Southwest Airlines may not be profitable in third quarter due to Delta hit By Reuters

 


© Reuters. FILE PHOTO: A Southwest Airlines Boeing 737-800 plane is seen at Los Angeles International Airport (LAX) in the Greater Los Angeles Area, California, U.S., April 10, 2017. REUTERS/Lucy Nicholson

(Reuters) – Southwest Airlines (NYSE:) Co became the first big U.S. carrier to warn of a hit from the more infectious Delta variant of the coronavirus on Wednesday, saying it may not be profitable in the current quarter.

Shares of the company were down 2% in premarket trading as it said the spread of the more infectious variant had hit bookings and increased cancellations in August.

The warning marked a u-turn from the airline’s statement last month that it would remain profitable for the rest of 2021. It also weighed on shares of rivals Delta Airlines (NYSE:) Inc, American Airlines (NASDAQ:) Group Inc and United Airlines Inc, which lost more than 1% each.

The rapid surge in cases of the variant has pushed U.S. hospitalizations to a six-month high, prompting governments in areas such as Hawaii to re-impose restrictions and threatening a recovery in travel demand that helped airlines bounce back.

Southwest also forecast its third-quarter operating revenue to be down 15% to 20% versus 2019, a cut of about three to four points from its prior outlook issued just three weeks ago. (https://

But the airline maintained its unit cost outlook for the quarter.

Last week, Frontier Airlines also lowered its third-quarter forecast and warned the Delta variant was hurting demand.

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2021-08-11