Southwest Airlines Co. (NYSE: LUV) a major American airline headquartered in Dallas, Texas today issued a Q1 2020 financial results. Via this report we learned that Southwest Airlines had its first loss since 2011. Besides this, here are the key takeaways:
First quarter net loss of $94 million and $.18 net loss per diluted share
|•||Excluding special items, net loss of $77 million and $.15 net loss per diluted share|
|•||First quarter operating revenues of $4.2 billion, down 17.8 percent year-over-year|
|•||Capital returns of $639 million to Shareholders through share repurchases and dividends during first quarter; dividends and share repurchase programs suspended until further notice|
|•||Return on invested capital (ROIC)1 pre-tax of 18.1 percent for the 12 months ended March 31, 2020, or 14.3 percent on an after-tax basis|
|•||In April 2020, reached an agreement in principle with the U.S. Department of Treasury (the “U.S. Treasury”) for proceeds of approximately $3.3 billion under the Payroll Support Program (“PSP”) as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act); consists of $2.3 billion in direct payroll support and $948 million in the form of an unsecured 10-year term loan; the Company is expected to issue warrants that enable the U.S. Treasury to purchase up to an aggregate of approximately 2.6 million shares of the Company’s common stock|
|•||Since the beginning of 2020, bolstered cash on hand by $6.8 billion as of April 24, 2020, including $1.6 billion of PSP proceeds, or 50 percent; remaining $1.6 billion of PSP proceeds expected to be received by July 2020|
“We came into this year with significant financial strength and a fortress balance sheet, ending 2019 with cash and short-term investments of $4.1 billion and adjusted debt2 to average invested capital (leverage) of only 24 percent. “- said Gary C. Kelly, Chairman of the Board and CEO and added that LUV is -“…currently the only U.S. airline with an investment-grade rating by all three rating agencies.”
He furthermore thanked to President Trump:”We applaud the work of our federal leaders, President Trump, Secretaries Mnuchin and Chao, and the entire United States Congress”
“Following recent debt transactions, we have unencumbered assets worth nearly $8 billion, including more than $6 billion in aircraft (742 aircraft in its fleet.). We expect to receive the remainder of PSP proceeds, approximately $1.6 billion, over the next three months.”- he concluded
It is worth noting that during Q1 2020, the Southwest Airlines returned $639 million to its Shareholders through the repurchase of $451 million of common stock and the payment of $188 million in dividends.
Southwest Airlines estimates second quarter 2020 capacity to decrease at least 60 percent, YoY.