Record-Long Gov't Shutdown Forces Southwest To Cut Guidance As Airline Warnings Pile Up
First, Delta Air Lines warned that the record 43-day government shutdown last month, which throttled air traffic at 40 major airports, would slash its fourth-quarter profit by about $200 million. Now Southwest Airlines is following suit, cutting its full-year profit guidance as the shutdown's ripple effects continue to weigh on major carriers.
Southwest revealed in a new SEC filing:
"As a result of lower revenue due to the government shutdown, and the impact of higher fuel prices, the Company now expects its full-year 2025 EBIT to be approximately $500 million, compared with its prior expectation of $600 million to $800 million. Following the temporary decline in demand related to the shutdown, bookings have returned to previous expectations."
The good news is that the shutdown's impact didn't spill over into December. Southwest noted in its filing that bookings have already bounced back:
Following the temporary decline in demand related to the shutdown, bookings have returned to previous expectations.
Southwest shares are down about 1.5% in premarket trading following the earnings outlook downgrade. Year-to-date (as of Thursday's close), shares are up 6.5%. The float is short 6.56%, or about 33.5 million shares.
Delta Air Lines and Alaska Air Group, which owns Alaska Airlines and Hawaiian Airlines, both disclosed Wednesday that the shutdown's disruption would dent earnings this quarter.
"When you've got the Transportation Secretary telling people, 'We don't have controllers,' questioning the safety at some level of travel, which has never before happened, people said, 'Whoa, I'm going to hold up on making decisions,'" Delta Chief Executive Ed Bastian said Wednesday at a conference.
Last month, the Federal Aviation Administration restricted flights at major US airports in response to the government shutdown, which sent some federal transportation workers home. More importantly, air-traffic controllers called out sick, causing widespread disruptions and prompting Transportation Secretary Sean Duffy to reduce flight volumes nationwide to prevent chaos across airports.