Southwest Airlines (NYSE:LUV) lowered its revenue and profit forecast on Wednesday, blaming the delta variant for weaker bookings.
The airline is the second carrier in less than a week to warn that the fast-spreading COVID-19 variant will weigh on results. Frontier Airlines on Thursday said it would break even, at best, this quarter because of the variant.
Southwest said it expects August operating revenue to be down 15% to 20% compared with the same month in 2019, compared with an earlier forecast for a 12% to 17% drop.
"The Company has recently experienced a deceleration in close-in bookings and an increase in close-in trip cancellations in August 2021, which are believed to be driven by the recent rise in COVID-19 cases associated with the Delta variant," Southwest said in a filing.
It said September revenue will likely be down 15% to 25% from 2019, its first estimate for the month.
Southwest said it was profitable in July, but the impact of the rapidly spreading variant in August and September "will make it difficult" for the company to turn a profit in third quarter without counting federal aid that’s provided some temporary relief in covering its labour costs.
Meantime in the airline industry, the Biden administration is considering a target date of 2050 for airlines to fly on 100% jet fuel from renewable sources as part of its broader push to fight climate change. The administration is said to be trying to come up with incentives to support private-sector production of sustainable aviation fuel, which currently is two to five times more expensive than standard jet fuel.
LUV shares erased $1.08, or 2.1%, to $50.03
