DALLAS (AP) -- Southwest Airlines posted its first quarterly loss in nearly a decade and said Tuesday that the downturn in air travel that began in late February shows no signs of letting up.
Cancellations have eased from a peak in March, but remain at levels that Southwest has never experienced.
Southwest doesn't fly to Asia, where the pandemic originated, and so it felt its effects later than rivals Delta, United and American. However, with U.S. air travel now down about 95% from a year ago, all the carriers are navigating the same storm.
Southwest expects revenue to drop by 90% to 95% this month, compared with last April.
"The U.S. economy has been at a standstill, and the current outlook for second quarter 2020 indicates no material improvement in air travel trends," Chairman and CEO Gary Kelly said in a written statement.
Kelly told employees a few days ago that passenger traffic was "virtually zero," that the airline was burning through cash at an alarming rate.
Kelly told employees that Southwest must prepare to become "a drastically smaller airliner" if travel doesn't improve by July, a stunning declaration coming from the head of an airline that has never laid off employees in 49 years of flying.
But the Dallas airline has also never reported an annual loss, a streak that most believe will come to an end this year. It's canceled thousands of flights, grounded much of its fleet, and negotiated for $3.2 billion in federal aid to help cover payroll costs through September. It's asked employees to take unpaid time off.
The company has borrowed $6.8 billion this year, including the federal loan it has already received. Southwest plans to apply for a second round of federal help, a secured loan of $2.8 billion, and is shopping for money from other sources.
As of last week, Southwest had cash and short-term investments of $9.3 billion and mortgageable assets worth nearly $8 billion, mostly planes, to ride out the coronavirus crisis. With no immediate need for more planes, Southwest is overhauling its order book with Boeing.
Southwest swung to a first-quarter loss of $94 million, from a $387 million profit in the same period last year. The airline last reported a quarterly loss in September 2011.
The loss, after excluding some items, was 15 cents per share -- not nearly as bad as the 48-cent loss expected on Wall Street, according to a survey by Zacks Investment Research.
Revenue dropped 18% to $4.23 billion, as the number of passengers fell 21% -- three times faster than Southwest canceled flights. The average flight - including the halcyon days of January and most of February -- was 68% full, an extraordinary drop of 13 points from early 2019.
Shares of Southwest Airlines Co. have dropped 46% this year. That is the best stock performance by any U.S. airline. The stock dipped less than 2% before the opening bell Tuesday.