Southwest Airlines’ financial performance has resulted in a profit this quarter. As we know Southwest Airlines did make a loss in the previous quarter so this is good news. However the performance is slightly worse than the same time last year.
As we know Southwest Airlines’ financial performance, like Many others, has been affected by the pandemic. When the pandemic struck, government restrictions around the world meant that demand for flights plummeted. This meant that many airlines made heavy losses. To make matters worse, when Covid restrictions were lifted there was mass congestion at airports due to staff shortages as a result of layoffs during the pandemic when demand was less. There were mass delays and cancellations last year particularly during the Independence Day weekend in the US and Canada. As a result airlines had to restrict flights in order to ease congestion and allow time for airlines and airports to recruit new staff as many were now in other fields.
Southwest Airlines’ Financial Performance
In terms of Southwest Airlines’ financial performance, in the three months ended 30th June 2023, the airline made a profit of 683 million US dollars. This is 10.1% lower than the 720 million US dollars made in the three months ended 30th June 2022. This shows that Southwest Airlines financial performance is faring less well than the same time last year. However the company is still making a profit. It is the case that generally Southwest’s financial performance has been reasonable over the past year making an overall profit at the year end in 2022. However it does appear that the company did make losses in the last two consecutive quarters, the fourth quarter last year and the first quarter this year. So Southwest Airlines’ financial performance now is in fact better than the previous two quarters. However for the first time we are seeing a performance inferior to the previous year for the same time period.
In terms of Southwest Airlines’ revenue (total money received) however, there has been an increase when compared to last year of 4.6%. In the three months up to 30th June 2023, Southwest Airlines’ financial performance resulted in a revenue of 7.037 billion US dollars when compared to 6.728 billion US dollars for same time period in 2022. The fact that revenue has increased, be it by a small percentage, does indicate that the company is attracting more customers. However even though revenue is increasing when compared to the same time period last year, profit is decreasing. This indicates that there has been a significant increase in costs. According to the report, it does suggest that there has been an increase in labour costs as well as other costs attributable to what it describes as general inflationary pressures (price rises).
The Company’s Response
In terms of the company’s response to Southwest Airlines’ financial performance, the company’s Chief Executive Officer Bob Jordan was very positive. He said that the company had produced record revenues. In addition, he talked about improved operational performance (improved effectiveness in the way services are provided for example whether flights are on time). The one drawback discussed was the fact that there were adverse weather conditions during the quarter. This may have impacted on profitability.
As one can see Southwest Airlines’ financial performance has resulted in a profit in this quarter, although this is at a reduced level when compared to the same time quarter last year. However, it does seem that revenues improved and there is a positive outlook for the future. We have to wait to see how this progresses.