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Southwest Airlines Shares Edged Higher on the First Profitable Quarter Since 2020

Simon Mugo trader
Updated 27 Jan 2022

Trade Southwest Airlines Shares Your capital is at risk

Key points:

  • Southwest Airlines reported its first profitable quarter since the pandemic struck two years ago.
  • The budge airline made a $68 million profit in Q4 2021, marking a turning point.
  • However, the airline expects to lose in Q1 2022 due to bad weather and rising Omicron cases.
  • Southwest Airlines shares edged higher during premarket trading after the airline reported a profit during Q4 2021 driven by a surge in passenger numbers during the holiday season.

    The airline revealed that it made a $68 million profit during the last three months of 2021 before the Omicron variant emerged and became the most dominant strain of the SARS-CoV-2 virus.

    The budget airline said it expects to report a loss during the first quarter of 2022 amid lower passenger numbers due to the rampant Omicron cases and government restrictions.

    Also Read: The Best Travel Stocks to Buy Right Now.

    Southwest reported its first profitable quarter in two years since the emergence of COVID-19 in early 2020 ground global air travel to a halt as governments and people struggle dot understand the virus.

    However, the situation is not any better now since the recent wave of Omicron infections has triggered a wave of restrictions and flight cancellations. The airline also announced that it would be lowering its flight capacity this quarter due to lower bookings.

    Southwest reported a quarterly profit of 14 cents per share, beating analysts expectations of a 7 cents profit and far outdoing the $1.29 loss per share recorded in Q4 2020.

    The airline expects to incur losses in January and February 2022 due to terrible winter weather and rising Omicron infections, but it expects to return to profitability in March.

    The company expects bookings to pick up around the President’s Day holiday in late February.

    Southwest also noted that the cancellation of thousands of flights in late December due to the emergence of the Omicron variant also hurt its profits, which could have been much higher.

    Bob Jordan, Southwest Airlines’ incoming CEO, said that the airline was optimistic about the future, saying, “With COVID-19 cases trending downward, the worst appears to be behind us.”

    Jordan will assume the CEO role at Southwest in February.

    Southwest Airlines shares have been trading almost flat over the past 12 months and are up 2% this year.

    *This is not investment advice. Always do your due diligence before making investment decisions.

    Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading