Southwest Airlines lost $159 million in the first quarter as the financial impact of its holiday meltdown stretched well into 2023.
The carrier canceled more than 16,000 flights in the final days of December when staffing software couldn't keep pace with scheduling changes during coast-to-coast storms. The incident resulted in a $325 million revenue impact for the first quarter, Southwest said.
The company had warned of a loss for the quarter in January and said it logged an increase in customer cancellations early this year.
Southwest shares were down more than 3% in afternoon trading after releasing results.
Here's how Southwest performed in the first quarter, compared with Wall Street expectations according to Refinitiv consensus estimates:
- Adjusted loss per share:Â 27 cents vs an expected loss of 23 cents.
- Total revenue: $5.71 billion vs an expected $5.73 billion.
Revenue rose more than 21% from a year ago to $5.71 billion. Southwest's net loss for the period of $159 million is likewise an improvement over the same period last year, when it lost $278 million.
The Dallas-based carrier said it expects revenue headwinds into the second quarter but said it expects a profit for the three months ending June 30.
Revenue per available seat mile, a measure of how much an airline is generating for how much it flies, is expected to be down 8% to 11% in the second quarter from last year, with capacity up 14%, Southwest said.
The carrier said its sales outlook was impacted by about $300 million "breakage revenue" because of a "higher-than-normal amount related to flight credits issued during the pandemic that were set to expire unused." Southwest said it eliminated expiration dates on flight credits last summer.
Southwest expects second-quarter costs, excluding fuel, to be up 5% to 8%, a cost outlook that includes wage accruals for labor contracts that are currently under negotiation, including for its pilots and flight attendants.
The CEOs of both Southwest and rival American Airlines said that aircraft deliveries from Boeing are delayed, hindering their growth plans.
Southwest said it expects to receive only 70 of Boeing's 737 Max planes this year, down from 90, and CEO Bob Jordan said the airline is being "prudent" about its plans given repeated delays from the manufacturer. Southwest said it will hit its capacity plan by 1 percentage point for 2023.
"You plan way in advance to set your schedules, to set your capacity, and you're wrong. It's just really difficult to change that close in," Jordan said in an interview with CNBC's "Squawk on the Street" following the report.
He said the company will also have to "moderate" its hiring plans from a net 7,000 people this year because of Boeing delays.
On Wednesday, Boeing said it plans to ramp up output of 737 Max planes to 38 a month this year from a current rate of about 31 a month, a long-planned increase that was delayed by supply chain problems and labor shortages.
Correction: Revenue per available seat mile is expected to be down 8% to 11% in the second quarter from last year. An earlier version misstated the range.