Southwest Airlines (LUV) turned a profit in the third quarter of 2021, despite a drop in passenger traffic during August and September 2021.
The airline reported a net income of $446 million in Q3 2021, a noticeable increase compared to a net loss of $1.2 billion during the same period in 2020. This was largely driven by the United States Payroll Support Program (PSP) and “$763 million offset of salaries and wages”, the airline outlined in a statement dated October 21, 2021.
Southwest Airlines CEO Garry C. Kelly said: “Despite the deceleration of traffic in August and September due to surging COVID-19 cases, the third quarter 2021 demand and revenue performance was quite strong and a dramatic improvement from a year ago.”
The Dallas-based airline, which reported an operating revenue of $4.7 billion, cancelled more than 2000 flights between October 9-13, blaming the bad weather and unexpected air traffic control issues. Extensive flight cancellations have cost the airline approximately $75 million.
“Third quarter 2021 was a challenge for us, operationally,” Kelly explained. “We have reined in our capacity plans to adjust to the current staffing environment, and our ontime performance has improved, accordingly.”
Looking ahead to the future, Southwest aims to hire 5000 new employees by the end of 2021, and the airline is currently “more than halfway toward that goal”. In Q4 2021, Southwest expects renewed momentum in leisure and business traffic, revenues, and bookings, especially during Thanksgiving and the winter holidays.
Kelly added: “Except for higher fuel prices, fourth quarter 2021’s overall results are trending better than third quarter 2021.”