November 10, 2021 8:00 AM
 — 
3
 min

Southwest Airlines Continues to Show Improved Operations

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Southwest Airlines posted encouraging 3Q results. The company's quarterly operating revenue was $ 4.68 billion, up from $ 1.79 billion in the same period last year. Revenue in July-September of this year was 17% lower than Q3 2019, but above market expectations at $ 4.58 billion. by about $ 100 million and $ 200 million, respectively. Net profit in July-September amounted to $ 446 million, compared with a loss of $ 1.16 billion in the same period a year earlier. Earnings per share were $ 0.73 per share versus a loss of $ 1.96 per share a year earlier. Excluding one-off factors, the company recorded a loss of $ 0.23 per share, which was better than the market forecast, which assumed a loss of $ 0.27.

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The company's management notes that Q2 2021 was an important milestone in business recovery after the coronavirus pandemic, as demand for tourist travel began to recover. In June, Southwest Airlines reached profitable levels for the first time since the pandemic began with no incentive programs. The rapid recovery in demand for air travel is creating challenges for airlines, requiring them to step up operations and return to work. Management says staff shortages are weighing on operations, and the company plans to hire 5,000 new employees by the end of the year. Another risk for the business profile is rising fuel prices coupled with wage inflation. Southwest is the largest local airline in the United States and is considered by many to be the industry's pricing trendsetter. We believe that the company will continue to demonstrate strong recovery in business activity over the next few quarters and will be able to return to business growth soon. We maintain our valuation for Southwest Airlines at $ 67.

Southwest Airlines, a Dallas-based company, differentiates itself from other carriers with exemplary customer service delivered by more than 55,000 employees to more than 100MMcustomers annually. Southwest is the nation's largest carrier in terms of originating domestic passengers.

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