there’s also a $75 million impact from the airline’s recent operational woes and it’s unclear what the hit will be from reduced capacity to “fix” the operation. After all the other airlines heard Southwest say it does not expect to turn a profit in Q4, they issued a joint statement saying, “now you know how it feels, punk.”
American and Alaska Report Earnings With a Different Vibe
American and Alaska may be partners, but their Q3 earnings reports couldn’t have felt different from each other with Alaska looking like a rock star and American looking like, well, American.
American posted a Q3 loss excluding special items of $641 million on revenue of nearly $9 billion, slightly above previously-lowered Wall Street estimates. Thanks to its policy of always having $1 billion more than Southwest just to mess with the airline, American ended the quarter with $18 billion on hand.
Alaska, however, posted an actual profit of $187 million on just under $2 billion in revenue. For all the other airlines that might be a little rusty on this, a profit is when you make more money than you spend. It has just over $3 billion on hand which it is hoping to use to buy American when that airline’s stock price drops low enough.
Looking ahead, American says capacity in Q4 will be down 11 to 13% vs 2019 with a pre-tax margin of -16 to -18%, excluding special items. Alaska’s outlook is obviously sunnier, with hope for a profit once again.
TSA Expands Security Line Reservations to LA
The Transportation Security Administration (TSA) will expand its popular reservation system from Seattle/Tacoma (SEA) to some travelers flying out of Los Angeles (LAX) with a new test to see whether this should become a permanent fixture nationwide.
The LAX test will be called “The Fast Lane Program” and will run through January 18, 2022. During that time, United travelers will be able to schedule a time to go through the security checkpoints when departing from Terminals 7 and 8. Those with Precheck should be cautioned that if they use this service, Precheck can’t be combined with this. There will be no extra cost to use this service other than the emotional cost of having to fly United.
The program has seen success in Seattle where it was first pioneered, and it has already been expanded further there. The LA test will presumably give TSA more information with geographic variation such as… will LAX travelers be like Dodger fans and not show up until well after the scheduled time?
- Air Premia, a new South Korean airline, has received authorization to fly to the US from the DOT.
- Alaska Airlines still loves Boise. It is adding Boise – Idaho Falls and Las Vegas.
- Avelo continues to use cringeworthy marketing to announce news. Today, we learned that it will start flying from New Haven to Sarasota on January 13.
- Embraer delivered 9 airplanes in Q3, which is 9 more than the worst case scenario, so let’s call that a victory.
- Emirates has suspended flights to Khartoum for a couple days due to what is being characterized as a “deteriorating security situation.”
- Frankfurt was experiencing hurricane-force winds earlier today. If you were flying in, we hope you had your barf bag handy.
- IndiGo is ramping up for longer-haul, so it is adjusting its pure low-cost model. The new A321neos will have extra legroom seats, hot ovens, and promises of treating passengers like humans.
- United says you should worry about booking other airlines, because they may not be as reliable if they don’t have a vaccine mandate in place. We assume that includes all of United’s own regional partners.
- Victoria has joined New South Wales in Australia in committing to ending the required quarantine for returning international travelers as soon as November 1.
I’m so good at finance…
Even my bank says my balance is outstanding.