By Chase Hagl
Southwest Airlines Reports Record Profits During Third Quarter
Last week, Southwest Airlines released its third-quarter results for 2023, reporting a net profit of $277 million. The $277 million set a record for the airline, making it the largest quarterly profit in the airline’s history — a direct result of the strong demand for air travel this summer season.
The Dallas-based carrier brought in a total of $6.2 billion in operating revenue, another quarterly record for the airline. The numbers reported by Southwest, as well as many other carriers this quarter make the assumption that the travel industry has made a full recovery from the pandemic, a fair one.
“We are pleased to report solid third quarter 2022 profits and record third quarter operating revenues,” Bob Jordan, Chief Executive Officer at Southwest, said.“We remain focused on maintaining our current momentum and expect to generate strong profits and margins in the fourth quarter of 2022, based on current trends and barring any significant unforeseen events.”
Southwest’s $6.2 billion in operating revenue is a 10.3 percent increase from 2019’s third-quarter results. Of the total revenue, $5.6 billion came from the carrying of passengers, $44 million from freight, and $563 million from other streams of revenue.
The quarter resulted in the carrying of 34.5 million passengers with a Revenue per Available Seat Mile (RASM) of ¢15.85, up 10.6 percent from the pre-pandemic ¢14.32 in 2019. These results can be attributed to the “surge in leisure demand,” which contributed to the airline’s 85.4 percent load factor.
Southwest continues to run a reliable operation. The airline achieved a 99 percent completion rate for the quarter.
Southwest Airlines looks to end the year on a high note. Despite lower demands when compared to the summer season, “Leisure and business demand remain strong, and we currently expect revenue trends to improve sequentially from third quarter to fourth quarter 2022,” Jordan said.
To begin 2023, Southwest plans to increase capacity by 10 percent from what was reported in the first quarter of 2022 and 14 percent in the second quarter. However, the airline plans to exercise caution with the capacity adjustments as there is uncertainty around Boeing’s expected delivery dates of their 737 Max aircraft. “We currently expect aircraft delivery delays to persist into 2024,” Jordan added.
In the ongoing attempt to drive economic benefits through cost savings from more fuel-efficient aircraft, the company expects to retire a total of 26 Boeing 737-700 aircraft in 2022, including 5 -7’s retirements in the fourth quarter. Previous guidance had plans to retire an additional three aircraft, however, are likely keeping them operational due to the delayed Max deliveries.
Thus far this year, Southwest has received a total of 40 Boeing 737-8 aircraft with an additional 31 737-800 aircraft expected to be delivered this quarter. Contractually, the carrier is scheduled to receive 114 MAX deliveries, however, due to Boeing’s delay, a portion of its deliveries are expected to shift out of 2022. By year’s end, the company is expected to have 768 aircraft.