Southwest Airlines (LUV) Stock Jumped After First Loss In 50 Years, JetBlue (JBLU) Stood Firm For Lesser Loss

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Driven by the coronavirus pandemic and its disastrous effect on the tourism industry, Southwest Airlines Co. (LUV) was up +1.02% to $44.6 after reporting the first negative results in almost 50 years in 2020. Nevertheless, with an adjusted loss per share of $1.29 versus a consensus of $1.66, the low-cost carrier reported better-than-expected fourth-quarter results. Revenue fell 65 percent to $2.01 billion, compared with the market’s expected $2.11 billion. The group, with $14.3 billion in cash ending the quarter, still burned about $12 million in cash per day over the period.

Nevertheless, the company expects to increase its daily cash consumption to about $17 million in the first quarter, mainly due to weak demand and a seasonally weaker travel period in January and February, as well as higher fuel prices. It hopes to reach equilibrium during the year.

To break even, we continue to estimate that operating revenues will have to be in the range of 60-70 percent of the levels of 2019, which is approximately double current levels, said Gary Kelly, CEO of Southwest. He said the company was prepared to recover in 2021 but warned that as the pandemic evolves, the travel and tourism industries face an ever-changing environment.

The company reported a net loss of $3.1 billion, or $5.44 per share, for the full year, with revenue dropping 59.7 percent to $9 billion.

On March 11, the Texas-based company plans to return the Boeing 737 MAX to service and expects to receive 35 MAXs by the end of the year, of which seven were delivered in December.

After unveiling a smaller-than-estimated loss in the fourth quarter, JetBlue Airways Corporation (JBLU) stabilized by -0.2% to $14.65 on Wall Street. For the period, the airline reported a deficit of $381 million, or $1.34 per share, compared to a profit of $161 million or 56 cents per share a year earlier. The EPS stands at -$1.53 versus -$1.67 consensus on an adjusted basis. Revenues dropped 67.4 percent to $661 million, also above the expectations of analysts of $634 million. Availability dropped by 47.3 percent, although the occupancy level fell from 81.9 percent to 52.4 percent during one year. During the quarter, the organization burned $6.7 million in cash every day, following the $6 million to $8 million guidance. The organization forecasts sales to slip from 65 percent to 70 percent for the first quarter. At the end of 2020, it had $3.1 billion in cash.

We have significantly reduced our consumption of money as 2020 signs of progress and are beginning to focus on rebuilding our margins. Later this year, we remain cautiously optimistic about the improvement in demand trends. More importantly, the crisis has made us an airline that is more agile, creative, and resilient, and we believe that our initiatives will allow us to emerge with better structural margins, said Robin Hayes, general manager of JBLU.

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