Southwest Airlines posts loss, will offer buyouts
Southwest Airlines posts larger-than-expected loss for the first quarter, will offer buyouts
DALLAS (AP) -- Southwest Airlines Co. reported a surprisingly large loss in the first quarter as traffic fell in what the CEO called the carrier's toughest revenue environment ever.
The company said Thursday it will offer buyouts to employees to trim its work force and was also imposing a hiring freeze.
Southwest said it lost $91 million, or 12 cents per share, including $71 million due to the falling value of its fuel hedges.
Without the fuel-hedges item the airline would have lost $20 million, or 3 cents per share, on $2.36 billion in revenue.
In the year-ago period, Southwest earned $34 million, or 5 cents per share, on revenue of $2.53 billion.
Analysts, who usually exclude special items from their forecasts, had expected Southwest to lose a penny per share on revenue of $2.40 billion in the first quarter, according to a survey by Thomson Reuters.
Over the first three months of the year, Southwest's traffic fell 4 percent, a smaller decline than at most other U.S. airlines. And traffic seemed to stabilize in March, when it declined only 0.4 percent from March 2008.
But the more lucrative business travel remained weak, contributing to the loss at Dallas-based Southwest, which went 17 years without a losing quarter until last fall, but now has posted three straight losing periods.
"Our first quarter 2009 financial results are disappointing, but not surprising given the current economic environment," Chief Executive Gary C. Kelly said in a statement. "We face the toughest revenue environment in our history."
Kelly said the rapid weakening in traffic during the first quarter, particularly among business travelers, showed that Southwest is "not immune to the challenges the worldwide recession is having on air travel."
Southwest told employees Thursday it will offer voluntary buyouts to reduce its work force. The airline said it also froze hiring and pay for top officers and senior management.
In premarket trading Southwest shares lost 39 cents, or 5.1 percent, at $7.25.
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