Southwest Airlines Co became the first big U.S. carrier to warn of a hit from the more infectious Delta variant of the coronavirus on Wednesday, saying it may not be profitable in the current quarter.
Shares of the company were down 2% in premarket trading as it said the spread of the variant had hit bookings and increased cancellations in August.
The profit warning marked a u-turn from the airline's upbeat statement last month that it would remain profitable for the rest of 2021. It also dragged down shares of rivals Delta Air Lines Inc, American Airlines Group Inc and United Airlines more than 1% each.
The rapid surge in cases of the variant has pushed U.S. hospitalizations to a six-month high, prompting governments in areas such as Hawaii to re-impose restrictions and threatening a recovery in travel demand.
Budget carrier Southwest had been one of the biggest beneficiaries of easing coronavirus curbs as it mainly caters to the domestic market.
The carrier on Wednesday also forecast its third-quarter operating revenue to be down 15% to 20% versus 2019, a cut of about three to four points from its prior outlook issued just three weeks ago.(https://bit.ly/3s94erL)
But it maintained its unit cost outlook for the quarter.
Last week, Frontier Airlines also lowered its third-quarter forecast and warned the Delta variant was hurting demand.
Southwest shares were trading at $49.85. They have risen 9.7% this year on hopes of a recovery in travel demand, but underperformed the benchmark S&P 500 index's 18.1% rise.
https://finance.yahoo.com/news/southwest-airlines-says-may-not-105842400.html
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