Southwest Airlines, profitable again, sees dark delta turn

Southwest Airlines says it may not be profitable in its third quarter and now foresees operating revenue for the period coming in lower than previously expected as it deals with rising concerns over increasing COVID-19 cases

Southwest Outlook (Copyright 2020 The Associated Press. All rights reserved.)

The highly contagious delta variant has darkened the outlook for Southwest Airlines one of the largest carriers in the U.S., which said that it may not turn a profit in the third quarter as COVID-19 infections spread.

The revelation, contained in a Wednesday filing with the U.S. Securities and Exchange Commission, comes just three weeks after Southwest CEO Gary Kelly called the airline's most recent quarter a “milestone" after turning its first profit without government assistance in more than a year.

The airline said Wednesday that it was profitable in July, but believes the recent negative effects of the pandemic on August and September revenue will make profitability less likely in the third quarter if the benefits of temporary salaries and wages relief are excluded.

The problems are appearing in what are called close-in bookings and close-in trip cancellations, trips people scheduled several weeks out. The first is falling, the second rising in recent weeks, Southwest said, and it tied those trends to the recent rise in COVID-19 cases.

Shares dropped more than 2% before the opening bell and shares of all other major airlines followed.