Southwest Airlines expects a $300 million hit to its operating revenue in the first quarter

With
the travel and tourism industry taking the greatest hit across the globe due to
the rapidly spreading Coronavirus, Southwest Airlines declared in its
announcement on Thursday that its operating revenue in the first quarter can be
expected to take a $300 million hit.

Following Southwest’s announcement, it was seen trading 3% down in premarket trading on Thursday. Its competitors including American Airlines, United Airlines, and Delta Airline also lost traction in the stock market on Thursday as the Coronavirus concerns continued to rise.

United
Airlines Suspends Its Guidance For Full-Year

The
Coronavirus has so far infected over 90,000 people worldwide and caused more
than 3,000 deaths. The virus-driven disruptions, as per Southwest, resulted in
a sharp increase in ticket cancelations and a steep decline in the airline’s
traffic. Airlines from all over the world are now pushed into cutting flights
and focusing on measures to control costs.

In
its statement on Wednesday, United Airlines also suspended its guidance for
full-year and highlighted that 10%
of domestic flights in the United States and as many as 20% of its
international flights will be cut in April. United also announced a hiring
freeze, delayed increases on salaries of executives, and unpaid leaves
(voluntary) on Wednesday.

The
full spectrum of the virus impact on global business operations and the economy
at large are still unpredictable. President Donald Trump held a meeting with top
executives of American Airlines, Southwest Airlines, JetBlue Airways, and
United Airlines on Wednesday to discuss the options. The companies, however, as
per President Trump, didn’t forward a request for financial assistance to
support operations.

Southwest
Expects Its Q1 Total Revenue Per Available Seat Mile Within 2% Down To 1% Up

According
to Southwest, its total revenue per available seat mile in the first quarter is
expected to lie within the range of 2% down to 1% up. In the previous guidance,
the company had expected the aforementioned measure that is closely followed
for insights into the airline’s performance, to see a growth of 3.5% to 5.5% in
Q1.

Southwest
Airlines had recorded its operating revenue in 2019’s first quarter at $5.15
billion.

At
the time of writing, Southwest Airlines is trading at $45.17 in the stock
market that marks a little under 20% decline in 2020 so far. Its performance in
2019, however, was moderately upbeat with an annual gain of just over 15%.
Southwest Airlines has a market cap of $23.37 billion with a price to earnings
ratio of 10.73.