The Dallas-based carrier posted a net loss of $94 million during the first quarter of 2020 in its latest earnings reports.
According to the company’s report, first quarter operating revenues rested at $4.2 billion, that’s down 17.8% when compared to last year.
Southwest said the losses are due to a decline in air travel at “unprecedented levels” coupled with having to significantly reduce its flight schedules through July 2020 due to the coronavirus pandemic.
The COVID-19 crisis devastated the airline industry, as many countries are under stay-at-home orders to prevent further spread of the virus.
Many carriers are getting an influx of cash to help weather the storm.
Southwest will receive $3.3 billion as part of the Coronavirus Aid Relief and Economic Security, or CARES Act, that was passed by Congress in March in response to the pandemic, according to the statement.
The funding is part of the CARES’ Payroll Support Program. Southwest will get $2.3 billion in direct payroll support along with $948 million in an unsecured 10-year loan.
In addition to that federal funding, the company said it has taken several actions to conserve cash, including the reducing named executive officers salaries and Board of Director cash retainer fees by 20%, suspending all hiring and non-contract salary increases, implementing voluntary time-off programs, modified vendor and supplier payment terms and cutting all non-essential spending.
Southwest said the combined effort resulted in more than “$2 billion in reduced annual 2020 operating costs as well as $1 billion in reduced annual 2020 capital spending, compared with original plans. ”
Gary C. Kelley, Chairman of the Board and Chief Executive Officer, thanked the federal government for stepping in.
“We applaud the work of our federal leaders, President Trump, Secretaries Mnuchin and Chao, and the entire United States Congress for recognizing the unprecedented health and economic crisis that our Nation is currently facing due to the pandemic, as well as the importance of airlines to the U.S. economy.”
Click here to read the full statement.
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