Southwest Airlines Faces Staffing Challenge as Travel Rebounds

Southwest Airlines Faces Staffing Challenge as Travel Rebounds
A Southwest Airlines commercial aircraft approaches to land at John Wayne Airport in Santa Ana, Calif. on Jan. 18, 2022. (Mike Blake/Reuters)

Southwest Airlines Co on Thursday forecast a "solid" profit for the current quarter and full-year, but said staffing woes were making it harder to keep pace with booming travel demand.

The company said a sharp recovery in travel bookings in March helped lift its monthly revenue above 2019 levels for the first time since the onset of the COVID-19 pandemic and turn a profit.

In April, too, leisure bookings for spring and summer travel remained "strong," it said. The Texas-based carrier now expects an 8%-12% increase in revenue in the quarter through June compared with the corresponding period in 2019.

Southwest's shares were up about 2.1 percent at $46.90 in afternoon trade.

But the airline is grappling with staffing challenges, which led to mass cancellations of flights last year.

As a result, it has trimmed plans to add more flights. Its capacity during the quarter through June is projected to be down 7% from pre-pandemic levels.

The company expects to restore the vast majority of its network by the end of 2023 and is aiming to add over 10,000 new employees, including 1,200 pilots this year.

"We've made trade-offs with lower capacity in order to support operational reliability," President Michael Van de Ven told investors on an earnings call.

Staffing woes have marred operations in recent weeks at carriers such as Alaska Airlines and JetBlue, forcing them to cut summer schedules to avoid further disruption.

Southwest said it is better prepared to handle the surge in traffic this year. It also downplayed the risk of a slowdown in travel spending because of rising fares and high inflation.

The company expects consumer demand would continue to outpace supplies. Southwest is the latest carrier to offer a bullish outlook.

American Airlines Group, United Airlines, and Alaska Air Group Inc last week said their revenue in the current quarter would surpass pre-pandemic levels even as their capacity remains below that of 2019.

"Air travel demand is on the rise and pricing power has returned to the industry, leading to a strong revenue outlook," said Peter McNally, vice president and global sector lead at research firm Third Bridge.

Southwest reported a wider-than-expected adjusted loss of 32 cents a share for the quarter through March.

By Rajesh Kumar Singh and Kannaki Deka