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(CNN) — Southwest Airlines reported its first quarterly loss since the depths of the Great Recession 11 years ago.
Southwest lost $77 million excluding special items, which was a bit better than Wall Street’s expectations. But it was the carrier’s first red ink since the first quarter of 2009. Revenue fell $915 billion, or 18%, from a year earlier.
The company has been one of the industry’s most profitable airlines, but coronavirus has dealt serious damage to airlines. Travel has fallen to virtually zero during the pandemic.
Southwest said the current quarter will also yield miserable results. It said revenue in April and May is expected to be down at least 90%, although trip cancellations have receded from their peak in March. And it said it sold only 6% of its seats to paying passengers in April.
“The current outlook for second quarter 2020 indicates no material improvement in air travel trends,” said the company.
Southwest, like the rest of the US airline industry, has accepted help from the Treasury, in the form of a $2.3 billion grant and a low-interest loan of $948 million. It has gotten half of that $1.6 billion. It has also borrowed an additional $5.2 billion since the start of the year and has $9.3 billion of cash on hand as of last Friday.
“We entered this crisis prepared with the US airline industry’s strongest balance sheet and most successful business model,” said CEO Gary Kelly. “While the impact of the pandemic is unprecedented, we believe demand for air travel will rebound. And, we intend to emerge with ample liquidity.”
As part of that federal assistance package, Southwest has agreed not to furlough or cut the pay of staff through the end of September. It also is not allowed to pay dividends or buy back shares in the second or third quarter. It will be the first time since 1977 it has not paid a dividend. Southwest it has suspended both dividends and repurchases “until further notice.”
If the company’s losses extend through the full year, it would be the first annual loss at the company following 47 consecutive profitable years.
The company uses only Boeing 737 jets and has more the troubled 737 Max jets than any other airline. But Southwest said Tuesday it doesn’t expect to use the grounded planes until at earliest November, and the company warned it could push the use of the planes back beyond that. Boeing has said it expects to get approval to fly the grounded jets by the middle of this year.
Southwest has grounded 350 of the the other jets parked because of its scaled back schedule, about half of its fleet. Southwest said it “is evaluating the need to temporarily remove or retire additional aircraft from its fleet.” And it said has agreed with Boeing to reduce the number of new jets that it will add to its fleet through the end of 2021.
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