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Southwest Slips As Q2 Numbers Show Turbulence In Recovery

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By Dhirendra Tripathi

Investing.com – Southwest Airlines (NYSE:LUV) stock fell almost 4% Thursday as the airline’s April-June numbers still came lower than 2019 quarter’s with some hope of recovery though not full in the ongoing quarter.

The company, like American Airlines (NASDAQ:AAL) which also announced its second quarter earnings today, managed to post its first monthly profit in June since the negative effects of the pandemic began in March 2020. This was driven by a surge in leisure travel as people took to travelling after a year’s gap.

Business travel remained sluggish though the company said July has seen weekly improvements in that segment.

The company's second-quarter operating revenue of $4 billion is still almost two-third of 2019 June quarter level.

Load factor was at 89.2% compared to 86.4% in June quarter of 2019.

The company expects load factor to fall month-on-month through August. Operating revenue in July is seen lower by 10%-15% and by 12%-17% in August compared to 2019 levels in those months, respectively, due to fewer holidays from last year.

“Despite steady weekly improvements in business bookings, thus far, in July, the lag in business travel recovery is expected to continue to have a negative impact on close-in demand and average passenger fares in third quarter 2021,” Gary C. Kelly, chairman of the board and chief executive officer, said in a note.

Second quarter net income was $348 million, or 57 cents per diluted share, driven by a $724 million offset of salaries, wages, and benefits expenses related to the receipt of federal government’s fiscal stimulus.

Excluding special items, second quarter net loss was $206 million, a far cry from the $741-million net income in April-June of 2019.

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