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Southwest Air Sees Lower Demand Amid Coronavirus, Cuts Sales Guidance

Southwest Air Co (NYSE: LUV) 8-K filing shows warning "in recent days, the company has experienced a significant decline in customer demand, as well as an increase in trip cancellations" likely

Benzinga · 03/05/2020 12:44

Southwest Air Co (NYSE: LUV) 8-K filing shows warning "in recent days, the company has experienced a significant decline in customer demand, as well as an increase in trip cancellations" likely related to coronavirus concerns.

The company sees first-quarter operating sales to be negatively impacted by $200-$300 million, and cut RASM guidance from up 3.5-5.5% year-over-year to down 2% to up 1%.

Southwest Air cut first-quarter operating costs per available seat mile ex fuel, oil expense guidance from up 6-8% year-over-year to 5-7%, citing less severe weather than expected during first quarter 2020 resulting in a higher completion factor.

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“While it is difficult for the Company to estimate the duration and severity of the impact from COVID-19, the company remains financially strong," the company said. "The company has a strong, investment-grade balance sheet with ample liquidity. As of March 3, 2020, the Company had approximately $5.3 billion in cash and short-term investments and a fully available unsecured revolving credit line of $1.0 billion.”

United Continental (NYSE: UAL) has also been impacted by the virus and is planning fewer flights in April as the ongoing coronavirus epidemic hits demand for travel.

Southwest Airlines shares were trading down 3% at $45.51 in Thursday’s pre-market session. The stock has a 52-week high of $58.83 and a 52-week low of $44.34.