Southwest Airlines Say Shutdown Cost Them $60mn, Cuts Estimates
The shares of Southwest Airlines slipped drastically at the stock market on Wednesday. The slip for the airline based in Dallas followed the company’s decision to trim its outlook for revenue in the quarter as they cited a major blow of $60 million, owing to the partial shutdown of the government.
As far as the March quarter is concerned, the carrier has expectations of an increase of 3-4% in the revenue per seat mile available, as compared to the first quarter figures for the same time period in 2018. Revenue counted per seat mile available is considered as a primary industry metric to measure how much money an airline is making on each seat that they fly for a mile. The airline had previously announced that it visualized revenue to see an increase of approximately 5% in this quarter.
The shares of Southwest slipped several rungs on the ladder as they fell by greater than 4% during afternoon trading on Wednesday. United Airlines, Delta Air Lines as well as American Airlines were all down by a margin of lower than 1%.
The partial shutdown of the U.S government that had lasted for 35 days and ended only last month, had put a stopper on the launching of new routes and jets, which included the all-important service of Southwest to be provided to Hawaii. This, in turn, lead to loss of revenues for the firm as government workers as well as contractors did not travel during the lockdown.
According to estimates presented last month by Southwest, the shutdown had incurred a heavy cost of nearly $10-15 million in terms of revenue for the company in January. As per statements by the company itself, the airline has continued to face palpable tension in passenger bookings and demands as a repercussion of the shutdown. On Wednesday, Southwest filed a forecast of a major blow of $60 million.